Jonah, they’re on it already. It’s called cellulosic ethanol. Ross Douthat had a good profile (subscription only) of Craig Venter, one of the guys working on engineering the stuff, in last month’s Atlantic. Here’s the article’s sales pitch for why it could be exciting and wonderful and solve all our energy needs (well, some of them) with just a quick bit of biological rejiggering:

The answer isn’t in corn kernels, but in the stalks, roots, and leaves of corn and other plants—“cellulosic” material that’s historically been difficult to break down into sugars efficiently, but that now might be only a few breakthroughs away from becoming the source that makes ethanol available on the cheap. Cellulosic ethanol could be made from agricultural waste, so that we need not rob our food supply for our energy supply. Better still, it could be derived from non-food- producing plants grown on land otherwise unsuitable for cultivation. Cellulosic ethanol wouldn’t provide a complete solution to our energy problem, but even many skeptics acknowledge its promise, and the Department of Energy is excited enough to have made the pursuit of cellulosic ethanol a key component of its plan to replace a third of annual U.S. oil consumption with biofuels by 2030.

It’s a bit of a long shot, but if it quiets the incessant doomsaying of the Al Gore/Laurie David crowd, count me in.

Update: I should clarify that I’m not thrilled with pouring federal research dollars into this or any other alternative energy project. Part of “success” is being self-sustaining without public funds–something many alternative energy cheerleaders seem to forget.