Unfortunately, the lower energy level of ethanol isn't the real problem. Rather, the issue is EROEI - Energy Returned On Energy Invested.
At least one study out of Berkely by Pimentel and Patzek, and published in a peer reviewed journal points out:
Energy outputs from ethanol produced using corn, switchgrass, and wood biomass were each less than the respective fossil energy inputs. The same was true for producing biodiesel using soybeans and sunflower, however, the energy cost for producing soybean biodiesel was only slightly negative compared with ethanol production. Findings in terms of energy outputs compared with the energy inputs were: • Ethanol production using corn grain required 29% more fossil energy than the ethanol fuel produced. • Ethanol production using switchgrass required 50% more fossil energy than the ethanol fuel produced. • Ethanol production using wood biomass required 57% more fossil energy than the ethanol fuel produced. • Biodiesel production using soybean required 27% more fossil energy than the biodiesel fuel produced (Note, the energy yield from soy oil per hectare is far lower than the ethanol yield from corn). • Biodiesel production using sunflower required 118% more fossil energy than the biodiesel fuel produced.
Bottom line, it costs more oil to produce biofuels than the energy we get out. Suppose we went to a machine, put in a dollar, and got out 95 cents. We're getting money out - but it's a net loss every time. (I attached the complete paper, if you're interested)
On a more positive note, a recent analysis out of MIT suggests that switchgrass and other approaches may have a positive return; so corn ethanol might be a necessary precursor to future refinements.
Here's a
LINK