In a letter to the editor published in the Fridays's Australian Financial Review, Minchin said ethanol already received a full excise rebate of 38 cents per litre in addition to other assistance measures to support the biofuels industry.

"It receives a large government subsidy and like any other industry it needs to convince consumers of the benefits of its product," Minchin said.

"The fact is, there is no current scientific evidence before the Australian government to suggest ethanol warrants even greater government support, such as mandating its use in fuel blends. Experts such as David Pimentel of Cornell University, have found that the production of ethanol requires more energy than ethanol returns".

McGrady said he was appalled by Minchin's comments.

"In recent times Federal Nationals like Deputy Prime Minister John Anderson and Ron Boswell have come out supporting ethanol, giving the industry renewed hope," McGrady said.

"Today they've been shot down by their Coalition partners with Mr Minchin pulling the trigger.

"Mr Minchin is clearly ill-informed. There are now many more definitive expert studies from both Brazil, Canada and the USA that show conclusively that the energy produced by ethanol is significantly greater than that consumed in the production of ethanol."

These reports include the US Department of Agriculture Report 2003 and various reports from research organisation Argonne, according to McGrady said.

"I'm told that ethanol can produce up to 70% more energy per unit than oil due to losses in refining," he said.

"In Queensland the major feedstock for ethanol production is molasses which is a by-product of the sugar milling process.

"The major energy required in its production has already been expended and would have occurred irrespective of whether it was to be used for ethanol production or not. It makes sense to turn this by product into ethanol and this is why ethanol production in Queensland is truly a value added process.

"I'm told David Pimentel of Cornell University is in fact one of the very few researchers still running the negative argument on energy usage in the ethanol lifecycle. He is reportedly doing so based upon old data which has not been updated to take into account more recent findings on this issue."