Hydrogenating biomass could viably produce biofuel researchers at Purdue University say, according to Science Daily. The researchers say that adding hydrogen during the gasification phase (sounds to me like they're heating biomass up in air and seeing what comes off) changes the composition of the the gasses produced making them more interesting for fuel. Possibly through a Fischer Tropsh reaction.
My only environmental concern about the process is that Hydrogen doesn't grow on trees and a fairly large amount of energy is needed to generate it, even if that energy comes from
a "carbon-free" energy source, such as solar or nuclear power.
It would be interesting to see if the researchers Chemical engineering Professor Rakesh Agrawal, doctoral student Navneet Singh and Professors Fabio Ribeiro and W. Nicholas Delgass have carried out any energy balance studies for the process.
One the other hand biomass does grow on trees...