Ethanol prices may come down thanks to innovation

Those worried about high gas prices should also be celebrating this news: a new innovation may lower the cost of ethanol.

Novozymes Biotech Inc. said it found a way of drastically reducing the cost of enzymes needed to create ethanol out of rice straw and other agricultural waste, also known as biomass.

For now, almost all commercial ethanol is made out of corn.
Experts say it will be about five years before it's commercially viable to use alternative materials like rice straw. Novozymes President Glenn Nedwin said Thursday's breakthrough will probably shorten that timetable.

Corn-based ethanol is blended into the gas sold throughout most of California, but it remains controversial. State officials say ethanol can increase air pollution in hot weather; they want to eliminate a federal government rule that makes ethanol use mandatory. But ethanol advocates say the additive makes gas burn more cleanly and argue that increased ethanol use would reduce California's dependence on petroleum and make for cheaper gasoline.

Although the short-term impacts on gas prices are non-existent in several years, this could make the additive cheaper.