IN 1908 when Henry T Ford launched the Model T Ford, the grandfather of the modern motor industry believed ethanol — not petrol — would power the first generation of mass-produced vehicles.

Ethanol, an alcohol distilled from plants, had powered his first car, the Quadricycle. Ethanol, said Ford, was “the fuel of the future”. It would take a century for his vision to come true.

Ethanol has been the almost-ran of the motor industry pretty much since its foundation — beaten into second place by a more efficient and better- organised oil industry. Now, as petrol prices hit record highs in America, ethanol is back in the driving seat.

Next month Ford’s great-grandson, Bill Ford, and the leaders of the other American car giants — General Motors and Chrysler — will meet President George Bush to discuss how they can get more of America’s cars running on ethanol.

Petrol has hit $3 a gallon in America, painfully high for a country that consumes about 20.5m barrels of oil a day.

Back in February the president said America had to end its “addiction” to foreign oil. The price rise has contributed to his falling popularity.

The car companies, too, could do with a boost. Toyota is poised to become the world’s largest car company and two of Detroit’s big three have teetered on the edge of going bust in recent years.

Executives at the firms are not talking about the meeting. But last week Ford said he wanted to lobby the government to finance a national delivery system for ethanol.

Ethanol is also getting a serious boost in Europe. Aiming to reduce Europe’s reliance on fossil fuels, the EU wants biofuels to make up 5.75% of all fuel used in transport by 2010.

Bruce Tofield is a biofuels expert at the University of East Anglia and a member of CRed, an organisation looking to reduce carbon emissions.

He said the last time America looked seriously at ethanol was after the oil-price hikes of the 1970s when the global energy crisis made ethanol cheaper than petrol. Ethanol plants were subsidised by the American government and gasohol — a blend of petrol and ethanol — was widely available. But in the 1980s oil prices fell again as new sources were discovered in Alaska and in the North Sea.

“It’s different this time,” said Tofield. “The price is not going to fall as sharply as it did back then because we don’t appear to have any new sources of oil, and at the same time China and India are becoming huge consumers.”

China recently overtook Japan to become the world’s second-biggest consumer of oil and it has been predicted that the country will probably have more cars than America by 2030.

The three American car giants are already producing flexible-fuel vehicles — cars that can run on petrol or a mixture of petrol and ethanol. Last week Daimler Chrysler, parent company of Chrysler, Jeep and Dodge, said it intended to have a quarter of its cars ethanol-ready by 2008.

The big three have more than 4.5m ethanol-ready cars on the road now but Ford said last week that many drivers were unaware that they could be using the cheaper biofuel. It is also much harder to find than regular petrol. America has only 600 stations selling ethanol-based fuel, against about 180,000 petrol stations.

One of the ironies of the current situation is that the price of ethanol is one of the factors contributing to America’s pain at the pumps. Last summer Congress mandated a near doubling in the use of ethanol in petrol by 2012, to 7.5 billion gallons a year from today’s 4 billion. Ethanol producers are scrambling to meet demand and, as a result, the price has shot up to more than $2.80 a gallon from a low of $1.35 last summer.

Much of the American support for ethanol comes from the powerful farming lobby. Ethanol receives a hefty subsidy of 51 cents a gallon. Critics say it is inefficiently produced. Some have gone as far as to suggest that ethanol production can actually be more expensive — and harmful to the environment — than oil.

David Pimentel at Cornell and Tad Patzek of the University of California at Berkeley have shown that making ethanol from corn grain can consume 29% more fossil energy than the oil it replaces.

Tofield said that ethanol can be produced to provide cheap fuel and be less harmful to the environment. Improvements in technology and recycling could easily make it cost efficient in America, a country that has the land and the weather to produce enough of its own fuel from corn or certain grasses.

Brazil, the world leader in ethanol production, runs 50% of its cars on ethanol. Most of its ethanol is made from sugar cane, an ideal plant for conversion but one that does not grow well in much of America, or at all in Britain. If we converted all of the rape seed grown in Britain to ethanol, Tofield calculates it would cover 5% of the petrol we now use. All the corn would be equal to 10%.

British Sugar is building an ethanol plant in Norfolk that will convert sugar beet to fuel. But it will take 15 or more such plants for Britain to comply with the EU’s ethanol directive.

Ninety-eight years on from the Model T Ford, there are still problems with ethanol. But as oil supplies dwindle it may have finally become the fuel of the future.

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