Absolutely. The first internal combustion engine, designed and built by Henry Ford, was designed to run on ethanol not gasoline. The diesel engine , designed and built by Rudolf Diesel, was designed to run off of vegetable oil.
I imagine you’re asking whether or not the production of biofuels would be commercially viable without government subsidies. That depends on a lot of factors and is better answered by an economist, engineer, or scientist, not a website.
From a free market point of view, biofuels would work best if fossil fuel is more expensive than biofuels. This takes into account all variables that would make a consumer switch to BF–the actual price per barrell, the distance driven per unit of fuel, and the cost of vehicles that can run on biofuel.
As sylvestergraham mentioned, the free market would work best if fossil fuels were naturally more expensive than biofuels rather than subsidized by the government.
In direct answer to your question, one type of biofuel that would not go away is Waste Vegetable Oil (WVO). Since WVO is discarded by restaurants all over America, it is a great option for fueling vehicles. People can convert diesel cars to run on filtered WVO. My uncle has done this, and got his fuel for free when he visited his favorite restaurants.
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