There is a battle brewing over cornstarch-based ethanol in Washington, pitting onetime allies against each other. The camps are not separated by party affiliation, but by geography and interest in the agriculture supply chain. Each side is vying for the public’s compassion in a time when Americans are faced with a faltering economy and rising energy and food costs.

As the clash intensifies, so does interest in cellulosic ethanol.

Case in point:  last week the Glover Park Group, a public relations firm in Washington, staged a teleconference with reporters to disparage what it called the U.S. food-to-fuel policy. Hours later, ethanol booster Sen. Chuck Grassley, a Republican from Iowa, held a press conference on Capitol Hill with five fellow senators to “dispel myths being perpetuated by a newly emerged version of the anti-ethanol campaign."

Documents obtained by Grassley and posted on his Web site indicate that the Glover Park Group was hired by the Grocery Manufacturers Association to launch the anti-ethanol campaign, and the teleconference was held on behalf of the National Restaurant Association, Earth Policy Institute, National Retail Federation, Environmental Working Group, National Chicken Council, National Council of Chain Restaurants and the National Turkey Federation.

Grassley’s place as a leader from the Corn Belt gives him backing from powerful Washington players like the National Corn Growers Association and Archer Daniels Midland Corp., the world’s largest ethanol producer.

The rhetoric from both camps has intensified as food and energy prices have risen, but, according to David King, a lecturer in Harvard’s John F. Kennedy School of Government, “It’s a completely unfair fight. The anti-ethanol crowd is riding around on a bicycle with training wheels while Archer Daniels Midland Corp. is on a Harley Davidson fueled with ethanol.”

The anti-ethanol side, according to King, has substantial challenges to face. For one, it is a disparate coalition, drawing together grocery distributors, protein producers, trucking lobbyists and the petroleum industry, among others. Even Ducks Unlimited, an organization concerned with preserving wetlands and promoting duck hunting, has a stake since land once set aside for conservation is now being used for farming, displacing ducks and hunters alike, explained King.

Additionally, the anti-ethanol camp is being outspent. The ethanol industry has a significant financial stake in the success or failure of this campaign, and it promises to devote appropriate funding to make its point.

“The ethanol side has far more money, but money doesn’t always win the argument,” quipped King, adding, “It’s going to be rhetoric. The question is, if [the debate] is focused simply on the price of gas, then it’s pro ethanol; if it’s the price of gas plus independence from foreign oil, then it’s pro-ethanol; but if it's focused on the interdependence on the supply chain for food— and that every time you take a spoonful of cereal, that’s done at the cost of subsidizing the corn industry—that’s a winning argument.”

But Josh Tickell, a documentary film producer and an expert on renewable fuels, contends that the real culprit is oil.

“Food prices have gone up in the U.S. considerably,” Tickell argued in an interview. “So have oil, steel, and cement prices. You’re looking at a tremendous overall economic upturn in the price of basic raw goods in the U.S. and I don’t think it’s safe to say ethanol has increased the price of cement, that ethanol has increased the price of steel—oil is the basic underlying resource of the market.”

In his documentary “Fields of Fuel,” Tickell explains that the food-versus-fuel crisis is an international issue because “since World War II we’ve been dumping very cheap commodity prices on the world market…locking [developing nations] into a cycle of dependence.” He said the U.S. provides significant subsidies for farmers who are then able to sell commodities much more cheaply than can farmers in developing nations.  

As the debate over cornstarch-based ethanol rages on, exacerbated each time the price per gallon of oil reaches a record high, more pressure is placed on accelerating the progress of cellulosic ethanol. Rather than using the carbohydrate in the corn kernel, cellulosic ethanol is made by breaking down the cell wall of plants and then fermenting it into ethanol. The recently-passed Farm Bill allocates approximately $1 billion to promoting the industry, with financial assistance provided for both producers of biomass—like switchgrass and sorghum grass— and cellulosic ethanol producers.

However, cellulosic ethanol faces serious obstacles.  Among them are high production cost, at least with current technology, and possibly also high transportation costs, for the less-valuable farmland that might produce large quantities of biomass is located far from the slew of ethanol plants built in the Midwest to process corn.

Furthermore, the negative press about cornstarch-based ethanol has made investors wary of putting money into the forward-looking technology, according to Arnold Klann, president and CEO of Irvine, Calif.-based BlueFire Ethanol Fuels Inc. which is beginning construction on its first cellulosic ethanol plant. “The market’s in paralysis from a financing standpoint,” Klann said, “It’s affected [our ability] to raise money…You’ve got to get past the negative press and negative connotation."  BlueFire's facility will use plant and wood waste, including paper.

Those who own stock in ethanol production companies have seen its value decrease 40 percent to 60 percent since January 2008, according to William Caesar, a principal at McKinsey & Company Inc., a financial advising firm. This trend, Klann said, is not pinned to the profitability of cornstarch-based ethanol but mostly related to press and public opinion.

Both sides are rolling out campaigns, both on Capitol Hill and in the country at large. While Social Security is typically seen as the third rail of politics, this year it could be ethanol, as two powerful Washington lobbies have drawn a line in the sand. But, remarked King, “assuming Obama and McCain are the nominees, they are both maverick enough that they might be willing to take this on.”