Flipping Green Houses

Ethanol, a biofuel fermented from grains or sugars, can be combined in a 10% mixture (E10) with ordinary gasoline without any modification to the car's engine.
Here in Australia, ethanol is being produced from sorghum (a relative to maize, which can be harvested multiple times during the year and requires only 1/3rd the water of sugarcane) and a 2% mixture (E2) with gasoline is being mandated in New South Wales, where the largest plants are located.
The Howard gov't has recently guaranteed that biofuels will be untaxed until 2011, with a slow ramp-up afterward. However, the Howard gov't refuses to mandate E10 usage countrywide. Australia plans to produce 350 ML of biofuels by 2010 (10% of the fuel needed for a full gas-to-E10 conversion).
Ethanol use in a gasoline mix, or in a 'flex-fuel' engine designed to handle either gas or pure ethanol, reduces the amount of greenhouse gas emissions only slightly, while it increases the amount of smog-producing nitrous oxides. It must compete not only with the price of oil but the exchange rate with the US (remember, OPEC only accepts dollars). In order for ethanol to be cheaper than gas oil must be at $65/barrel and the aussie dollar at <$0.65 (US). Today it's $73 and $0.85. Also, there is some controversy that more energy is used to produce a liter of ethanol with grain-stock than is contained in the ethanol (the estimate is now around 120% but this has a lot of fudge factors, see below)
FeedstockEnergy output/fossil energy inputSugarcane8.3Sugar Beet (European Union)1.9Maize (United States)1.3-1.8Wheat (Canada)1.20Switch grass4.4Fossil fuel (Gasoline)0.8Sweet sorghum (Hosein Shapouri, USDA)8.0 (12-16 in temperate areas)
Local ethanol production does inject money into the Australian economy. A speculative boom in the price of raw sugar in mid-2006 was brought about by the addition of an ethanol market, and prices for land in wheat- and corn- producing states has grown on the back of green speculation.

Australia’s first ethanol plant begins site preparation
Bulldozers started preparing road access and a railroad crossing in December at Australia’s long-awaited ethanol plant near Dalby, Queensland. Dirt work was expected to start in late January with mechanical construction starting shortly thereafter, according to Chris Harrison, director of Dalby Bio-Refinery Ltd. Harrison, who has more than 25 years experience as an independent fuel and lubricant distributor, has championed the Dalby project since 2002. Initially scheduled for construction in 2003, two issues delayed the project. “Excise has been resolved, with a zero excise until 2011 and then a phase-in of 2.5 cents per liter (cpl) until 2015 when the final excise applicable to ethanol of 12.5 cpl will apply,” Harrison said. The project also had to fight for support from Australia’s major oil companies and consumers. Dalby Bio-Refinery won the fight with “time and perseverance,” according to Harrison. “The major oil companies in Australia are now demonstrating a commitment to achieving the federal government biofuel target by 2010, and consumer confidence is improving daily,” he said. The US$75 million ethanol plant will employ 30 people and produce 80 mmly of ethanol (21 MMgy) from sorghum. It will also produce around 170,000 tons of distillers dried grains with solubles. Delta-T provided the plant design, and Leighton Construction is handling the construction.