What's the real deal with ethanol and how will it affect consumers and businesses? Is ethanol something that clean-tech advocates should embrace or shun? Ethanol, an alcohol formed from fermenting starches such as corn and sugar, is blended with gasoline in low blends (less than 10%, known as E10) as an additive to meet federal oxygenate standards -- and in high blends (up to 85%, or E85) as a fuel replacement that can be sold at a substantial discount from conventional gasoline. Ethanol tends to result in lower tailpipe emissions, though its environmental impacts depend on the specific blend and the vehicle. In low blends and in older vehicles, there tends to be evaporative emissions and permeation, where ethanol reacts with gasoline in the tank of the car, raising vapor pressure in the tank and enabling smog-forming volatile organic compounds to permeate through hoses and fittings that have not been optimized for it. This reaction does not occur in newer vehicles or higher blends, resulting in greater emissions reductions. Ethanol's real benefit to the environment results from the petroleum it displaces and its potential to significantly reduce global warming gases. Argonne National Laboratory estimates that a 2% reduction in greenhouse gas emissions per vehicle mile traveled is achieved when corn-based E10 is used in gasohol, and that a 24% to 26% reduction is achieved when it is used in E85. Cellulosic ethanol can produce an 8% to 10% reduction in greenhouse gas emissions when used in E10 and a 68% to 91% reduction when used in E85. But not everyone agrees that ethanol is an environmental asset. A recently published study by David Pimental and Tad Patzek of Cornell University suggests that making biofuels, ethanol among them, consumes more energy than it produces. But other studies counter this. Of 15 studies over the last 10 years, only theirs' finds that ethanol has a negative net energy balance and more net greenhouse gases. The Department of Energy, U.S. Department of Agriculture and the European Union all find that ethanol is net-energy positive and that greenhouse gas emissions go down. The big difference lies in two areas: First, Pimental and Patzek count the energy required to manufacture the farm equipment used to grow and harvest corn and manufacture ethanol. Since no accurate data exist, the numbers used are at best a guesstimate. Second, economical ethanol production requires a multi-product model. No one makes just ethanol. Instead, producers like Phoenix Bioresources take railcars of corn and use it to create ethanol and distillers grain. The ethanol goes into fuel, and the grain goes into cattle feed. The USDA study gave a conservative number to the amount of energy required to make co-products (dairy cows need to eat anyway) of 19%, Pimental and Patzek use 9%, an unrealistic number. The real interest in ethanol lies in its future. Comparing ethanol and other biofuels with petroleum-based fuels is like comparing a toddler to a mature adult -- and then complaining about the earning power of the toddler. For a toddler, ethanol looks pretty good. In the short term, we can expect to see innovations in ethanol manufacturing, farming, and biotechnology that will drastically reduce cost, energy consumption, and greenhouse gas emissions. Moreover, in the next 10 years, ethanol feedstock will move from harvested corns and sugars to the vast amounts of cellulosic waste that currently are landfilled or burned. Cellulosic material -- such as rice straw and hulls, wheat straw, forestry waste, and corn stover -- are all currently problematic for farmers and foresters. However, these materials can be transformed using enzymatic processes into sugars and ligin. The sugars can be processed into ethanol, biodiesel, or other specialty chemicals, and the ligin can be used as a clean fuel source, potentially allowing the ethanol facility to use zero net energy in its operations. Using cellulosic waste will be critical if ethanol markets are to mature. The recently passed energy bill creates a nationally mandated threshold to 7.5 billion gallons, which would result in 5% of gasoline displaced by ethanol. If, as some estimate, our capacity to produce corn-based ethanol will max out at around 10 billion gallons, we simply will not have enough corn. Corn stover -- the stalk and leaves from corn -- along would add 7 to 12 billion gallons of ethanol capacity. If we are to realize substantial, material benefit from incorporating ethanol into our fuel mix -- if we are to move from a one-fuel economy to a portfolio of fuels -- we must follow the precedents being set by Minnesota, Illinois, and potentially Oregon (which is in the process of writing a renewable fuels standard). Though we have a flexible fuel fleet of more than 4 million vehicles in the United States, we lack the infrastructure to provide fuel to those vehicles. An E85 infrastructure is essential next step for market development. We should make substantial investments in our transportation future now. Anna Halpern-Lande is founder and principal consultant of Cyrnel LLC, a consulting firm specializing in go-to- market and market development strategies and execution for renewable energy and clean technology companies. She is also the founder and Program Leader of the MIT Club of Northern California Clean Technology and Renewable Energy Program.