Because many estimates concerning the efficiency of ethanol-based fuels put forth in the 1970s and 1980s were based on an assumption that ethanol would be primarily derived from corn, ethanol developed a reputation that has been hard to shake for being inadequate as a gasoline replacement. However, with technological improvements in agricultural and refining techniques, the development of ethanol sources beyond corn and, of course, rising conventional oil prices, ethanol’s reputation as an alternative energy cul-de-sac is no longer warranted. Brazil, for instance, has weaned itself off of foreign oil using ethanol produced from domestic sugar cane.
Here in America, Professor Albert Kausch of the University of Rhode Island’s Cell and Molecular Biology Department is leading research into how to efficiently produce ethanol and transportation fuel from a crop known as switchgrass …

“Switchgrass is a native plant of the tall grass prairies. It grows 12 feet tall in one season and produces 10 tons of plant material an acre, more biomass per year than most other plants,” said Albert Kausch, a University of Rhode Island plant geneticist on the cutting edge of switchgrass research. “I’m confident my lab can make it produce 20 tons an acre using the tools and personnel we have right now”….Kausch is a world leader in developing transgenic grasses, having spent 20 years genetically modifying turf grasses, rice and corn.
“There are several impediments to the process of converting switchgrass to ethanol that would make unaltered switchgrass commercially unprofitable,” Kausch said. “We are working with professors at Brown University, for instance, to create better enzymes that will degrade cellulose into sugars for a more efficient conversion to ethanol.”
Kausch is now genetically engineering switchgrass that is both sterile and resistant to herbicides, and he has a long list of other traits he hopes to improve as well, including drought tolerance, salt tolerance and cold tolerance. He expects to have test plots of the genetically modified plants on the URI campus within two years, and he hopes the first varieties will be in commercial production by 2011.

Here is the proverbial bottom line…

Kausch has launched Project Golden Switchgrass at the University of Rhode Island, which he hopes will develop “the variety of enhanced switchgrass that everyone needs.” He said that native switchgrass grown commercially today could produce ethanol for approximately $2.70 per gallon, but by genetically improving a number of plant traits he believes the production price could get as low as $1 per gallon.

I’m not sure that it is from the same analysis that Professor Kausch cites, but an article from the Winter 2001 edition of Issues in Science and Technology (a journal published by the National Academy of Science, the National Academy of Engineering, and the Institute of Medicine) broke down a $2.70 price for ethanol in detail and compared it to the cost of gasoline, adjusting for the fact that ethanol is not quite as efficient as gas. The $1.50 per-gallon price for gasoline used in the analysis seems almost quaint by today’s standards…

The refinery gate price of gasoline is about $0.80 per gallon; transportation, storage, and retailing add about $0.40 per gallon; and taxes raise the price at the pump to roughly $1.50 per gallon. Producing cellulosic ethanol costs about $1.20 per gallon (1.80 per gallon, gasoline equivalent, since ethanol has two-thirds of the energy of a gallon of gasoline). Assuming that the per-gallon distribution costs are the same for ethanol and holding total tax revenue constant, ethanol would sell for $1.80 per gallon at the pump. However, this is equivalent to $2.70 per gallon in order to get as much energy as in a gallon of gasoline.

Conspiracy theorists should now convene with free-marketers to ponder this question: If $2.70 per gallon is the price where conventionally produced gasoline loses its economic advantage over ethanol, is it mere coincidence that gas prices have settled down into a range just below that?