Support is increasing to make ethanol a leading alternative fuel choice, not only as a way to cut petroleum imports faster but to aid economically depressed rural areas.

“Woody cellulosic ethanol development is poised to create additional new markets for renewable fuels, and advance economic growth and new business opportunities – initially in Southern and Northwestern [U.S.] markets,” said Fletcher Hall, president of Potomac, MD-based consulting firm F.R. Hall and Associates and formerly executive director of the Agricultural and Food Transporters Conference.

“The development of the cellulosic ethanol markets to make vehicle fuel, while also using woody biomass as feedstock, could eventually create new business opportunities throughout rural America where cellulosic feedstock is available or can be grown,” he added.

U.S. automakers also believe ethanol represents perhaps the easiest way to scale back on America’s oil imports.

“It’s increasingly clear that, of anything that we can do over the next decade, ethanol has by far the greatest potential to actually reduce U.S. oil consumption, reduce oil imports, and reduce carbon gas emissions,” said Rick Wagoner, chairman & CEO of General Motors, in a speech this month to shareholders.

“GM now has more than two million E-85 vehicles on the road, with plans to expand production significantly going forward,” he said. “In fact, if all of the E-85 vehicles that GM, Ford, and Chrysler have already built, plus those that we have committed to produce over the next 10 years, were to run on E-85, we could displace 22 billion gallons of gasoline annually.”

Waggoner also noted that if all vehicle manufacturers in the U.S. made that same commitment, it would save 37 billion gallons of gasoline annually. “That’s more than four times the savings that a proposed 4% per year CAFE [Corporate Average Fuel Economy] increase would achieve and, very importantly, enough to actually reduce America’s oil consumption by more than 10% vs. today’s levels.”

To achieve these goals, the U.S. Department of Agriculture (USDA) said it plans to increase its annual investment in biofuels from $75 million to $160 million. The agency will also provide $500 million to create a new bio-energy and bio-products initiative to stimulate government and university research on better ways to make renewable fuels from biomass and cellulosic ethanol.

USDA also plans to create a $2.1-billion loan guarantee program to help build commercial-scale ethanol facilities in rural areas; help cellulosic ethanol producers begin operations through direct payments, and increase funding for competitive biomass research grants focusing on cellulosic ethanol.

“The development of accessible cellulosic ethanol markets in the U.S. is essential in reducing America’s dependency on foreign oil and in increasing the availability of homegrown renewable fuels from all parts of the country where these opportunities exist,” noted Hall.