Biofuels

Every time I read about the economics of producing ethanol fuel, it seems that it is doomed from the start. The problem is that producing ethanol from food crops, such as corn, creates additional problems, such as increasing the demand and price of a basic food staple, and using up energy to grow the crop vs how much energy you can produce. The energy balance of producing an intensive agricultural crop like corn is negative. The reason it is being pushed so hard, especially by the Bush administration (and also in Canada) is that corn production is subsidized, and we produce excess corn. Yet corn takes a lot of fertilizer and a lot of energy to grow and process. It's a win/win situation for politician, they can appear to be pro-environmental, and keep farmers in business by throwing money at them, and pretend they are fighting foreign oil dependency. But any forward thinking rational person would point out this is very short-sighted.
One way to get around this is to use a non-food crop to produce the ethanol, for example in Ottawa we have a company (Iogen) which produces enzymes to digest cellulose (dead wood) into ethanol. It's unclear wether that energy balance is positive yet, and many areas in the third world don't have wood to spare. But the problem may be ethanol itself. It is a very toxic product for cells, and we may have already reached the ethanol capacity of microorganisms.

An alternative is to produce oils instead of alcohols. The Jatropha produces seeds that are 40% oil, the plant itself is resistant to drought and pests, and it is not edible. Basic chemestry will tell you that oils are much more energy dense than sugars or alcohols. Again I'm not sure what the energy balance is for this plant but I can tell you it's superior to corn. Corn produces about 18 gallon equivalent per acre, while Jatropha produces 202 gal/acre. Already in India, the Mumbai-Delhi train uses a 20% biodiesel mix from Jatropha planted along the tracks. Oils form coconuts and palm are also very energy rich, and have great yields, but the agriculture is more energy intensive, and you are competing with food usage.

Another alternative are algae. They are relatively easy to grow, and there is a lot of space to grow them in the open ocean. Some figures based on a very generous 60% oil content estimate a maximum capacity at about 5000gal/acre. These microorganisms might also lend themselves to genetic manipulation and maybe even synthetic biology one day.

One of the most expensive steps in producing ethanol is the distilling. When it comes to oils, separating them from water is really easy, but it's the transformation into diesel that is limiting. But once again you can count on biology to provide the answer: enzymes found in fungi. Metarhizium anisopliae produces copious amounts of lipase, prefect for transforming the oils.