"Biofuels won't solve the world's energy problems and will never substitute for crude oil," cautions Elliott Gue, editor of The Energy Strategist. "However, generous subsidies will power rapid growth in this industry."

He explains, "The U.S. government has mandated that the U.S. produce 12 billion gallons of ethanol by 2012, up from around 5.4 billion gallons in 2006. But many on both sides of the aisle in Congress want to extend that mandate to a whopping 35 billion gallons by 2017.

"To put that into perspective, there currently isn't enough corn grown in the U.S. to produce 35 billion gallons of corn-derived fuels even if we divert every last kernel to biofuels production.

"In addition, the European Union has aggressive mandates for biofuels production. Even in fast-growing Asia, there's plenty of growth to be found. The U.S. government offers generous funding and subsidies for biofuels production.

"Our recommend play in the biofuels sector is Monsanto (NYSE: MON), whose main business is the production of genetically modified (GM) seeds. GM seeds are designed to exhibit certain traits; examples might include drought, weed, and pest resistance.