Green gold

“AMERICA'S sensible fuel,” reads a TV advertisement, while a soothing melody plays in the background. Other ads tout a fuel that promotes peace and is economical, home-produced, clean and renewable. So what is this magic potion? Ethanol, of course. Growth Energy, a lobby group, is spending $2.5m on America's first national television campaign for the stuff. “No beaches have been closed due to ethanol spills,” one ad notes. Growth Energy planned the campaign before the BP disaster, but the push could hardly be better timed.

After the oil spill Barack Obama declared that “the time to embrace a clean energy future is now.” Biofuels will be part of that future. However, most policymakers agree that the industry must move beyond corn ethanol, which is less efficient than the sugar-derived stuff and pushes food prices upwards. The new Renewable Fuel Standard (RFS2), which took effect on July 1st, limits conventional ethanol to 15 billion gallons of the annual 36 billion gallons of renewable fuel that must be used for transport by 2022, and the administration has just announced extra funding for algae-based biofuels (see article). But with a viable new biofuel yet to emerge, lobbyists are still pushing to support the old one.

Corn ethanol should not be maligned, argues Tom Buis of Growth Energy. While next-generation biofuels, such as cellulosic ethanol, are struggling to come of age, corn ethanol is well-established. Between 2000 and 2008 it shot from 1% to 7% of America's fuel supply. Regulators have given ethanol a few recent boosts. In February the Environmental Protection Agency (EPA) concluded that ethanol emits 20% less greenhouse gas than petrol. In June the agriculture department noted that ethanol plants have become more efficient.

But the industry wants more. Production will soon hit the “blend wall”, when ethanol will meet 10% of fuel demand; the EPA allows blends of up to 10% ethanol (more might corrode engines). The industry wants the EPA to raise that cap to 15%, though in June the agency delayed a ruling.

In the meantime, ethanol's advocates want to extend their existing perks and add others. A tariff on ethanol imports and a tax credit for blenders are due to expire in December—these should be renewed, lobbyists insist. The government should also require most new cars to be flex-fuel vehicles (FFVs), able to use blends of up to 85% ethanol. And petrol stations should be required to install pumps that blend petrol with ethanol.

Ethanol's advocates say that such measures will bridge the gap between today's biofuel and those of the future. FFVs and a higher blend limit, for example, would help grain ethanol expand but would also open the market for cellulosic fuel. In the meantime, corn ethanol continues to enjoy its subsidies. Between 2005 and 2009 the tax credit for blending petrol with ethanol cost $17 billion. This year it will cost some $5.4 billion. Surely the money could be better spent somewhere else.