Ethanol, otherwise known as CH3CH2OH, is also the stuff that makes you drunk. The colorless clear liquid is flammable, and therefore you can put it in your car. They say Henry Ford's Model T ran on 100% ethanol.
In theory, ethanol cuts down on greenhouse gas emissions and VOCs (volatile organic compounds) when you put it in your car's gas tank, although Businessweek tells us that "the EPA's own attorney admitted to the judges that because of its higher volatility, putting ethanol into the nation's fuel supply would likely increase smog where it was used." Greeeeeat. In the Midwest (CORN country!) and certain cities in wintertime (mandated by the 1990 Clean Air Act), "gasohol" is sold at the pump - a blend of fuel including 10% ethanol.
So ethanol is produced when yeast eats sugar, and sugar can either come from sugar (easy) or corn (a little harder). Half of Brazil's cars run on 100% ethanol because sugarcane is a readily accessible crop. If you're not lucky enough to grow a lot of sugar nearby, there are enzymes that will digest cellulose, and scientists have found a way to produce them more cheaply. Why is this important? Cellulose is in CORN. And CORN COBS. And CORN is from the U.S. In 2006, 36% of the world's ethanol came from the U.S and 33% came from Brazil (with runners up China, India, France and Russia). As of July 2007, there were 110 U.S. ethanol plants and 73 more were under construction. Corn grown for biofuel production is highly subsidized, and pro-ethanol legislation sells easily to the right (pro-farmer! reduces dependence on foreign oil!) and to the left (pro-environment!).
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