I am exhausted by people making policy suggestions by looking at small parts of complex inter-related systems in isolation. One such example is the recent response of some ethanol mandate defenders to recent charges that corn-based ethanol is net harmful to the environment and its mandated and subsidized use is driving up world food prices.
The response by some (certainly not in the corn lobby, of course) has been that our problems would all be solved if we switched to cellulosic ethanol, which is generally made from non-food plants. Supporters argue that this eliminated the food for fuel problem.
Huh? Sure, in the narrowest possible sense, I guess, since we are no longer using food crops but rather grasses and such to make ethanol. But at any reasonably holistic level of analysis, this is simply absurd. Food prices rise not because food is converted to ethanol per se, but because the amount of grains going into the food supply decreases. The issue is the use of farmer's time and resources and the use of prime cropland to grow plants for fuel rather than food for consumption. The actual crop used to make the fuel, whether corn or switchgrass, does not matter to food prices -- it is the removal of farmers and cropland from food production that matters. The only way cellulosic ethanol is likely to improve food prices in substitution for corn is by being more efficient per acre in fuel yields than corn (which may turn out to be the case, but has not yet been proven in this country). But even so, incremental improvements in yield don't help much, because we are talking about enormous (40-50% or more) amounts of US cropland that would have to be dedicated to fuel, whatever the plant technology, to meet the current ethanol mandates. And remember, the net effect on fossil fuels may still be zero no matter how much land is dedicated, since no one has demonstrated large scale ethanol operations in the US that don't use more fuel to produce the ethanol than they produce.
Postscript: Related to this topic of thinking about economic systems narrowly, Lubos Motl discusses the supposed positive green impact on the economy in light of the open window fallacy.