A few years ago, corn-based ethanol fuel was all the rage. Farmers shelved crops like wheat and soybeans and planted more corn instead in order to cash in on the new revolution. Bill Gates and Richard Branson pumped in billions in funding. And ethanol stocks soared.

But the reality couldn’t match the hype, as the raw materials and cost required outweighed the output, and people realized that it would take greater viability to truly change people’s habits, psychology and the status quo in the energy sector.

But in today’s guest editorial from The Street Authority, editor Andy Obermueller explains how a different form of ethanol biofuel could revolutionize the landscape in just a few years – and hand early investors some outstanding potential profits. Check it out below…

Martin Denholm, Managing Editor, Smart Profits Report

The Ethanol Equation

In 1976, a businessman in North Central Kansas commissioned a CPA firm to do a feasibility study into the financial viability of a commercial-scale ethanol plant.

This businessman and his partner owned farmland and grew a little corn. And the ethanol concept that gained momentum in the 1970s post-oil embargo period piqued their interest.

But when the study was completed, the answer was abundantly clear: The technology wasn’t there and the project wasn’t financially viable. So the businessman – my father – focused on other ventures. It turned out to be a wise move, as most people who invested in ethanol in those years lost money.

Flash-forward to today, where ethanol has become a significant element of our national energy strategy. But it’s never existed without significant federal support in the form of subsidies and import tariffs.

So is this energy resource any more viable today? Let’s take a look at a different form of ethanol production – and a government mandate that aims to propel its progress…

The 16-Billion Gallon Biofuel Revolution

There’s one piece of federal legislation George W. Bush signed into law that President Obama likes: The Energy Independence and Security Act of 2007, which went into effect on January 1, 2009.

It requires the U.S. to use a total of 36 billion gallons of biofuel by 2022.

The rub is that only 15 billion gallons can come from corn-based ethanol. Right now, the U.S. produces 10 billion gallons of corn-based ethanol per year, bolstered by billions of dollars in federal money. That’s on track with federal production targets, which peak at 15 billion gallons in 2015.

Instead, the lion’s share of that 36 billion gallon total – 21 billion gallons (or 58.3%) – must come from “advanced biofuels” that are 50% cleaner than gasoline. And of that total, an aggressive federal timetable for 16 billion gallons to come from something called “cellulosic” biofuel by 2022.

The U.S. isn’t producing any of it right now. In fact, only a few companies even know how. And as these federal mandates take effect, the handful of companies that control this technology could see demand grow by 15,900% – and their revenues follow.

The Sugar Solution Making Ethanol A Viable Energy Solution

So what is cellulose anyway?

It’s a compound found in all plants – from hardwood trees to the grass in your yard. It’s the most common organic compound on Earth. Chemically, it’s a sugar (hence the “-ose” at the end of the word ) – and that means it can be easily fermented into ethanol.

And while corn-based ethanol does have modest growth prospects over the next few years, cellulosic ethanol’s trajectory – again, written into federal law -blows corn out of the water. That’s because the U.S. doesn’t produce much cellulosic ethanol at the moment, mostly because the technology is still being refined.

But the technology is very, very close to coming online. Several demonstration-scale plants are operational. And after scientists nail down the process, the U.S. could see the biofuel industry go from producing almost zero gallons of cellulosic ethanol to 16 billion gallons. That’s a 15,900% increase in only a dozen years – enough to turn a $10,000 investment into $1.6 million.

And investors who get in on these cellulosic ethanol fuel companies at the ground level could be set for a huge profit windfall.

Source: The Biofuel Revolution: Why Now Is The Time To Invest In Ethanol Stocks