A cornerstone of the federal government's environmental policy, the use of ethanol as an alternative to fossil fuels in vehicles has become more complicated in recent months as a number of aid groups have linked its production to rising food prices.

The issue has attracted enough attention that, in recent weeks, representatives from two world organizations — the International Monetary Fund and the World Bank — have urged caution in promoting biofuels.

Corn-based ethanol has been championed in Canada and the United States as a solution to energy, environmental and agricultural issues. (Matt Rourke/Associated Press)

"We don't think it's advisable to vilify biofuels and make it responsible for all evil at the moment," Juergen Voegele, director of the agriculture and rural development department at the World Bank, told the Reuters news agency on May 8. "Nor do we think we can continue to support biofuels the way it is supported at the moment in many countries."

Here in Canada, that renewed reluctance has slowed the passage of Bill C-33, which would allow the government to regulate new minimum requirements to ensure all gasoline in vehicles has an average renewable fuel content of five per cent by 2010.

Yet even before some international organizations raised alarm bells on the food-versus-fuel debate, ethanol, particularly corn-based ethanol, has been one of the most hotly debated alternative fuel options, dividing scientists and environmentalists over its relative merits in reducing greenhouse gas emissions and its contributions to energy policy.

Here we look at some of the big questions surrounding an alternative fuel that has run hot and cold in its last year in the public eye.

How is ethanol created?

Ethanol is a clear alcohol — made of oxygen, hydrogen and carbon — mostly produced from the fermentation of plant-derived matter, mainly sugars and starches.

Fermentation from sugar-cane, for example, involves the decomposition of glucose into ethanol and carbon dioxide and then heating to distil the ethanol, with the sugar-cane residue typically burnt to generate the heat for processing. This process is mostly used in the tropics, in countries like Brazil.

Ethanol can also be derived from starches obtained from crops such as corn, wheat, rye and potatoes, most often through a process called dry-milling. In dry-milling, the grain is ground and water is added to form a mash, and enzymes are then added to convert the starch to dextrose. The fermentation process then creates ethanol, carbon dioxide, water and solids, the latter of which can then be turned into a feed for livestock. In another process — wet-milling — the grain is broken down using water and diluted sulphuric acid and processed to yield germ, fibre, gluten and starch. The starch is then fermented as in dry-milling and the gluten meal is used as a stock feed.

How efficient is this process?

Some critics of ethanol as a source of fuel say that it requires a great deal of energy to turn the crops into fuel, and that this energy is often derived from burning fossil fuels. But ethanol is still a net energy and greenhouse gas winner, according to the federal government.

Natural Resources Canada says that to make one litre of ethanol fuel — containing 23.6 megajoules (MJ) of energy — requires around 15 MJ of fossil fuel. That works out to a net energy return of 8.6 MJ/litre, or about 57 per cent more than the energy put in.

When compared to other assessments of crop-based ethanol, however, the federal government's estimates are among the more optimistic. Most of the studies have favoured the notion that ethanol does produce more energy than required to make it, though to varying degrees, depending on how they calculate both the energy inputs required to make the ethanol and whether they count the feed as part of the output.

On one end of the spectrum, the Canadian Renewable Fuel Association, citing a 2001 Agriculture Canada report, says ethanol contains twice the amount of energy required to produce it. On the other end is a Cornell University-California-Berkeley study that appeared in the journal Natural Resources Research in July 2005 which said corn-based ethanol was actually a net energy loser, requiring 29 per cent more fossil energy than the fuel it made produced.

A survey of ethanol production efficiencies published in the journal Science in January 2006 discounted the Cornell study as flawed for, among other reasons, relying on old data, and instead said the consensus among remaining studies was a net gain per litre of ethanol of four to nine MJ, or 20 to 62 per cent more energy than required to create it. And a University of Minnesota-led study published in the June 2, 2006 issue of the Proceedings of the National Academy of Sciences pinned corn-based ethanol's net energy gain at 25 per cent.

Studies have shown that ethanol made from sugar cane is even more energy efficient to produce because the process to extract it involves fewer steps.

Does ethanol help the environment?

Ethanol's selling point is that it burns cleaner than gasoline, producing significantly less greenhouse gas. Its proponents say even when factoring in the amount of fossil fuel required to make it, the fuel still comes out cleaner than regular gasoline.

Natural Resources Canada says the use of a litre of gasoline that includes 10 per cent ethanol made from corn can reduce greenhouse gases by three to four per cent, while using a mixture that contains 85 per cent ethanol (E85) can reduce net emission by as much as 75 per cent, they said. Regular automobile gas tanks can have up to 10 per cent ethanol without any modifications, but a special vehicle is required to run E85 fuel.

Environment Minister John Baird made ethanol investment and mandates a key part of the federal government's plan for the environment during a news conference in Toronto, in April 2007. (Adrian Wyld/Canadian Press)

But those numbers are based, in part, on the government's own assessment of the energy — and fossil fuels — required to produce the ethanol. So scientists who suggest corn-grown ethanol's net energy gain is more or less will have correspondingly higher or lower assessments of the impact on total greenhouse gases.

But not all of the government's own studies in this area agree. An unpublished study produced by Environment Canada researchers who tested four different vehicles operating on low-blend ethanol gasoline found that the addition of ethanol didn't result in any significant reduction of carbon dioxide, methane or nitrous oxide.

At the time the report was made public last year, however, federal Environment Minister John Baird said it was only part of a bigger picture.

"I think there's an issue between the tailpipe and the whole cycle," he said. "The whole cycle is better than the tailpipe."

A Stanford University study published in the journal April 18, 2007 issue of Environmental Science and Technology said while ethanol-based fuels reduce greenhouse gases, it would increase smog in the world's most polluted cities. And a number of recent studies have also suggested that converting agricultural land to produce corn and corn-based ethanol could have a negative influence of the environment.

Does ethanol have an impact on fuel efficiency?

Blending ethanol into gasoline raises fuel consumption by two per cent, according to the federal government. Natural Resources Canada said ethanol-blended gasoline contains only 97 per cent of the energy of pure gasoline, but this is somewhat offset by the improved combustion efficiency of the blend.

What is cellulosic ethanol?

While corn-based ethanol continues to attract criticism, ethanol produced from cellulosic material such as switchgrass or corn stalks is viewed as a more palatable alternative, in part because it doesn't rely on food crops to be produced.

To get to the cellulose requires special enzymes to remove the lignin that holds the cellulose together. This lignin, however, can be used to fuel the process of turning the remaining material to ethanol, meaning the process relies less on fossil fuels than other methods of creating ethanol.

One issue with cellulosic ethanol, however, is the cost of the enzymes needed to break the cellulose down. The National Research Council of Canada said that while waste biomass is cheaper than corn, the current enzyme cost for biomass conversion is about 16 cents per gallon (or 3.78 litres) of fuel ethanol. The ideal economic target, they say, would be in the three-cent-per-gallon range.

Not everyone, however, is convinced that cellulosic ethanol is the answer. University of British Columbia ecologist Bill Rees, a longtime critic of ethanol as a fuel alternative, said cellulosic ethanol is no better. He said taking away corn stalks and other material that would normally return to the land would deplete the soil, requiring further fertilization later. Improving the fuel efficiency of cars on the road is a more cost-effective way to improve the environment, he said.

Where does Canada stand right now on ethanol?

According to the International Institute for Sustainable Development, Canada produced an estimated 422 million litres of ethanol in 2006 and an additional 59 million litres of biodiesel. If all planned plants are built, Canada could have a capacity to produce three billion litres of ethanol and one billion litres per year of biodiesel by 2010, according to Organization for Economic Co-operation and Development, although the group expects actual production to be about half of that.

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

For now the federal government continues to debate Bill C-33 and has made amendments to include the creation of a parliamentary committee just one year after the bill becomes law to assess the environmental and economic impacts of the five per cent floor.