Currently, about 10 per cent of the gas sold in the country contains some ethanol. (CBC)

There's nothing new about the latest alternative fuel to catch the eye of the federal government. It's the same fuel that the previous Liberal government was committed to making more available across the country.

The Conservative government unveiled its clean-air initiative on Oct. 19, 2006. The plan - the Tories' so-called "made-in-Canada" replacement for the previous government's commitment to the international Kyoto Protocol - would begin to regulate smog levels by 2010 and cut greenhouse gas emissions in half by 2050.

Part of that plan is to make sure that renewable fuels account for five per cent of all gasoline sold across the country by 2010. Currently, about 10 per cent of the gas sold in the country contains some ethanol. Conventional engines can run on gasoline that contains up to 10 per cent ethanol. Anything more than that, and you need a modified engine.

Four provinces - Alberta, Saskatchewan, Manitoba and Ontario - have committed hundreds of millions of dollars to boost ethanol production. As a result, a handful of new plants are running or will soon open in those provinces.

In the March 2007 budget, the federal government said it was allocating up to $1.5 billion over seven years as an operating incentive to alternative fuel producers.

Ethanol's been around a lot longer than the first internal combustion engines. People discovered it thousands of years ago, probably by accident - and quickly developed a taste for it. Ethanol is produced when organic material - like wheat, barley and hops - ferments. The fermentation process - which is aided by the addition of yeast - turns sugars in the organic material into alcohol. The same kind of alcohol that's the base of some of the world's most popular beverages.

When organic material ferments naturally, the liquid that's produced contains about 15 per cent alcohol. Do it in the lab and the alcohol content skyrockets. Ethanol is almost pure alcohol. In the 1850s, ethanol was widely used as a fuel for lamps. But during the Civil War, the U.S. government slapped an alcohol tax on ethanol to raise money for the war effort. The tax made it way too expensive to burn ethanol as a fuel.

Ethanol production dropped off and didn't pick up again until the tax was repealed in 1906. Two years later, the Model T was mass-produced - and designed to run on a mixture of ethanol and gasoline. Henry Ford called it the fuel of the future. The opinion of the American government differed - it considered ethanol liquor and banned it when Prohibition began in 1919.

Ethanol enjoyed a resurgence as a fuel during the Second World War when gasoline and diesel fuel were in short supply. But it took the oil shocks of the 1970s to trigger widespread interest in ethanol. In the early 1970s, oil prices surged as several Arab oil-producing nations refused to sell to countries that supported Israel.

Brazil was one of the first countries to turn to ethanol in a big way. The government offered tax and loan incentives to help build the infrastructure needed to turn the country's abundant supply of sugar cane into a fuel for cars and trucks. In addition, Brazil offered subsidies to the country's auto industry to develop vehicles that could run on a fuel that contained more ethanol.

Government policy ensured that the price of ethanol remained well below the price of gasoline in Brazil - even though it actually cost more to produce ethanol than to import gasoline. In North America, ethanol remained economically uncompetitive while oil prices remained low.

In a submission to a House of Commons committee, the Canadian Renewable Fuels Association said $41 per barrel is the magic number when the cost of producing a barrel of ethanol equals the average wholesale cost of producing a barrel of gasoline.

Canada ratified the Kyoto Protocol on Dec. 17, 2002. Within months, ethanol producers were lobbying the federal government for $400 million in subsidies to develop their industry. In North America, most ethanol is produced from corn - and corn growers have been actively looking for new markets for their product.

Canada has trailed the United States in the production of ethanol - and vehicles that can run on a fuel that contains more ethanol than gasoline. E85 contains 85 per cent ethanol and 15 per cent gasoline. It burns cleaner than gasoline but costs a little more.

The U.S. Department of Energy estimates that it would cost $113 US more a year to run a Ford Taurus on E85 than on gasoline. But at the end of that year, the Taurus running on E85 would have produced 1.5 tonnes less greenhouse gases than the Taurus that relied on gasoline.

However groups like the Sierra Club of Canada point out that while more ethanol and less gasoline makes sense, it has to be the right kind of ethanol. The environmental group says it takes five hectares of cornfields to produce enough ethanol to run a car for a year. The same land could feed seven people for a year.

During the campaign leading up to the Jan. 23, 2006, election, the Sierra Club lauded both the Liberals and Conservatives for committing to a National Renewable Fuels Standard setting a minimum of five per cent mix of biofuels in gasoline and diesel by the end of 2010. But it urged both parties to switch from relying on ethanol derived from corn and grains to ethanol produced from waste straw and wood chips. The organization argues that producing ethanol from those sources doesn't take farmland out of food production and achieves greater reductions in the emission of greenhouse gases.

A Cornell University study that appeared in the journal Natural Resources Research in July 2005 found that producing ethanol from plants such as corn, sunflowers and soybeans uses more energy than the fuel generates.

In terms of energy output compared with the amount of energy required to produce ethanol, the study found:

• Corn requires 29 per cent more fossil energy than the fuel produced.
• Switch grass requires 45 per cent more fossil energy than the fuel produced.
• Wood biomass requires 57 per cent more fossil energy than the fuel produced.

Critics of the Cornell study argue that the researchers used outdated data to come to their conclusions. One of the researchers - Prof. David Piementel - had looked at ethanol's energy efficiency in the past and concluded it wasn't worth the effort. However, there's also a long list of studies that have found that the production of ethanol results in a net gain in energy - between 34 and 75 per cent.

Meanwhile, a 2004 study conducted for the National Research Council found that increasing the use of ethanol would not be enough to achieve the greenhouse gas emissions that Canada committed to when the Kyoto Protocol was ratified. The study found that requiring gasoline to contain more ethanol would reduce greenhouse gas emissions, but it could also create problems like a shortage in cattle feed.

The study said more would need to be done - like persuading people to buy smaller, more fuel-efficient vehicles. The Conservative government announced in late April that it plans to introduce new fuel-efficiency standards for cars and light trucks built after 2011. The standards have not yet been set.

American farmers are expected to devote 3.2 billion bushels of corn to ethanol, an increase of 49 per cent over last year. Demand for corn has pushed prices to their highest point in a decade, and experts say consumers should expect to pay higher prices for a whole range of food products at the grocery store.

Jyoti Sahasrabudhe, a Calgary-based food industry analyst, says food manufacturers have long favoured corn as an ingredient for its versatility. For example, cornstarch is used to thicken chocolate milk while corn syrup solids are to increase the shelf life in frozen foods.

"We need to find that balance between fuel sources and food sources, and if we can't afford the food we eat, we have no need for vehicles," Sahasrabudhe said.

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