But that argument rests on a blind spot. If the United States decided to thwart its farm lobby and import Brazilian sugar cane-based ethanol to meet President Bush's ambitious biofuel plan (substituting 15 percent of the country's gasoline by 2017), Brazil would need to sow cane on 20 million additional hectacres.

Ethanol, the centerpiece of President George W. Bush's
plan to wean the U.S. from oil, is 2007's worst energy investment.
The corn-based fuel tumbled 57 percent from last year's
record of $4.33 a gallon and drove crop prices to a 10-year
high. Production in the U.S. tripled after Morgan Stanley, hedge
fund firm D.E. Shaw & Co. and venture capitalist Vinod Khosla
helped finance a building boom.
Even worse for investors and the Bush administration,
energy experts contend ethanol isn't reducing oil demand.
Scientists at Cornell University say making the fuel uses more
energy than it creates, while the National Research Council
warns ethanol production threatens scarce water supplies.
As oil nears $100 a barrel, ethanol markets are so
depressed that distilleries are shutting from Iowa to Germany.
An investor who put $10 million into ethanol on Dec. 31 now has
$7.5 million, a loss of 25 percent. Florida and Georgia have
banned sales during the summer, when the fuel may evaporate and
create smog.
``I don't anticipate any sort of immediate rebound,'' says
Barry Frazier, the 50-year-old president of Center Ethanol LLC
in suburban St. Louis. ``It's going to take 12 to 24 months
before the market is able to absorb the large amount of new
capacity.''
The biggest producer, Archer Daniels Midland Co., may
resort to exporting ethanol. Pacific Ethanol Inc., backed by
Microsoft Corp. co-founder Bill Gates, dropped 63 percent in New
York trading this year as profits collapsed. Record oil prices,
which make blending of ethanol with gasoline more profitable for
refiners, haven't stemmed the declines.

Bad Recipe

``Ethanol companies are near break-even at best,'' says Ron
Oster, a principal at Broadpoint Capital Inc. in Albany, New
York. ``That's not a good recipe when you have $100 oil.''
Corn has risen to $3.795 a bushel on the Chicago Board of
Trade from less than $2.50 in September 2006. Ethanol on the
exchange is little changed at $1.865 a gallon, after falling
from a peak of $4.33 in June 2006.
The Bush energy plan triggered production by mandating
increased use of so-called biofuels, such as corn-based ethanol.
The administration proposed raising output in the next 10 years
to five times the current target amount for 2012.
The U.S. Senate approved the increase and lengthened the
time frame to 2022. The federal government has 20 separate laws
and incentives to boost ethanol use, and 49 states offer
additional subsidies and supports, according to the Energy
Department in Washington.

Benefits Challenged

Scientists question the wisdom of using ethanol. Stanford
University researchers say ethanol, originally added to gasoline
in the 1970s to reduce tailpipe emissions, does nothing to
improve the environment.
``It takes more energy to produce ethanol than it actually
gives off,'' says David Pimentel, a Cornell University professor
who has studied production of the fuel for two decades.....

Grinding stuff, burning stuff and cooking stuff in order to make something else is a lot harder than you think.

This was the big lesson to be learned in the 1980s, when so many municipal bond-financed waste-to-energy power plants went bust, and it was also the lesson to be learned from the 1990s, when a bunch of municipal bond-financed waste-paper ``de- inking'' mills went broke.

It is, perhaps, one of the eternal verities of the municipal bond market.

There is a corollary, too: whatever you're grinding, burning, or cooking, make sure to toss in wads of cash, and have plenty in reserve to feed the boilers.

The latest cautionary tale to prove these rules comes from Mead, Nebraska, site of the first ``closed loop'' ethanol plant.

In December 2006, Saunders County, Nebraska, sold $45.7 million in tax-exempt industrial development revenue bonds and $4.7 million in taxable revenue bonds to help finance a new plant that would produce 20 million gallons of ethanol a year. The plant opened in June, and in November of 2007 entered Chapter 11 bankruptcy.

From cradle to grave in one year? Quite an accomplishment!.....

The federal government has invested billions of dollars over the past 16 years, building a fleet of 112,000 alternative-fuel vehicles to serve as a model for a national movement away from fossil fuels.

But the costly effort to put more workers into vehicles powered by ethanol and other fuel alternatives has been fraught with problems, many of them caused by buying vehicles before fuel stations were in place to support them, a Washington Post analysis of federal records shows.

"I call it the 'Field of Dreams' plan. If you buy them, they will come," said Wayne Corey, vehicle operations manager with the U.S. Postal Service. "It hasn't happened."

Under a mandate from Congress, federal agencies have gradually increased their fleets of alternative-fuel vehicles, a majority of them "flex-fuel," capable of running on either gasoline or ethanol-based E85 fuel. But many of the vehicles were sent to locations hundreds of miles from any alternative fueling sites, the analysis shows.

As a result, more than 92 percent of the fuel used in the government's alternative-fuel fleet continues to be standard gasoline. A 2005 law -- meant to align the vehicles with alternative-fuel stations -- now requires agencies to seek waivers when a vehicle is more than five miles or 15 minutes from an ethanol pump.

The latest generations of alternative vehicles have compounded the problem. Often, the vehicles come only with larger engines than the ones they replaced in the fleet. Consequently, the federal program -- known as EPAct -- has sometimes increased gasoline consumption and emission rates, the opposite of what was intended.

The EPAct program offers a cautionary tale as President-elect Barack Obama promises to kill dependence on foreign oil and revive the economy by retooling for the green revolution, experts say.....

These days, it's routine for businesses to fail, get rescued by the government, and then continue to fail. But ethanol, which survives only because of its iron lung of subsidies and mandates, is a special case. Naturally, the industry is demanding even more government life support.

Corn ethanol producers -- led by Wesley Clark, the retired general turned chairman of a new biofuels lobbying outfit called Growth Energy -- want the Obama Administration to make their guaranteed market even larger. Recall that the 2007 energy bill requires refiners to mix 36 billion gallons into the gasoline supply by 2022. The quotas, which ratchet up each year, are arbitrary, but evidently no one in Congress wondered what might happen if the economy didn't cooperate.

Now the recession is hammering demand for gas. The Energy Information Administration notes that U.S. consumption fell nearly 7% in 2008 and expects another 2.2% drop this year. That comes as great news for President Obama, who is achieving his carbon-reduction goals even without a new carbon tax, but the irony is that the ethanol industry is part of the wider collateral damage.....

In September, ethanol giant VeraSun Energy opened a refinery on the outskirts of this eastern Iowa community. Among the largest biofuels facilities in the country, the Dyersville plant could process 39 million bushels of corn and produce 110 million gallons of ethanol annually. VeraSun boasted the plant could run 24 hours a day, seven days a week to meet the demand for home-grown energy.

But the only thing happening 24-7 at the Dyersville plant these days is nothing at all. Its doors are shut and corn deliveries are turned away. Touring the facility recently, I saw dozens of rail cars sitting idle. They've been there through the long, bleak winter. Two months after Dyersville opened, VeraSun filed for bankruptcy, closing many of its 14 plants and laying off hundreds of employees. VeraSun lost $476 million in the third quarter last year.

A town of 4,000, Dyersville is best known as the location of the 1989 film "Field of Dreams." In the film, a voice urges Kevin Costner to create a baseball diamond in a cornfield and the ghosts of baseball past emerge from the ether to play ball. Audiences suspended disbelief as they were charmed by a story that blurred the lines between fantasy and reality.....