I am preparing a rather involved post for this string, but I felt it only fair to contribute a source and a thought or two to your question.

The best source regarding the questions you ask can be found here:

http://i-r-squared.blogspot.com/2006/06/e3-biofuels-responsible-ethanol....

If you are new here, you may not be familiar with Robert Rapier’s work, but he has been exhaustive in his research on ethanol, and brought the mind of chemist and a petroleum genius to the subject.

On the post I am linking, Robert is discussing one of the few ethanol process that possibly could show promise, called:
E3 Biofuels' Closed-Loop Ethanol Process

The problem with ethanol, as Robert says, is “We take fossil fuels and basically recycle them into ethanol in a very inefficient manner.”

The fuels used are of course Diesel in the equipment, but of greater concern to many of us is the natural gas. The pesticides and fertilizers are not, as many seem to believe, oil based, but natural gas derived chemicals. The U.S. is already deeply concerned about supply of natural gas, and even embarking on expensive and complex projects to import LNG (Liquified Natural Gas) from of all places, OPEC nations. It makes the claim of ethanol as a “freedom fuel” that will assist U.S. energy independence all the more ironic. Natural gas is also consumed in getting the water out of the corn (distilling) and this is no small job. Corn has a very high water content.

Even if ethanol could overcome the consumption of water, land space, topsoil, and food that the industry creates, the natural gas issue alone would be a huge barriar to acceptance by many, who see natural gas as a natural treasure, one of the last great clean chemical and energy sources in the world.

The only system that has a chance is something like the E3 Biofuels system, in which the cattle, the corn, and the waste product are recycled, without long transport, all on one site. It may work, but it will be an uphill fight.

Good Luck, and follow out some of Robert’s work on his blog, it is fascinating stuff! :-)

RC
Remember, we are only one cubic mile from freedom