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I think we are going in the direction of ethenol engines.
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Ethanol is a net energy loser, so it won't help us. It requires massive fossil fuel inputs, such as fertilizers, pesticides, and fuel to run a tractor, not to mention that it is energy-intensive to process corn into ethanol...Another thing to consider is that we likely wouldn't have enough arable land for a massive transition to ethanol to fuel automobiles.
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Actually, I agree that ethanol and other organic fuels are the wave of the future, at least until something better like super-safe and easy nuclear power comes along. Here's my reasoning.
1.) Organic fuels require very little modifications to existing powerplants (engines), and in some cases require non at all, such is the case with biodiesel. Biodiesel (the diesel equivalent of ethanol) is made from oil seed plants such as corn, canola, etc. and requires no modifications whatsoever in the majority of diesel engines to use. Jet fuel is highly similar to diesel fuel (minus a few lubricants required for the pistons in a diesel engine mainly), therefore an organic fuel to replace Jet A is not entirely out of the question.
2.) Yes, it does take energy to produce these biofuels, but one of the largest current users of biodiesel is in fact agriculture. About 80% of modern farm equipment uses diesel fuel making biodiesel ideal for these machines, especially since they need no mods. Hence this reduces greatly the need for oil to produce the biofuels. As for the energy put into manufacturing equipment, fertilizers, and the milling of crops, I think this needs to come from advancements in nuclear power and renewable energy such as wind energy.
3.) Yes, arable land is a limiting factor, but there are many things that need to be considered. To begin with there is far more arable land out there than one might realize that is not in use mainly because of costs. Current crops with low relative grain prices are not profitable therefore the land goes unused. There is a government program called CRP (Conservation Reserve Program) which actually pays farmers to plant their cropland to native grasses to provide habitat for wildlife, reduce erosion, etc. etc. Thousands of farmers enroll their land in this program as their retire or just simply because they can't otherwise break profit off of their land. This along with all the farmland in developing countries would provide a substantial base for oilseed crops required for biofuels, which in turn would also boost agriculture.
Finally, I do believe this is only a temporary fix and that the future lies with renewable resources and nuclear energy. Maybe someday nuclear energy will be advanced enough to power our cars and aircraft. Just think about it, nuclear powered airliners! Wouldn't that be cool!