Producing ethanol from bio-mass materials such as ag and forestry residues or purposely grown trees and grasses is proving to be a complex technology challenge. It will be easy along the way for critics, like this one at Grist, to claim the effort is a fools errand (see middle on comments re ethanol). While this is a critical commentary about the technology, it may be worthwhile to review the links contained within it.
I do not doubt that the first plant was a glorious failure. That result was almost an inevitable risk of attempting to scale up the technology. Indeed, that risk of failure was the very reason why government assistance was requested and granted in the first place. Commercial markets were not ready to finance the technology at this stage of its evolution.
To claim today that the failure of the first attempt to scale up the technology means we should give up on it is like claiming that NASA should have given up on space travel the first time they had a rocket that blew up. The more significant question is did they learn anything from the attempt.
Another example of “failed” government intervention is the Minitel videotext system that operated in France for several years http://en.wikipedia.org/wiki/Minitel. In many respects, it was the precursor to the World Wide Web and it could be argued that the lessons learned from that government funded system set the stage for the eventual development of Mosaic and the world wide web concept at another government funded operation (CERN).
The oil sands is an example of an energy production technique that had a long period of unprofitable operations and extensive government support. Yes, billions were spent by governments over 20+ years to commercialize the technology, but eventually it became economically viable and now the governments of Alberta and Canada are reaping the rewards. Was that a fools errand or wise investing on the part of the government?
Looking beyond government, does anyone remember the Apple Newton http://en.wikipedia.org/wiki/Newton_(platform) ? It too was a financial failure, but the lessons learned led to the development of the iPod, iPhone and IPad. Sometimes failure has to be dealt with in the innovation and commercialization process.
I expect that the process of scaling up bio-mass ethanol will be subject to a few more glorious failures. That does not mean that the effort to produce this innovation should be abandoned. If we can create a new energy production technique equivalent to extracting oil from the oil sands or natural gas from shale formations, is that not worth a bit of risk taking along the path?