Ethanol has been held up as a homegrown fuel which creates jobs and replaces foreign oil.
It's also been criticized as a huge waste of food resources, benefiting corn farmers at the expense of livestock producers, all for a fuel that isn't very clean.
Lately, as corn prices have shot up in what some are calling the worst drought in a half century, there is more criticism than acclaim for ethanol.
"When you're in one of the most hated industries in the world, it's always interesting and always challenging," says Todd Becker, President and CEO of Green Plains Renewable Energy in Omaha, Nebraska.
The company buys up to 3 percent of the nation's corn supply to make ethanol, an unprofitable business lately due to high corn costs. Green Plains swung to a loss in the second quarter, and on Thursday, it's stock plummeted to a 52-week low, trading below the company's cash value.
"There really is a big need for this fuel," Becker insisted.
The company is getting through the downturn by reducing production 7 percent, sitting on $137 million in cash, and increasing its dependence on its non-ethanol businesses, including leasing out rail cars to help deliver oil from the Bakken Shale. Its goal is to generate enough revenue from these other businesses to cover all debt servicing.
Green Plains has also locked in prices for about 40 percent of the corn it will buy and the ethanol it will sell in the fourth quarter, at a margin Becker believes will return the company to profitability no matter what happens with the other 60 percent.
But the biggest political issue facing the industry right now is pressure by ethanol critics, especially livestock producers, to reduce the federal government's mandate on how much ethanol must be purchased by gasoline refiners. Proponents say refiners can use past spending splurges on ethanol as credits against this year's purchasing requirements, and exports will also probably be cut. This should leave more corn for everyone else.
However, that may not happen. Becker thinks refiners will still keep buying a lot of ethanol as needed. Why? Many have come to depend on the corn-based fuel's high octane level of 113 to raise overall gasoline octane to 87 and higher.
"What we've seen over the last 18 months is that the refining community has kind of scaled back to an 84 octane subgrade gasoline — which you can't put in your car — because they saw the benefit and the opportunity that they can use ethanol as their blend stock," Becker said. "If you want to replace this octane, you're going to have to buy something much more expensive than ethanol today, and it's not in big supply."
If that's the case, then the fight will be on in earnest between all the users of corn this fall, assuming the worst about the drought. Yet the octane issue shows how the ethanol industry has tried to expand its value proposition in the nation's fuel supply. That's a change from four years ago, when many declared the death of ethanol as corn topped $7 and several producers went bankrupt. Like a zombie, ethanol won't die.
"The industry this time around is much healthier to withstand this. We will see some guys go down, but in general it's a much different experience than '08," Todd Becker said. "We're still in business today, our lights are still on, we're still going to be in business at the end of the year."
—By CNBC's Jane Wells