May 11, 2006 | 9:59 a.m. ET

Is an ethanol revolution coming? (Stone Phillips, Dateline anchor)

Dateline
In Brazil, in one of the sugar cane fields that help the country produce ethanol.
Before I started working on this story , I was one of those Americans who thought ethanol was that fad fuel from the 1970's that never caught on.  In fact, the ethanol industry produced 4 billion gallons of corn ethanol last year and expects to top 5 billion gallons in 2006.  Much of this ethanol is being used to boost the octane rating in our gasoline. (Adding more ethanol to the blend is how premium gasoline is made.)

But the talk now is of shifting from ethanol as an additive, to ethanol as a replacement for petroleum-based fuel.  And the person who may know more about the business, technology and potential of ethanol than anyone else in the country says making that shift is "brain dead simple."  Vinod Khosla is a venture capitalist, a bio-medical engineer and an ethanol evangelist, who's been briefing political and business leaders all over the country. Talking with him has convinced me that an ethanol revolution may well be coming.  Flex-fuel cars, capable of running on ethanol, gasoline or any mix of the two, are already here and don't cost consumers a dime more.  And a new generation of ethanol technology is on its way.   

In this country today, we make ethanol from corn, a process that has become far more efficient over the years, but still has its drawbacks. One problem is the energy-in versus energy-out equation.  Currently, for every unit of energy required to make corn ethanol, we only get about 1.3 units out. That's not a very favorable energy balance, especially compared to the 8-to-1 ratio they're getting from sugarcane ethanol in Brazil. Plus, a huge increase in corn ethanol use could affect U.S. food prices. But all that is about to change with technology.  

With the new cellulosic approach, we will be making ethanol from all kinds of plants, including easy-to-grow prairie grasses that don't deplete the soil and require little or no fertilization or irrigation.  And when using corn, we won't be limited to the kernels;  instead, we'll process the whole plant —stalk, leaves and all. The process involves the use of enzymes or bacteria to break down the cellulose in plants to create feedstock, which will then be put through the traditional fermentation process that results in ethanol. 

Khosla, a highly successful venture capitalist with an eye for innovative technology, is investing in some of these new technologies right now, which he believes will lead to an ethanol production process with a 10-to-1 energy balance, or better.  And how much of America's farm land will be needed to replace the oil we use for gasoline consumption?  Khosla estimates that it would take about 55 million acres.  To put that in perspective, the U.S. has more than 70 million acres in soybeans alone.

The more I learn about ethanol, the more I wonder if we're not on the verge of an energy revolution.  If so, this could be as big as any story I've covered. Just as the events of  9-11 changed how we guard our cities and protect ourselves, a new generation of ethanol may soon change the way we gas up our cars and protect the earth. Maybe we really can break our addiction to oil, slash prices at the pump, strengthen our national security, send jobs to rural America instead of the Middle East, and save the planet all at the same time?                 

That would be a pretty big story, wouldn't you say? 

Click here for Stone Phillips' report on ethanol . Can your car already run on E85? Click here to check . A database of U.S. and Canadian gas stations that sell ethanol can be found here.



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