The world is going through the strongest surge in energy prices as crude oil prices have soared to more than $100 per barrel. The high price of fossil fuels, environmental concerns, and geopolitical instability in some major oil producing nations have spurred intense global interest in alternative fuels, especially from renewable energy sources.

Developments in solar panels and wind farms favored by eco-activist groups have been severely hampered in developing countries by their high initial costs. Nuclear power for developing countries is still viewed with suspicion; Crop-based fuel production has been the main focus of interest in developing as well as developed countries. In US and European countries ethanol and biodiesel are made from food or inedible crops, including corn, sugarcane, maize, cassava, rapeseed (canola oil), soybeans, and palm oil.

Large scale production of biofuel has put tremendous pressure on global grain prices. In the short- and medium-term, ethanol can do little to affect oil consumption, but the diversion of grain from food to fuel has already exerted a widespread and profound ripple effect on various food commodities.

The United Sates produced 3.9 billion gallons of ethanol in 2006 and expanded its output to 6.5 billion in 2007. This took millions of hectares of land out of food production. In 2007, 54 percent of the world's corn was grown in the USA, and 38 percent of US corn crop ended up in gas tanks instead of stomachs. The amount of corn required to produce a gallon ethanol is enough to feed a human being for two weeks. Corn is mainly used to feed chickens and cattle, so the price of poultry, eggs, beef, and dairy products will continue to rise.

In December 2007, President George W. Bush signed into law the "Energy Independence and Security Act," which mandates that 36 billion gallons of biofuels to be produced in America every year by 2022, a nearly fivefold increase over current production levels. The European Union has also announced it will replace 10 percent of its oil consumption with biofuels by 2020.

Developed countries' commitment to biofuels has already raised food costs and hunger risks for the world�s poor. The soaring price of staple food is not an isolated phenomenon. According to the United Nations Food and Agriculture Organization (FAO), global food prices rose an incredible 40 percent in 2007 alone. FAO has announced that 36 countries are in crisis as a result of higher food prices. Record world prices for most staple foods have led to an 18 percent food price inflation in China, 13 percent in Indonesia and Pakistan, and 10 percent or more in Latin America, Russia and India, Wheat has doubled in price, maize is nearly 50 percent higher than a year ago and rice is 20 percent more expensive, says the UN.

The traditional human priorities on use of good cropland start with food. Famine, after all, is society�s ultimate failure. Tightening the world�s food supply by diverting major quantities of its grain stocks into fuels will drive up the prices of all food. This will inevitably hit hardest at the poorest people in the world�s food-shortage regions. This would not be ethical even if there were no other sources of energy.

Society is already farming about 37 percent of the global land area, and already using almost all of the good quality land. Additional farmland will have to come at the expense of forests and wild species, and is likely to incur heavy penalties in terms of soil erosion, drought risks, and endangered wild species.

In Pakistan, sugar cane molasses is the only major raw material for alcohol production. Molasses, which is a byproduct of the sugar industry, contains about 45�50 percent fermentable sugars. Presently 16 distilleries are in operation with installed alcohol production capacity of 400 thousand tonnes, which require on the order of 1,600 thousand tonnes of molasses. In Pakistan, the distillery industry normally operates for 250 days with the alcohol production efficiency of 250 liters (240 Kg) per tonne of molasses.

In Pakistan, the average production cost of ethanol is US$ 0.1452/liter much closer to Brazil�s production costs of US$ 0.1355/1 and it exports substantial quantities to the EU. Pakistan has exported around 167.610 thousand tonnes of alcohol during 2006. The average price fetched by exporters for different grades of alcohol ranged around $560 to $680 per tonne for different grade of alcohol.

The ease with which this can be fermented into ethanol and its low price have made this raw material ideal for ethanol production. As a consequence, no other raw material at present in Pakistan can match the economics of molasses for ethanol production. However in recent years because of a jump in molasses prices and limitation on molasses availability, ethanol production has been greatly affected in Pakistan.

In addition to this, the government of Pakistan is an making effort to introduce ethanol into gasoline, which will boost its domestic consumption. Pakistan�s expected consumption of gasoline in the year 2005-06 was estimated around 1.6 million tonnes, hence if the country starts blending ethanol at the ratio of 10 percent; it will require 160,000 tonnes of ethanol.

The price of sugar is high in Pakistan, therefore, there is very little possibility of using cane sugar to produce alcohol. This suggest further research to exploit alternative feedstocks in the future. Promoting ethanol as fuel will require developing technology to produce it from readily available feedstocks.

In many countries, including the Pakistan, rice and wheat straw is an abundant byproduct from rice/wheat cropping system (RWS) and can serve as a low-cost attractive alternative for production of ethanol. The technologies for converting straw to ethanol have been demonstrated in pilot plants. Commercial use of rice and wheat straw to produce ethanol faces significant technical and economic challenges. Its success depends largely on the development of an environmentally friendly pretreatment procedure, highly effective enzyme systems for conversion of pretreated wheat straw to fermentable sugars, and an efficient microorganism to convert multiple sugars to ethanol. Pretreatment of any lignocellulosic biomass is crucial before enzymatic saccharification.

The future economic growth of Pakistan crucially depends on the long-term availability of sustainable energy resources and improved performance of the agriculture sector. Given high oil prices in early 2008 and the heavy dependence of many countries on imported oil, the potential for producing or importing biomass-derived liquid transportation fuels has awakened interest in many developing and industrialized countries.

The supply of feedstocks is crucial to the success of the biofuel strategy. Converting rice and wheat straw to ethanol has the potential for addressing long term availability of energy resources and improves performance of agriculture sector. The production of biofuels from rice-wheat straw could generate economic and environmental benefits, create additional employment, reduce energy import bills and open up potential export markets.