I've often wondered the same thing.  Iowa has been trending solid blue for some time, with a commensurate increase in stature on matters agriculture and environmental (see Grassley, Chuck and Vilsack, Tom).  I'd have to allow that Iowa's status as the "first state" every four years forces candidates to play ball when it comes to ethanol.  Even the "Straight Talk Express" of McCain's derailed on this issue.  He openly stood against ethanol in 2000, and lost some key rural voter support.  His position became somewhat more...nuanced...in the last election.  For it before he was against it, but now he's all for ethanol as a fuel, but not subsidies for it, yadda yadda. 

I will grant that the ethanol industry was founded and nurtured in the cradle of government subsidies.  For a time, it became economically competitive, and might be someday for good.  And let's remember that "ethanol" is not the issue, per se.  The furor usually surrounds corn-based ethanol, with any antipathy directed at next-gen ethanol largely the result of its connection to the former.  I believe that next-gen fuels will be vastly more economical (and "greener" if that's your thing) once mature, but we are standing on Point C staring off into the distance at Point Z.

At any rate, in this current political climate, any alt-fuel will be subsidized, if only because all politicians love two things:

    1.  The sound of their own voices

    2.  Spending someone else's money (usually, to enrich themselves or protect their incumbency)

I'll leave further political commentary to the Boiler Room.