Having had a go at making biodiesel and looked at the economics of America's cack handed bioethanol production, I think that current approaches to biofuels are flawed:

Brazil has a successful bioethanol industry because they grow sugar cane in a subtropical environment, it doesn't require a lot of fertilizer, and it produces a high ethanol yield because you don't have to fiddle with it to get enough sugar out to make any ethanol at all. Corn and wheat as feedstocks, by contrast are pretty poor for giving a decent amount of sugar, requiring a malting process which uses lots of water and heat, or chemical treatment with substances derived from petrochemicals. To distill ethanol to sufficient purity to be a fuel requires vast amounts of heat. In sum, I think that the total energy return from the manufacture of bioethanol is close to zero.

Biodiesel is slightly better, in that getting vegetable oil out of feedstock can be done by cold pressing or with minimal heat. However the biodiesel process requires heat to be applied for some considerable time, and the use of caustic substances such as sodium hydroxide (caustic soda in the UK, lye in the US) to catalyze the process, and an alcohol such as methanol (produced from petrochemicals) or ethanol (see ethanol issues above) , to make it.

Converting a diesel vehicle to run on pure vegetable oil in the UK using a kit currently costs around £3000, but to build diesel engines from scratch to run on vegetable oil would probably add negligible cost to the price of a diesel engine, which was after all originally developed to run on vegetable oil. Vegetable oil, out of the above three options (bio ethanol, bio diesel, veg oil) requires the least energy and the least chemicals to produce. However, veg oil is also a foodstuff, which means that government would find it hard to centralize and hard to tax, and there are no tax breaks for veg oil as a fuel, so nobody is going to bother to build a plant to produce it.

If either UK party really believed in greening the fuel supply, they'd probably be pushing straight veg oil.

There is also research currently on oil producing algae, which would solve the problem of finding enough land to grow enough oil crops to provide fuel as well as food on a large scale, because it could be grown on the sea.

So this project is based on the hypothesis that we will continue to experience grain surpluses. There's the economics of the madhouse for you.

Global grain yields aren't growing nearly as fast as they used to; we managed to triple harvests between 1950 and 1990, but since then the rate of growth has been going up much less quickly.

When you throw in recent poor harvests in the US and Australia there is a real pressure on the global grain market which is reflected in the decline in stored food around the World; it was 116 days of stores as recently as 1999, now its around 60. Because Africa (for once) had reasonable harvests in the last couple of years the decline in global food security has not been such an issue - no one is starving - yet. A few bad years and the World could be in real trouble.

The US is already reporting increased prices for feed grain which instead of going into the meat industry is being turned into ethanol. Meat production in America is expected to decline this year for that reason alone. Mexico has seen protests because the staple corn tortilla is soaring in price thanks to deluded US gasohol backers.

So what are we doing? Turning perfectly good food into petrol substitutes so that we can go on just the way we are right now.

I must recommend two recent studies. The first is a Rutgers University Study (Eaves and Eaves 2007: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=969496&high=%20eaves#PaperDownload) that shows that ethanol can replace little automobile fuel when produced sustainably and it is inherently more unreliable compared to gasoline. The other is Hill (2006). Both studies illustrate that ethanol policy is simply a subsidy and certainly not an energy policy.