Ethanol is a growth opportunity for cleantech. When you drive, there is most likely ethanol in your fuel tank. Ethanol is a fuel from a plant source that is normally mixed with gasoline. The percentage varies widely. All current U.S. vehicles can run on a blend of up to 10% ethanol (E10).⁽¹⁾ (Karen Lundegaard, Wall Street Journal, 4/17/06.) Some states require ethanol as an oxygenating agent in gasoline, replacing MTBE and tetraethyl lead.

Ethanol is reducing the U.S. dependency on foreign oil. We are growing our own fuel. Brazil has used ethanol to reduce its dependency on gasoline by 40%. In the U.S., 2%.

There is a heated debate about whether ethanol helps the environment. If you live in Brazil, the answer is that ethanol is a big help. In Brazil, ethanol is processed from sugarcane, a cellulosic source. This cellulosic ethanol produces over eight times more energy than the fossil energy used in its production.⁽²⁾ (Hunt, Sawin, Stair, “Cultivating Renewable Alternatives to Oil,” State of the World 2006.)

In the U.S., the vast majority of ethanol is processed from corn. There may be no environmental benefit if the “wheel-to-wheels” process uses diesel farm equipment, fertilizer from fossil fuel, coal produced electricity, and diesel fuel delivery trucks.

Ethanol creates a major economic opportunity for the USA. We produce 33% of the world’s ethanol, second only to Brazil. Major firms like ADM and Cargill are rapidly expanding capacity. General Motors and Ford have been promoting E85 (85% ethanol, 15% gasoline). GM launched a national campaign, “Live Green Go Yellow.” GM will produce some 400,000 flex-fuel vehicles this year, up from 275,000 in 2005. Ford is planning 250,000 flex-fuel vehicles in 2006 (including versions of its popular F-150 pickup truck), up from some 200,000 last year. Daimler Chrysler is the leader in diesel and will take the lead in biodiesel, promoting more mpg. These three are all fighting to regain market share from hybrid leaders Toyota and Honda.

Which is better, hydrogen or ethanol? Hydrogen transportation is cleaner with almost no health damaging emissions. Renewable hydrogen produced at the fueling site, running in a fuel cell, produces zero greenhouse gases. Hydrogen reformed from a fossil fuel, then transported 1,000 miles to a fueling station, results in more “wheel to wheels” greenhouse gases than cellulosic ethanol produced near the pump.

Which will become a dominate fuel? Both. E10 will first be widely deployed in the U.S. E85 will grow more slowly because new pumps are required. Hydrogen is more disruptive, requiring new vehicles, fueling, codes and is more costly. In the long run, hydrogen may be the bigger winner as costs fall dramatically. Hydrogen can be produced from more sources ranging from wind electrolysis to being processed from the same plant sources as ethanol.

⁽²⁾ Hunt, Sawin, Stair, “Cultivating Renewable Alternatives to Oil,” State of the World 2006, p.69.