Shaping the energy mindset towards ethanol

Oil is up a little, down a little and gasoline is staying in the expensive range.

It is going to be pretty difficult to get a solid read on the future of oil prices until we get a better grip on whether this worldwide economic slowdown is going to linger, or if we'll come rocketing out of it quickly.

Natural gas, big surprise, tends to echo the rise and fall of its petroleum-based cousin.

However, what there isn't a lot of talk about lately is ethanol.

Remember back when everyone was up in arms about food crops being diverted to ethanol production, driving up the cost of everything from baladi bread to corn tortillas?

Food prices were skyrocketing, especially in parts of the world that could ill-afford to pay more for staples. Once the golden fuel of the green movement, ethanol was demonised as taking food from the mouths of the hungry.

Ethanol's story kind of got lost in between the crude crash and the world's ongoing economic woes. So what happened?

At least in the United States, ethanol plants are closing down as demand for all fuels shrink, and the surplus of the biofuel grows.

According to Ethanol Producer Magazine, four plants filed for Chapter 11 bankruptcy protection in January alone.

In response, producers are asking the US Environmental Protection Agency to boost the 10 per cent ethanol cap in gasoline to 15 per cent. With President Obama pushing a renewable energy agenda, there seems to be a significant chance producers may get what they are looking for.

Meanwhile, Brazil's state development bank is lending just over $1 billion (Dh3.67 billion) to the nation's ethanol producers to stockpile fuel and prevent a price dip there. Despite apparent interest in keeping ethanol production alive and well, the opposition to the biofuel hasn't disappeared.

At the heart of the opposition is concern that using crops for fuel is going to drive food prices up, especially now when everyone from North America to the Middle East and on to Asia is feeling the pinch of economic stagnation.

In the third world, those concerns are even stronger. In the past, farmers have switched from food to fuel crops because they make more money after harvest, a situation that often led to skyrocketing prices for staples like rice, wheat and corn.

Surprisingly, however, a University of Missouri think tank begs to differ, saying it expects ethanol to keep corn prices high despite the ongoing US recession.

The other concern, however, is that ethanol really isn't that green after all.

Unlike worries about the food supply, which I tend to find a little overblown, the questions about the true carbon footprint of ethanol need to be answered.

The general consensus is that ethanol from sugar cane - as in Brazil - is less damaging than the fuel made from corn. Most seem to agree that methods of producing it from fast-growing and low intensity crops such as some grassy weeds may be the best choice of all.

However, the growing concern is that governments' support - regardless of the continent - of traditional forms of ethanol production is drawing interest, and more importantly cash, away from developing even greener forms of biofuels.

But whether you think it is green, or just greener than petroleum products, interest in ethanol is probably only going to be on the upswing, even if fuel consumption is decreasing.

The writer is a journalist based in Alaska, USA.