When Dario Franchitti steered his sleek, 670-horsepower, orange-and-black Indy car to victory at this year's Indianapolis 500, the ebullient Scotsman chalked up an odd footnote in sports history. He became the first driver ever to win the iconic American auto race on pure ethanol—the gin-clear, high-octane corn hooch that supporters from midwestern farmers to high-ranking politicians hope will soon replace gasoline as America's favorite motor fuel.

Indy's switch back to the old bootlegger's friend is just one indicator of the mad rush to biofuels, homegrown gasoline and diesel substitutes made from crops like corn, soybeans, and sugarcane. Proponents say such renewable fuels could light a fire under our moribund rural economy, help extract us from our sticky dependence on the Middle East, and—best of all—cut our ballooning emissions of carbon dioxide. Unlike the ancient carbon unlocked by the burning of fossil fuels, which is driving up Earth's thermostat by the minute, the carbon in biofuels comes from the atmosphere, captured by plants during the growing season. In theory, burning a tank of ethanol could make driving even an Indy car carbon neutral.

The operative word is "could." Biofuels as currently rendered in the U.S. are doing great things for some farmers and for agricultural giants like Archer Daniels Midland and Cargill, but little for the environment. Corn requires large doses of herbicide and nitrogen fertilizer and can cause more soil erosion than any other crop. And producing corn ethanol consumes just about as much fossil fuel as the ethanol itself replaces. Biodiesel from soybeans fares only slightly better. Environmentalists also fear that rising prices for both crops will push farmers to plow up some 35 million acres (14 million hectares) of marginal farmland now set aside for soil and wildlife conservation, potentially releasing even more carbon bound in the fallow fields.

The boom has already pushed corn prices to heights not seen in years, spurring U.S. growers to plant the largest crop since World War II. Around a fifth of the harvest will be brewed into ethanol—more than double the amount only five years ago. Yet such is the thirst for gasoline among SUV-loving Americans that even if we turned our entire corn and soybean crops into biofuels, they would replace just 12 percent of our gasoline and a paltry 6 percent of our diesel, while squeezing supplies of corn- and soy-fattened beef, pork, and poultry. Not to mention Corn Flakes.

Still, the prospect of amber waves of home-grown energy crops is too seductive to ignore, especially given the example of Brazil. Thirty years after launching a crash program to replace gasoline with ethanol from sugarcane, Brazil announced last year that thanks to ethanol and rising domestic oil production, it had weaned itself off imported oil. Investors, led by superstar CEOs Richard Branson of Virgin Atlantic and Vinod Khosla of Sun Microsystems fame, have bought into the vision, sinking more than 70 billion dollars into renewable energy companies. The U.S. government has ponied up hefty ethanol subsidies, and President Bush has proposed over 200 million dollars for research, with a goal of replacing 15 percent of our projected gasoline use with ethanol and other fuels by 2017.

"We can create ethanol in an incredibly dumb way," says Nathanael Greene, a senior researcher with the Natural Resources Defense Council. "But there are many pathways that get us a future full of wildlife, soil carbon, and across-the-board benefits." The key, Greene and others say, is to figure out how to make fuel from plant material other than food: cornstalks, prairie grasses, fast-growing trees, or even algae. That approach, combined with more efficient vehicles and communities, says Greene, "could eliminate our demand for gasoline by 2050."