Four years after the University of Washington received a $40 million federal grant to kick-start a biofuels industry in the Northwest, scientists have made great progress, but plans are lagging, in part because fossil fuels are so inexpensive.

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Cheap gas may be good for consumers and the economy, but it’s handicapping plans to turn Northwest-grown poplar trees into a sustainable source of fuel.

Four years after the University of Washington received a $40 million federal grant to kick-start a biofuels industry in the Northwest, plans are lagging, in large part because fossil fuels are so inexpensive.

The $40 million, from the U.S. Department of Agriculture, was part of a five-year, $136 million grant to several research universities, including UW and Washington State University, in September 2011.

It was the largest grant the Department of Agriculture had ever made. At the time, Agriculture Secretary Tom Vilsack said he was confident that in five years a new industry would be churning out fuel from trees. Vilsack flew to Seattle to make the announcement with now Gov. Jay Inslee, then still a congressman, at Sea-Tac Airport.

And the project has made important progress, with scientists establishing that the poplar is a good tree for fuel.

But making fuel out of trees only makes good economic sense if oil sells for at least $80 a barrel, says Rick Gustafson, professor of bioresource science and engineering in the UW’s School of Forest Resources.

“If oil goes back up to $100 a barrel, these things would be springing up right and left,” he said of the cellulose-based biorefineries needed to turn poplars into ethanol.

A carbon tax could also make biofuel from poplar trees more attractive because producing the fuel — and burning it — is nearly carbon-neutral, adding almost no additional carbon dioxide to the atmosphere.

But despite the climate accord reached in Paris last month, Gustafson said, “There doesn’t seem to be a lot of political will to make this happen.”

And there are those who are skeptical that biofuels will flourish even if oil prices go back up.

As recently as 16 months ago, when oil was more than $100 a barrel, many analysts thought prices would stay high indefinitely, said Clark Williams-Derry, senior researcher at Sightline, a nonprofit Seattle think tank that focuses on sustainability and environmental issues.

During that time, investors were dumping capital into a wide variety of energy projects — biofuels, fracking, tar sands in Canada, he said in an email.

“Yet even with high prices and a ton of investment activity,” he said, “we didn’t see a major cellulose-based biofuels industry emerge. There was a lot of very interesting and promising activity, and it seems as if costs were falling. Still, production volumes fell short of the more optimistic forecasts.”

Williams-Derry thinks investors have become wary of new investments in oil and oil substitutes.

“Many fossil-fuel investments have become absolute dogs — yet the same market and pricing forces have also made it difficult for alternatives to oil to attract substantial capital,” he said.

Gustafson said the market situation is frustrating, especially given the progress in developing the fuel. He said scientists have shown that poplars can grow well on marginal lands that wouldn’t otherwise be used for more valuable crops, and they don’t need a lot of water.

Unlike corn-based ethanol, biofuel from poplars uses a plant outside the food supply. One of the arguments against corn-based ethanol, which is mandated by the federal Renewable Fuel Standard to be blended into gasoline, is that it has caused the price of corn to rise.

Poplar-based biofuel is known as cellulosic ethanol, or ethanol made from the entire mass of the plant. There’s no waste, so it’s a more environmentally friendly way to produce ethanol, Gustafson said.

Biofuel created through poplar trees is almost completely carbon neutral because trees sequester carbon dioxide during their life cycle, absorbing it during photosynthesis, Gustafson said. When ethanol fuel from poplars is burned, it releases carbon dioxide back into the atmosphere, which is taken up again by the next generation of poplar groves.

As part of the grant, researchers grew trees that were selected for hardiness and speedy growth on three plots in Western Washington, totaling about 90 acres. One of the largest is in Pilchuck, near Granite Falls.

A private company, ZeaChem, built a small demonstration biofuels refinery in Boardman, Ore., and plans to build a commercial-scale refinery there, but has delayed those plans by six to nine months, Gustafson said. The company also intends to build the plant so it can use other feedstocks such as wheat straw, sugar beets and alfalfa stalks.

While researchers had hoped to convert the poplars into jet fuel, that work requires a more expensive biorefinery setup. With fuel prices so low, that project has been shelved for the time being, Gustafson said.

Gustafson said the grant work showed that biorefineries can also produce acetic acid — a valuable chemical — out of poplars, and for a lower cost than using other methods.

He said the delays have been frustrating, but he believes the research will eventually pay off.

“We have the technology,” he said. “We’re rarin’ to go here.”