The thundering rumble and whine of race cars whizzing around NASCAR tracks across the U.S. boast engines burning a new fuel this year: ethanol. Given the sport's roots in running corn whiskey among other products during Prohibition in the 1920s, it might be viewed as coming full circle. After all, ethanol as fuel is just a 200-proof version of the drinking variety—albeit blended with more traditional petroleum-based gasoline.

But NASCAR is hardly alone: U.S. IndyCar has run exclusively on ethanol at times since 2007. Of course, ethanol made from fermented corn starch plays a more prosaic role in the U.S. these days, making up some 10 percent of national passenger vehicle fuel. In fact, in 2010 the U.S. took roughly 40 percent of the national corn crop that grows on some 30 million hectares of prime farmland and turned it into roughly 50 billion liters of the alcohol fuel. That's up from roughly 190 million liters a year in 1979 and just 13.6 billion liters as recently as 2005.

And the U.S. Environmental Protection Agency recently approved plans to blend ethanol at levels of 15 percent into the nation's fuel supply (the current amount is 10 percent)—a move that has drawn either criticism or praise from legislators, depending on what part of they country they hail from. Those in states without a massive corn crop point to the wasted subsidies—at least 10.6 cents per liter in federal and state subsidies and tax credits since 1978—whereas those in corn country point to foreign oil imports avoided. Regardless, the U.S. Congress is currently debating whether the time to end subsidies for ethanol from corn—subsidies that have been in place since the 1970s—has finally come.

"We're helping to moderate gas prices and move this nation away from its dependence on imported oil," argues Robert Dinneen, president and CEO of the Renewable Fuels Association, a lobbying group for the ethanol industry. "We make 13.5 billion gallons, 10 percent of the motor fuel supply. If you take that off the market, gas prices go through the roof."

Simply put, biofuels are among the most imminent renewable alternatives to the dominant role of oil in providing liquid transportation fuels. In fact, ethanol fermented from sugar or starch is the only alternative fuel currently available on a large scale—more than 80 billion liters of the alcohol fuel are made globally. Biofuels may be the only solution on offer when it comes to an aggressive, short-term approach to reducing greenhouse gas emissions from burning fossil fuels in vehicles. And that's why the U.S. government has set a goal of producing a variety of biofuels—including roughly the same amount of corn ethanol as brewed annually today—that will amount to a 136-billion-liter total biofuel output in the U.S. alone—by 2022.

Alcoholic (energy) bliss

Making ethanol is one of humanity's oldest technological tricks, because it also enables one of humanity's oldest recreational drugs. Ethanol residues have been found in pottery dating back 9,000 years, indicating people were fermenting sugars with yeast since before recorded history. And it's been a fuel since the dawn of the automobile age—early Ford Model Ts ran on it until it became clear that cheap oil produced a better, less expensive fuel known as gasoline.

"Fermenting is still the most efficient way of producing the [ethanol] molecule," says Jeremy Shears, global manager of innovation in the biodomain for oil company Shell. "We have 2,000 years experience doing it. It's a low-temperature, low-pressure system."

Fermentation may be one of the oldest biological technologies, but that doesn't mean it comes cheap. Enzymes to turn the starch in corn, say, into the sugars that specialized yeast can then digest into ethanol cost 1 cent or less per liter, according to Novozymes, which makes more than 50 percent of the world's supply of those enzymes. Those prices continue to come down as the company and others improve the fermentation process to make those enzymes, but the end result, ethanol, remains more expensive than petroleum-derived gasoline.

That means subsidies: $7 billion in 2010 alone, once tax credits, tariffs and other incentives are added together. In fact, between 1980 and 2000 the U.S. government has devoted some $19 billion in tax breaks alone to the ethanol-from-corn effort, according to the U.S. Government Accountability Office, and ethanol subsidies per liter of the biofuel have often been larger than the total cost of a liter of gas the biofuel replaced. A significant portion of the profits made by agribusiness giants like Poet or Archer Daniels Midland—which, along with oil company Valero, are responsible for the bulk of ethanol produced in the U.S.—can be attributed to this government largesse with taxpayer dollars.

But even setting subsidies aside—after all, every energy source in use in the U.S. today continues to receive federal tax benefits, among other incentives—there's the simple economic cost of building all those corn mills, stainless steel fermentation tanks and other infrastructure needed to churn out ethanol on the tremendous scale of transportation fuels.

"In biofuels, because of the energy density and limits of collection, we're talking about very small facilities, maybe 40 million gallons a year," says Jeffrey Jacobs, vice president of the Biofuels and Hydrogen Business Unit for Chevron Technology Ventures, the research and development investment fund of the California-based oil company. In fact, the U.S. Department of Agriculture (USDA) estimates that the nation would need 528 biorefineries—the U.S. currently has 204 strictly corn starch–to-ethanol plants today—and $168 billion in infrastructure investment to meet its current biofuel goals. "That's going to take decades to build as well."

Plus, there's the energy cost of old-fashioned distilling, often supplied by burning fossil fuels like natural gas, where the broth is boiled to separate ethanol from the soup of water and yeast in which it has been fermented. After all that trouble, a gallon of ethanol fuel will only drive a car two thirds as far as a gallon of gasoline—it is a less energy-dense fuel—although it does help gasoline to burn without producing suffocating carbon monoxide, the original reason it was blended into the fuel supply.

As the USDA noted in a report on gasohol in 1986: ethanol "cannot be justified on economic grounds" and "had no long-term prospect for survival without massive new government assistance." More recently, the Congressional Research Service noted in a report last October that if the entire all-time record U.S. corn crop of 2009 was used to make ethanol—it would only replace roughly 18 percent of national gasoline use. "Expanding corn-based ethanol to significantly promote U.S. energy security is likely to be infeasible," the researchers wrote.

And then there are the environmental impacts, both direct and indirect. For example, fertilizer runoff from Midwestern corn fields promote algal blooms in the Gulf of Mexico that, in turn, create vast oxygen-deprived "dead zones". And, growing more corn in the U.S. means the nation produces less soy, which drives up the price of that bean, thereby causing farmers in Brazil to clear more Amazon rainforest to plant more of the staple. That means massive greenhouse gas emissions, notes agricultural expert Timothy Searchinger of Princeton University. "We can't get to a result with corn ethanol where we can generate greenhouse gas benefits."

That was the environmental reason to pursue a biofuel like ethanol in the first place—it theoretically balances the CO2 absorbed by the plant when it is grown with the CO2 released when the fuel is burned. But the U.S. ethanol industry is merely taking a crop that is already grown anyway—corn—and converting it to a fuel that is burned. That means the growth of the plant is not using additional CO2 to counterbalance the CO2 emitted when the fuel made from that plant is burned, Searchinger notes. "It's an offset," he says. "It's a very expensive way to have a very small effect." In fact, the Congressional Budget Office (CBO) estimates that it costs $750 in subsidies for ethanol for every ton of CO2 saved.

Even sugarcane—the most energy-efficient crop for ethanol because of its rapid growth rate and the fact it produces sugar that is ready to be fermented by yeast, unlike starch from corn that requires an additional step—needs some two meters of rainfall a year, which precludes growing it on much of the world's existing arable land. And to replace all of today's gasoline demand with ethanol made from sugarcane would require planting more than 320 million hectares across the tropics—more than half all the land devoted to agriculture presently and multiples of the roughly 20 million hectares of sugarcane planted today. Plus, it takes at least 5.7 liters of water to ferment 3.8 liters of ethanol—even more when the water used to grow corn is counted—an equation that may not work as water becomes a scarce resource. In fact, a 2007 study funded by the Swiss government found that all of today's most significant biofuels—ethanol from corn or sugarcane and biodiesel from soy or palm oil—do more environmental damage overall than do fossil fuels.

Food versus fuel

Perhaps the largest concern about ethanol is illustrated by an oil company's efforts in the U.K.: BP will turn British wheat into ethanol at several facilities in a bid to improve the country's energy security. Of course, wheat is a staple food crop, and using it to make fuel has an impact in global crop markets that results in increasing food prices.

Take corn. The U.S. produces 60 percent of the world's supply of exported corn, and uses that which it keeps for everything from feed for livestock to the sweetener in your beverage of choice. Turning corn into ethanol raises the price of corn, which in turn raises the price of foods such as steak or eggs. Corn now costs more than $7 per bushel, up from $2 per bushel at the turn of the 21st century.

The CBO estimated that ethanol contributes as much as 15 percent to the recent rises in food costs. And that's not just the case in the U.S. The U.N. Food and Agriculture Organization noted in a 2008 report during the last food crisis that the increase in demand for sugar and corn for biofuels was "one of the leading factors behind the increase in their prices in world markets which, in turn, has led to higher food prices." In fact, the International Food Policy Research Institute has called biofuel subsidies in rich countries the equivalent of a tax on food.

Of course, using homegrown crops—whatever the impact—does reduce the need for the roughly 11 million barrels of foreign oil (and the military entanglements required to secure that foreign oil) the U.S. imports every day; it also improves the livelihoods of rural communities. "We have only just begun to realize the benefits of home-grown fuels," U.S. Secretary of Energy Steven Chu said in a February address to the National Ethanol Conference in Phoenix, although he has also expressed skepticism about whether corn is the right crop for fuel.

For the moment, ethanol remains the biofuels king, whether fermented from corn or sugarcane. Oil companies like Shell are investing heavily in sugarcane biofuels, forming a joint venture with Brazilian ethanol company Cosan—dubbed Raizen—to produce 2.2 billion liters of sugarcane ethanol a year. "Of all the alternatives to road-transportation fuels, certainly over the next 20 years, biofuels are the answer," says Shears of Shell, which predicts biofuels will make up some 9 percent of the global transportation fuel market by 2030. "Of all the biofuels options at the moment, Brazilian sugarcane does produce less CO2."