Everyone is talking about alternative energy. Should government be spending taxpayer money for this? It was government funds that built the railroads, the electric grid (think Hoover Dam and Tennessee Valley Authority), scuba diving gear, the interstate highway system, weather satellites, the Internet (ARPANET, a secure military research network), Velcro, the space program and all the spinoffs in composite materials and other inventions, medical R & D, etc. Without government backing, most of these would be too high risk for private investors.

The Seattle Times reported last week, “Washington’s two major public universities have been awarded $80 million in federal grants to kick-start a biofuels industry in the Northwest, with hopes of turning trees into fuel for jet engines and cars alike. Underscoring the size and importance of the grant, U.S. Department of Agriculture Secretary Tom Vilsack [and former Iowa governor] was to make the announcement Wednesday at Seattle-Tacoma International Airport. The total grant is $136 million and one of the largest the USDA has ever made.”

In Iowa, the initiative is to turn corncobs, cornhusks, switchgrass and other available biomass in the state into fuel. Iowa State University is a major player in that effort. In Florida, a biorefinery is under construction to create fuel out of municipal and citrus waste.

Pennsylvania Gov. Tom Corbett “traveled to suburban Philadelphia on Tuesday to welcome a biomass energy company that plans to move its headquarters from Georgia and create 150 jobs in the next three years as it tries to develop ways to turn products such as wood and waste into fuel. The company Renmatix’s processes will use water to access sugars from biofuels,” according to Forbes. There are all sorts of tax breaks and government incentives for this.

An interesting article in Mother Nature Network reported, “Scientists have developed a potentially green and renewable biofuel replacement for diesel fuel that would not corrode oil pipelines or tanks. The researchers, affiliated with the U.S. Department of Energy’s Joint BioEnergy Institute, engineered strains of E. coli with the yeast Saccharomyces cerevisiae to produce bisabolane, a promising biosynthetic alternative to Number 2 (D2) diesel. Taek Soon Lee is director of the J.B.E.I.’s metabolic engineering program and a project scientist with Lawrence Berkeley National Laboratory’s Physical Biosciences Division.”

Who knew that E.coli, which we generally try to avoid when we eat out, could be a helpful ally.

Here is how it works. “By bringing together E. coli and S. cerevisiae, Lee and his team found that the microorganisms produce large quantities of a chemical compound called farnesyl diphosphate that can be synthesized into a particular terpene. From there, the scientists created bisabolene a precursor to bisabolane, which is almost identical to D2 diesel, except that it has a lower freezing point. This, according to Lee, will be to their benefit when developing it as a fuel replacement.”

So when you pull up to the Flying J truck stop, you may someday say “Fill ‘er up with E. coli!”

The U.S. military is the country’s largest single consumer of oil and therefore energy security has emerged as a major concern for the Pentagon. The military has been testing synthetic fuels made from coal and natural gas. The Wall Street Journal reports, “Military use of synthetic fuel faces significant obstacles. The energy bill signed into law by President [George] Bush … included a clause preventing the government from buying the fuel if it emits more pollution than petroleum. Manufacturers have promised to meet that target by recapturing carbon dioxide and other greenhouse gasses produced in refining. Without those efforts, synthetic fuel can emit up to twice as much pollution in refining as conventional petroleum.”

But not all is well or easy. According to the New York Times, “The United States would derive no meaningful military benefit from increased use of alternative fuels to power its jets, ships and other weapons systems, according to a government-commissioned study by the RAND Corporation … The report also argued that most alternative-fuel technologies were unproven, too expensive or too far from commercial scale to meet the military’s needs over the next decade. In particular, the report argued that the Defense Department was spending too much time and money exploring experimental biofuels derived from sources like algae or the flowering plant camelina, and that more focus should be placed on energy efficiency as a way of combating greenhouse gas emissions.”

New fuels are important, but they face the daunting problem that coal and other conventional hydrocarbons are so abundant and still so cheap. The economics of alternative fuels poses a serious challenge. Want proof? This week, we heard that at least three major U.S. solar energy projects went bankrupt.

China has become the undisputed solar- and wind-power producer and exporter with heavy government subsidies and mandates for domestic use far exceeding anything the U.S. is committing to alternative energy. China has knocked the U.S. from the number one spot.

The U.S. government has always been the trigger mechanism for infrastructure, new inventions and risky economic initiatives. No matter what you think.