I've seem this argument sorted out several places, and have concluded that the DOE's energy ratio of 1.24 is about accurate for ethanol from corn. I also think there's no new developments anticipated or being investigated here, and therefore this process justifies no further subsidies of any sort. Subsidizing ethanol from corn is simply a direct cash payment to farmers, most of which is collected by huge conglomerates like ADM.
Smarter would be to develop Iogen's system of producing ethanol and biodiesel from cellulose (stover / straw / wood / paper waste).
http://www.iogen.ca Uses an enzyme, needs some further ecomonies but very close.
Interesting also is SHEC Labs. thermochemical water splitting using a solar collector.
http://www.sheclabs.com They've just announced (October 12, 2004), a strategic partnership with Hydrogenics, a (well respected) publicly traded fuel cell manufacturing company (who supplies GM's fuel cells for research). Their patent indicates a really neat "catalytic static centrifuge" concept for separation which, with eg. solar energy, should be REALLY cheap to build and operate depending on catalyst since they claim to get significant production at "less than" 800 degC.
Also note the Sulphur / Iodine process of splitting water using only heat. DOE etc. working on it, but still difficult due to materials problems with high-temp. sulfuric acid etc. They should soon beat it. Requires fairly high (>1000 degC?) thermal inputs and large factory-type processes so currently targeting Gen IV helium circuit reactors with mixed electric / hydrogen as needed outputs. Maybe 10-20 yrs out.
I like the TSSOM concept. Tension Stabilized Steerable Orbiting Mirror. Big sheet of metalized Mylar in Geosync Orbit reflects sunlight onto a photovoltaic array at eg. Arizona or Salton Sea etc.
http://www.ecologen.com/page_TSSOM2-75.html Each mirror can increase the PV array's output by 75%, which increase happens at night. 4 x 2.75 km dia. mirrors in orbit all pointing to same PV array makes the cost of the system's electrical output cheaper than fossil fuels. Needs the Space Elevator working first though to be economical, but that's coming very soon now that the crew at Los Alamos have grown 4 cm long nanotubes
http://www.lanl.gov/worldview/news/releases/archive/04-076.shtml, or see the guys at McGill
http://www.azonano.com/details.asp?articleID=1022 or many others.
Space Elevator development, google NASA's Dr. Edwards or quick hilights at
http://www.isr.us/Spaceelevatorconference/ or specifics at http://www.spaceelevator.com/docs/iac-2004/iac-04-iaa.3.8.2.01.edwards.pdf . A ton of other stuff on the web re. Space Elevator, estimates put it technically feasible "sometime before" 2017.
And the final word on "Hydrogen as Energy Carrier" for transport should be Graham Cowan's work on the Boron fuel cycle, which I think deserves some serious development work. See
http://www.eagle.ca/~gcowan/boron_blast.html#TOC . Graham has addressed all the issues with unimpeachable science. Needs development work on the turbine and the regeneration chemical process but eliminates the huge energy hit of hydrogen storage / transport / handling. I've submitted to him a (IMHO) really neat design for an excellent turbine that would work really well for vehicles but he's working on other things now. Too bad.
:!)