Fiberight, an Iowa-based ethanol company, recently opened the nation’s first full-scale cellulosic ethanol plant. For years, Iowa has been the center of ethanol production within the United States, pumping out corn-based fuel for the masses. But the corn ethanol industry may be facing challenging times as debates over government spending and energy efficiency become keys to the looming presidential race.

Agricultural subsidies started in large part because of the Great Depression, as an effort to keep farmers on their land. However, nearly a century after their institution, farm subsidies are still being renewed. The most recent ethanol subsidy, The Food, Conservation, and Energy Act of 2008, subsidizes corn growing as well as biofuel research. In fact, federal law now requires the production of over 10.5 million gallons of biofuel a year. New flex-fuel cars have been produced to run on E85, a special blend of fuel that contains 85% ethanol. The motivation is to reduce our dependency on foreign oil-based petroleum, thereby cutting fuel costs as well as emissions. But ethanol may not be a silver bullet for energy woes.

Ethanol can be produced from a variety of plant materials, including sugarcane, switchgrass, and wheat. Here in the United States, almost all ethanol is produced from corn. It can make more sense for a farm to grow a large amount of corn than a combination of other crops because there is such a huge monetary incentive for doing so. The Food, Conservation, and Energy Act of 2008 continues a practice that has existed for years, generating $37.3 billion of corn subsidies between 1995 and 2003. Yet the amount of energy it takes to grow, harvest, refine, and transport the corn for ethanol is greater than the energy obtained from using it as fuel. Gasoline mixed with ethanol, which is sold in all states, also reduces fuel economy in most engines. Sugarcane ethanol is more energy efficient to produce, but its import is heavily taxed within the United States.

In addition, diverting grain to fuel drives up the cost of food, which can make it difficult for low-income families to fill their stomachs. Despite the food supply issues and reduced fuel economy, corn-based ethanol continues to have strong support from some federal lawmakers. According to Pike Research, the United States now leads the world biofuel market with a 44.7% share, as seen in the following chart from Algae-Based Biofuels.

However, this may not be the case for much longer. Republican presidential candidate Tim Pawlenty, among other candidates, is making the elimination of energy subsidies a key part of his campaign. The primary reason for this, Pawlenty claims, is to reduce government spending. However, there are added benefits to eliminating the corn ethanol subsidy — it could very well be accompanied by an elimination of petroleum subsidies, and a reduction in corn ethanol could lead us to search out more sustainable forms of vehicle power, such as electricity, fuel cells, cellulosic ethanol, or sugarcane ethanol. Fiberight may be the first in a wave of companies developing a more sustainable biofuel by manufacturing cellulosic ethanol on a large scale. In addition to Fiberight, Petrobras and Colorado-based ZeaChem are two companies throwing themselves into the cellulosic ethanol research ring. Eliminating government support for corn ethanol is becoming a hot topic in political debates, allowing the public to consider truly viable options for transportation energy.