Greentech Media

In efforts to kick its addiction to foreign oil, the United States has turned to another potent liquid - ethanol. The county is the largest producer of the alcohol-based fuel, churning out 4.86 billion gallons in 2006. Increased ethanol use for transportation has helped boost production by about 1 billion gallons more than in 2005, according to the U.S. Department of Agriculture. But such figures will soon look puny. Plants now under construction are expected to more than double the country's ethanol capacity. The federal agency pegs ethanol production to exceed 10 billion gallons by 2009. And, with the U.S. government openly supporting ethanol growth via presidential speeches and subsidies, companies and investors are placing their bets on the biofuel.

But ethanol growth is limited. If the United States uses only its current feedstock corn, the country will cap out at 12 billion gallons, according to the Department of Energy. To take ethanol production to the next level, entrepreneurs are turning to cellulosic ethanol, a next-generation technology that makes the fuel from nonfood biomass like switchgrass, wood chips and corn cobs. But the technology comes with its own set of challenges. Folks developing cellulosic ethanol still haven't been able to produce it on a mass scale, or at an affordable price. Even if such problems are solved, another major constraint holds back ethanol adoption. While more than 5 million U.S. cars are capable of using E85, a mix of 85 percent ethanol and 15 percent gasoline, fueling stations are hard to come by. In fact, some drivers can cross whole states without finding a single station (see chart "On Empty").

Ethanol Around the World

The United States overtook Brazil as the top ethanol producer in 2005; China is the third-largest.

Source: F.O. Licht, Renewable Fuels Association

Construction Zone Ahead

Ethanol plants currently being built will more than double the amount of the fuel that the United States can produce.

Source: Renewable Fuels Association

Top Deals

In 2006, venture capitalists worked with other financiers to put through a spate of $100-million-plus ethanol deals. But the trend seems to have faded in the first half of 2007, with Brenco's $200-million funding being the only exception.

*Data for 2007 only includes the first two quarters.
Source: The Venture Power Report, Greentech Media

Hope vs. Reality

The difference between alleged capacity and actual production of ethanol is growing in the U.S. Production fell 12.1 percent short of capacity in 2006, compared with only 6.85 percent in 2004.

*2006 production number is estimated
**Capacity calculated in January of the following the year.
Source: U.S. Energy Information Administration, Renewable Fuels Association

Producers Pie

ADM is the largest U.S. ethanol producer, but the bulk of the country's capacity actually comes from small producers.

Note: These numbers are from January and include plants under construction.
Source: New Energy Finance

Getting More For Less

Cellulosic ethanol delivers more energy, divided by the amount of fossil energy used to produce it, than ethanol from corn.

Source: U.S. Department of Energy

Price Sensitive

The success of cellulosic ethanol could vary widely depending on the price of oil.

Note: These projections assume that cellulosic-ethanol companies will achieve costs that are 20 percent lower than gasoline and that 80 percent of new passenger cars can run on 85-percent blend of ethanol.
Source: Annual Energy Outlook 2007, U.S. Department of Energy

On Empty

Ten states have no E85 stations at all; another 23 have fewer than 10 places for drivers to fill up on ethanol. Click on the chart to see all states.

Note: Numbers as of Aug. 9, 2007
*These states have fewer than 29 stations
Source: U.S. Department of Energy

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