Economic penalties for pursuing increased fossil fuel usage is a good idea IMO. It's the fastest ways to get things done.
There is no way that biofuels could meet energy or fuel needs of the US ever, but as a way to displace some of the fossil fuel consumption it can help. Conservation can also help a lot but good luck trying to get that to work without some sort of penalties.
Any C released by biofuels is used by the next generation of crops, so that's covered more or less.
The US already makes so much more food than it needs, so the land issue for a 15-20% displacement is not excessive. Also keep in mind that at any given time at least a quarter of farmland is not in use ("to regenerate") - low impact biocrops like switchgrass etc. could be used here. Also, it's an additional source of income for poor farmers who already need subsidies to support themselves as their crop prices are so low because there is so much extra food.
