ABSTRACT Bio-fuels are non-fossil fuels, produced from agriculture sources, residues, and waste. Bio-ethanol refers to ethanol produced from crops (e.g., corn-ethanol and sugar-ethanol) and from waste (i.e., biomass-ethanol). “The motivation for developing bio-ethanol as a transportation fuel is based on concerns about energy security, environmental quality, economic competitiveness, and stabilization of the agricultural sector.” (National Research Council [NRC], 1999, p. 6) Brazil’s three-decade experience in sugarcane-ethanol is considered a success by its government, although criticized by some researchers (Pimentel, 2001; Pimentel et al., 2002). Corn-ethanol production in North America is highly controversial; its cost, its energy balance, and its socio-economical effects are strongly debated between researchers. Biomass-ethanol, produced from farm and municipality waste is still in its early technological and industrial development. This quantitative research presents and analyzes the arguments, and concludes with recommendations for the short- and the long-term; recommendations that are best suited? for North America and that take into account all the aspects presented in this research paper. Corn-ethanol is not expected, and will never replace the fossil-gasoline consumption in North America, but could only be an alternative for up-to-fifteen percents at most: “increased production of ethanol from corn is a low-risk, viable short term solution” (Herwick & Wheeler, 2005, p. 28). Biomass-ethanol, in contrast to corn-ethanol, could be “an effective strategy for displacing petroleum…. Ultimately, producing ethanol from biomass will be more cost effective and necessary to achieve significant volume…. In total, 66B [billion] to 107B gallon of ethanol could be produced annually from [all sources of] biomass: it would be sufficient to support E60 to E70 [i.e., 60 to 70 percent of liquid fuel consumption], [and] displace approximately half of the petroleum used” (Herwick & Wheeler, 2005, pp. 27-28). Nevertheless, the technology for economical production of biomass-ethanol is still in early development, and President George W. Bush’s pledge, in his January 29th, 2006, State of the Union Address “to fund the research on cutting-edge methods of producing [biomass] ethanol” (Energy Policy Act, 2005; U.S. Energy Bill, 2005) is key to achieving the goal of producing 7.5 billion gallons of bio-ethanol in 2015. Addressing the problem of energy crisis in general, the 2005 symposium concludes that “the reality is that we can no longer just drill our way to global energy security. We must innovate our way to energy security— we must find new technologies that uncover new fossil energy sources, that conserve energy, that protect the environment, and that provide multiple, sustainable sources of energy.” (National Academy of Engineering [NAE], 2006, p. 163) TABLE OF CONTENT ABSTRACT 1 BACKGROUND 2 Background 2 Bio-fuels 3 Anhydrous and Hydrous Ethanol 4 The Research Paper 5 CORN-ETHANOL 6 Economical Cost/ Benefit Analysis 6 Production cost. 6 Energy balance. 7 Consumer’s preferences. 11 Governments’ role. 13 Environmental Aspects 17 Greenhouse gas emissions. 17 Waterways contamination. 18 Soil contamination. 18 Groundwater contamination. 18 Negative impacts. 20 National Aspects 20 Social Aspects 21 Moral Aspects 23 BIOMASS-ETHANOL 25 Sources of Biomass for Ethanol 26 Agricultural Residues 26 Energy Crops 27 Municipal Solid Waste (MSW) 27 Forestry and Mill Wastes 28 CONCLUSIONS 28 REFERENCES 31 CONCLUSIONS Current corn-ethanol production methods use a significant amount of energy; by using alternative sources as energy inputs (other than petroleum) in the ethanol conversion, the net energy balance of corn-ethanol would be positive. When we include externalities, the ethanol energy balance would even outperform that of petroleum-based liquid fuel. Assessing all the factors, the corn-ethanol has overall positive economical cost/benefit value. The social aspects of corn-ethanol, as discussed in this paper, emphasize the possible risks, and their negative impacts on rural North America – some of which are irreversible – and local farmers should be educated about them, before they have jumped on the wagon and it is too late. The moral aspects of agriculture-for-fuel are a real concern, but as long as other products (e.g., tobacco) are grown freely in third-world countries, the argument cannot touch ordinary North Americans. The U.S. and Canadian federal governments, as well as state and provincial governments, should keep the current (relatively low) level of subsidies (i.e., 52 cents for a gallon of pure ethanol, in the US), along with fuel-tax removal – this is more or less the cost of oil’s externalities. Providing low-interest long-term loans to farmers, for the construction of ethanol plants, will not cost much to the tax payers, but will enable those farmers who have excess yield of corn to receive more value for it. However, corn growth in North America is limited, by means of land. From the total of about ten billion bushels of corn grown in the US, only 25 billion gallons of ethanol could be produced, out of 140 billion gasoline consumed annually; therefore, corn-ethanol will never replace the petroleum liquid fuel in the US (Herwick & Wheeler, 2005, p. 7); corn-ethanol can, at highest production, provide solutions to E10 (or to E15) blends in the US. The Canadian supply of corn (and corn-ethanol) will have a very limited impact on the North American market, and will not significantly change the conclusion above. Biomass is a great source of renewable liquid fuel, and has the potential of replacing up to half of the petroleum fuel consumed in North America. The major obstacle for reaching that goal is technology related; we need to develop an efficient conversion process, one that is cost effective and consumes less energy, and at the same time produces food- and feed-byproducts. For achieving this goal, the U.S. federal government must invest heavily in research and development. For the long term, the solution to transportation fuel crisis should focus on fuel efficiency and reduction of fuel consumption, along with diversification of fuel sources, as concludes a symposium by National Academy of Engineering: “the reality is that we can no longer just drill our way to global energy security. We must innovate our way to energy security— we must find new technologies that uncover new fossil energy sources, that conserve energy, that protect the environment, and that provide multiple, sustainable sources of energy.” (NAE, 2006, p. 163) FOOTNOTES Ezra Bar, MBA, PhD Student, is a Business Process Reengineering Consultant, for Small, Mid-size, and Large organisations, and an Online Academic Mentor to Management and Engineering Students, operating globally from Toronto. Find many other Academic and Business Articles and Papers at http://Ez-B-Process.Com/Resources.htm Visit http://Ez-B-Process.Com/PhD.htm for Academic Mentoring. Visit http://Ez-B-Process.Com/SME.htm for Reengineering and Small Business Consulting.