While ethanol made from fermented corn grain can boost the octane and reduce the tailpipe emissions of gasoline, it's expensive, costing about five cents a liter more than gas. A Canadian biotech company, however, says that next year it will begin building the world's first facility to mass-produce ethanol, not just from grain, but from a far more abundant source: agricultural waste, such as cornstalks, cobs, and leaves. That could help bring ethanol's price closer to that of gasoline.

Iogen of Ottawa, Ontario, uses enzymes made by a genetically engineered fungus to convert cellulose in the corn waste to sugars, which are then fermented to make ethanol. Three sites in the United States, Canada, and Germany have been proposed for the new plant, which will produce about 200 million liters a year -- a capacity similar to that of the largest existing ethanol plants -- and should be operational by 2007, says Jeff Passmore, executive vice president of Iogen. A $54 million investment by Shell and Petro-Canada is making it possible.