History 101
The concept of biofuels is surprisingly old. It started with Rudolf Diesel's idea (beginning of the 20th century) to run an engine with peanut oil but petroleum entered the picture and the idea lost importance.
Petroleum crisis and search for independence from foreign oil, was the first and still is one of the main arguments still used today to push for biofuel production. In 1974 Congress took the first of many legislatives steps to promote ethanol made from corn in the United States. Over the next years there was a series of tax breaks and subsidies but in spite of those measures, the United States became more dependent on imported petroleum and ethanol remained marginal/
In 1992, the EPA passed the Energy Policy Act. This was aimed at increasing the amount of alternative fuel used by the U.S. government transportation fleets. The 1998 EPACT amendment included using biodiesel fuel in existing government diesel vehicles as an acceptable alternative to purchasing alternative fuel vehicles.
Today, some of the main reasons for the people shifting their interest to biofuels were the rising prices of oil, emission of the greenhouse gases plus more generous government subsidies for corn-based ethanol. The US government continues to heavily subsidize corn farms and ethanol producers even when high oil prices over the past few years have made ethanol highly competitive.
The push for ethanol and other biofuels has opened an industry that depends on billions of taxpayers subsidies.
USA: In 2005, government mandated the use of 7.5 billion gallons of biofuel per year by 2012, in 2007 governors proposed raising that number to 12 billion gallons by 2010.
Even thought biofuels can be made out of other resources than corn, the USA has mainly done it with corn and soybeans, this is due for the most part to the lobbying efforts of corn and soybean growers and huge companies such as Archer Daniels Midland Company (ADM), the biggest ethanol producer in the market, whom owe must of their growth to political connections that can benefit them with further subsidies or protection. Today there is further push in Congress for limiting ethanol imports, mainly from Brazil, in an attempt to protect the American industry.
ADM along some of the world's largest agroindutrial firms like DuPont Co and Monsanto Co have created a lobby group called the Alliance for Abundant Food and Energy. The group seeks to influence the public and politicians to support further subsidies for biofuel production in the USA.
European Union: The European Comission is using legislative measures to promote biodiesel from rapeseeds and sunflower seeds produced in Europe. The EU Common Agricultural Policy promotes production of ethanol with direct and indirect subsidies.
Brazil: Began its quest for alternative energy in the mid 1970 and derives almost all of it from sugar cane. The government has offered incentives, set technical standards and invested in supporting technologies and market promotion. Government has required that the auto industry produce engines that can use biofuels and has developed a wide ranging industrial and land use strategies to promote them.
"In 2005, global ethanol production was 9066 billion gallons; Brazil produced 45.2 percent (sugar cane) and the USA 44.5 percent (corn). Global production of biodiesel (most of it in Europe), made from oil seeds, was almost one billion gallons"