Homegrown energy: as America copes with climate change, many see hope in biofuels.

• Author: Andersen, Glen
• Position: Cover story

Henry Ford designed his first automobiles, beginning with the Model T, to run on ethanol made from hemp and corn. At the beginning of the last century, biofuels were a major competitor with oil--the first diesel engines relied on vegetable oil until the 1920s. An ardent proponent of biofuels nearly 100 years ago, Ford knew that the world needed a substitute for gasoline. "The day is not far distant when, for every one of those barrels of gasoline, a barrel of alcohol must be substituted," he said.

Ford, like many modern biofuels advocates, believed in a future where renewable energy would boost rural economies and cut America's reliance on imported energy.

His vision faded when ethanol lost favor to cheap oil, but recent developments--including escalating oil prices, climate change and energy security concerns--have pushed biofuels to the fore once again. Biomass will be "the new petroleum," says James McMillan, manager of Biorefining Process R&D at the National Renewable Energy Laboratory. "Agriculture will provide feed, fiber and fuel."

BREAKING THE OIL ADDICTION

Americans have a voracious appetite for gasoline. At only 5 percent of the earth's population, we consume nearly a quarter of the world's oil. The problem with this addiction has become all too obvious in the last few decades--60 percent of the oil consumed in the United States is imported, making the U.S. economy vulnerable to volatile energy markets and political instability in other countries. The United States spent more than $251 billion on imported oil in 2005. But the external costs--which include capital leaving the country, loss of domestic investment, military investments to ensure safe passage of oil from unstable regions and the cost of periodic oil supply disruptions--added $780 billion to that number, according to National Defense Council Foundation. The foundation says these "hidden costs" add $4.10 to each gallon of gasoline made from imported oil.

Robert McFarlane, former national security adviser to President Reagan, says the economic threat of terrorism on the world's oil supplies is real. A recent terrorist attempt to blow up the world's largest oil processing facility in Saudi Arabia, where two-thirds of American oil is processed, demonstrates our precarious situation. The attackers came within 100 yards of the plant. Had they succeeded, they would have taken 6 million barrels of oil a day off the market for a year, tripling oil prices to more than $150 per barrel and sending the United States and the rest of the world into deep recession.

"It's only a matter of time before one of these attacks is successful," says McFarlane. At the Colorado Energy Summit in March, he stressed the importance of reducing U.S. oil independence through biofuels, plug-in hybrid vehicles, and increased fuel economy.

Kansas Representative Carl Holmes says energy security is "definitely a factor" in searching for alternatives to oil. "Whether you look at the threat from terrorism or hurricanes hitting the Gulf Coast, it just makes sense to look at all fuel sources."

Representative Jackie Dingfelder, who carried the renewable fuels standard that recently passed the Oregon House, concurs. "Energy independence and promoting the growth of industry in Oregon has played a large role in our support of biofuels," she says. "We would rather be keeping money in the state than sending it to fund petroleum exploration and development in foreign countries."

BIOFUELS TO THE RESCUE?

Many see biofuels as the most readily available and technologically feasible oil substitute, one that could reduce the reliance on imported...