ScienceDaily has an article today about a new biofuel based on wood chips which can be blended with biodiesel and petroleum diesel. It's based on pyrolysis of wood chips in an oxygen-free environment, and yields charcoal as a waste product. It's supposed to be nearly carbon-neutral (as long as the forests are being replanted), and actually carbon-neutral if the charcoal can be added back to the soil as a fertiliser (presumably since the carbon in charcoal is pretty much out of circulation forever).
Link to the paper is here.
Of course, the thing that pops into my head is the question of how much land is available for growing trees. Will a wood-based biofuel lead to further deforestation - like the Brazilian forests that were cleared to plant Eucalyptus to produce charcoal for an iron smelter? Will it shorten the rotation time on current forest plantations? Will it lead to pressure to convert natural and semi-natural areas to tree monocultures? Will it compete with land for food production? Obviously we can't continue to depend on fossil fuels indefinitely, but alternative fuels seem to raise as many questions as answers.