The Scientifc Committee on Problems of the Environment (SCOPE) has produced a report looking at the enviromental impacts of biofuels,. The group makes a number of recomendations for second generation feedstocks, and favours woody or grassy plants.
As with the first generation biofuels, the environmental consequences of the next generation depend significantly on the type of feedstock and how and where the feedstock is produced. The net greenhouse gas emissions from using either cellulosic ethanol or BtL are substantially less than for ethanol produced from corn, particularly if the feedstock comes from wood or from perennial grasses grown on non-agricultural lands.
That sounds quite fair, I’m not sure that one of the other suggestions, that the methane from farm animals could be collected and used as fuel is particularly realistic. Even if you cram a cows together in a shed, the volume of methane has to be pretty low, or wouldn’t the cattle choke to death?
Apart from that quibble, the report looks balanced and could offer a sensible way forward in this area.