At the fuel pumps in São Paulo, customers have a choice: gas or alcohol? Since the mid-1970s, Brazil has worked to replace imported gasoline with ethanol, an alcohol distilled from locally grown sugarcane. Today ethanol accounts for 40 percent of the fuel sold in Brazil.

Ethanol can be produced from a wide variety of plant-based feedstocks, most commonly grain or sugar crops. It is then blended with gasoline as an oxygenate or fuel extender for use in gasoline vehicles, or it can be used alone in “flexible-fuel vehicles” that run on any blend of ethanol and gasoline.

Brazil led world ethanol production in 2004, distilling 4 billion gallons (15 billion liters). The United States is rapidly catching up, however, producing 3.5 billion gallons last year, almost exclusively from corn. China's wheat- and corn-rich provinces produced nearly 1 billion gallons of ethanol, and India turned out 500 million gallons made from sugarcane. France, the front-runner in the European Union’s attempt to boost ethanol use, produced over 200 million gallons from sugar beets and wheat. In all, the world produced enough ethanol to displace roughly two percent of total gasoline consumption. (For more examples of ethanol production by country, see data.)

Efforts to substitute alternative fuels for petroleum are gaining attention in a world threatened by climate change, rural economic decline, and instability in major oil-producing countries. Biofuel crops take in carbon dioxide from the atmosphere while they are growing, offsetting the greenhouse gases released when the fuel is subsequently burned. Replacing petroleum with biofuel can reduce air pollution, including emissions of fine particulates and carbon monoxide. Biofuel production also can improve rural economies by creating new jobs and raising farm incomes. As a locally produced, renewable fuel, ethanol has the potential to diversify energy portfolios, lower dependence on foreign oil, and improve trade balances in oil-importing nations.

Although ethanol’s popularity is growing, today’s inefficient production methods and conversion technologies mean that this fuel will only produce modest environmental and economic benefits and could impinge on international food security. The largest obstacle to biofuel production is land availability. Expanding cropland for energy production will likely worsen the already intense competition for land between agriculture, forests, and urban sprawl. With temperatures rising and water tables falling worldwide, global food supply and demand are precariously balanced. World grain reserves are near all-time lows, and there is little idle cropland to be brought back into cultivation. Shifting food crops to fuel production could further tighten food supplies and raise prices, pitting affluent automobile owners against low-income food consumers.

Placing greater emphasis on land efficiency—that is, maximizing energy yield per acre—will be essential to making the best use of ethanol. Though corn has broad political support as a feedstock in the United States, it is one of the least efficient sources of ethanol. For example, ethanol yields per acre for French sugar beets and Brazilian sugarcane are roughly double those for American corn.

Also important is the amount of energy used to produce ethanol. Growing, transporting, and distilling corn to make a gallon of ethanol uses almost as much energy as is contained in the ethanol itself. Sugar beets are a better source, producing nearly two units of energy for every unit used in production. Sugarcane, though, is by far the most efficient of the current feedstocks—yielding eight times as much energy as is needed to produce the ethanol. Given their positive energy balances and higher yields, it makes more sense to produce ethanol from sugar crops than from grains.

Ethanol could quickly take off in sugarcane-producing tropical countries, which have the advantage of year-round growing seasons, large labor supplies, and low production costs. As fuel demand rises in these developing nations, biofuel production could check oil imports while bolstering rural economies. Brazil, for example, could produce enough ethanol to meet total domestic fuel demand by increasing the area used to grow sugarcane for alcohol from 6.6 million acres to 13.8 million acres (5.6 million hectares) or by shifting all current sugarcane acreage to ethanol production. Unfortunately, new fields may cut further into already shrinking rainforests, making them a serious environmental liability.

If ethanol is to become a major part of the world fuel supply without competing with food and forests, it’s primary source will not be grains or even sugar crops; it will be more-abundant and land-efficient cellulosic feedstocks, such as agricultural and forest residues, grasses, and fast-growing trees. Promising new technologies are being developed that use enzymes to break down cellulose and release the plants’ sugars for fermentation into ethanol. A demonstration plant using this technology opened in Canada last year, and large-scale production is expected to be commercially viable by 2015.

Agricultural residues, such as corn stalks, wheat straw, and rice stalks, are normally left on the field, plowed under, or burned. Collecting just a third of these for biofuel production would allow farmers to reap a sort of second harvest, increasing farm income while leaving enough organic matter to maintain soil health and prevent erosion. The agricultural residues that could be harvested sustainably in the United States today, for example, could yield 14.5 billion gallons of ethanol—four times the current output—with no additional land demands.

“Energy crops,” such as hardy grasses and fast-growing trees, have higher ethanol yields and better energy balances than conventional starch crops. One likely candidate is switchgrass, a tall perennial grass used by farmers to protect land from erosion. It requires minimal irrigation, fertilizer, or herbicides but yields 2-3 times more ethanol per acre than corn does. Such crops could potentially be harvested on marginal land, avoiding the conversion of healthy cropland or forests to energy-crop production.

Still, with world energy demands rising, biofuels will meet only a fraction of fuel needs unless there are substantial improvements in vehicle fuel economy. Fortunately, the technologies required are available and affordable. Shifting vehicle production to gas-electric hybrids, like those on the market today, and reducing weight and drag would decrease fuel use several fold. Adding an extra battery and plug-in capability to hybrid vehicles would allow short trips to be made using only electric power – preferably produced from wind – decreasing fuel demand to levels that could be met with ethanol alone.

Increasing the role of ethanol in meeting fuel demand will require ongoing research and development to improve biomass-ethanol conversion technologies, along with consistent legislative support for biofuel production and greater fuel efficiency in the automotive industry. Shifting government energy subsidies, such as from oil exploration to biofuel development, is a clear choice as new oil fields prove increasingly elusive. With improved vehicle fuel economy and the use of more-efficient cellulosic feedstocks, biofuel has the potential to supply a substantial share of the world’s automotive fuel.

Copyright © 2005 Earth Policy Institute