Waiting for energy tech's best and brightest

CNET News.com's Charles Cooper says it's time to explode the myth surrounding the corn ethanol mania.

Hard to believe but 30 years have passed since the spring speech in which Jimmy Carter urged the country to get real about energy consumption, calling it the "moral equivalent of war." Time slips by so fast we usually don't pay attention unless an extraordinary event jogs our memory. So it was this week that I spotted my first filling station advertising $4-per-gallon gasoline.

Regular readers of this publication may have noticed that CNET News.com has included a lot more coverage of alternative-fuel technologies and new modes of personal transportation. That's been a no-brainer because this is the cutting edge. In the last year, the drive to reduce the nation's dependence on imported oil has become intertwined with our sense of national security.

These days Silicon Valley is awash with ideas--some loony, some very intriguing--about how to shape the future of motorized transport. And this isn't only a California craze. Venture capitalists all over the country are funding start-ups in hopes of finding the next big thing.

If current demand for ethanol continues, then our own inventories of corn will fall to dangerously low levels.

In his State of the Union speech in January, President Bush set an annual production target of 35 billion gallons of renewable fuel by 2017. Unfortunately, this is going to be a slow haul--the country's less than one-third of the way from realizing that objective--and there's a more immediate concern. With nary a murmur of protest in Congress, we've allowed a massive corporate welfare system to take hold that survives due to obscenely large public subsidies.

Corn subsidies are already almost $9 billion a year, and that doesn't count any of the goodies en route to the likes of Archer Daniels Midland, the nation's biggest producer of ethanol, thanks to energy legislation passed by Congress a couple of years ago. (Oh, and did I mention the U.S. slaps a ridiculous 54-cents-per-gallon tariff on ethanol imports in order to protect domestic producers?)

The corn ethanol industry is understandably following its own self-interest by trying to cash in on the biofuels mania. But it has to root for oil prices to remain high--if not climb higher. If demand eased and the price for a barrel of crude dropped another $30 or so, corn ethanol production would suddenly turn unprofitable. Agribusiness and farmers would then need even bigger government subsidies to survive or they'd go bust by the bushel.

I can't predict global crude trends, but as more corn gets earmarked for ethanol production, this much is clear: food supplies here and around the world will suffer. The U.S. produces 40 percent of the planet's corn. The production of ethanol from corn requires a lot more energy compared to the process based on cellulosic sources.

Here's the rub: if current demand for ethanol continues, then our own inventories of corn likely will fall to dangerously low levels. And with U.S. farmers devoting more acreage to corn at the expense of planting other crops, that's going to hit hard in the developing world.

In the current edition of Foreign Affairs, two economists from the University of Minnesota, C. Ford Runge and Benjamin Senauer, document the damage caused by the growing use of staples like corn and oilseeds--and even cassava, a crucial food for poor Africans--in the production of ethanol. Runge and Senauer say the better choice would be the use of sugar cane rather than corn. Down the road, they urge more investment in solar and wind power and in finding ways to improve energy efficiency in vehicles, homes and factories.

I think they're right. But the political constellation of forces in this country would short-circuit any move to sugar-based ethanol before it got going. There's more hope for the future-ific alternatives they sketch out--but that's going to need a big helping hand from technology's best and brightest.

We may think Uncle Sam has a grip on what needs to get fixed. But as Americans point their cars for the four corners of the country this Memorial Day weekend, it's appropriate to ask whether we're still heading in the right direction.

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