There is an outline of the Verenium's cellulosic ethanol process on TechnologyReview
The process begins when the cane is ground up and cooked under high pressure with a mild acid to hydrolyze the hemicellulose and separate it from the cellulose. The five-carbon sugars in hemicellulose are then fermented using genetically modified E. coli. The cellulose is broken down with enzymes and fermented with another type of bacteria called Klebsiella oxytoca. This bacteria does double duty, since it also produces enzymes that break down cellulose, reducing the amount of enzymes from outside sources by 50 percent. The dilute ethanol produced from fermentation of both types of sugar is then distilled to make fuel.A combination of pre treatment like this and genetic modification of bacteria to ferment the 5-carbon sugar produced by the hydrolysis are the keys here.
I'd be interested to know three things
1. The yield in terms of energy in vs energy out, and cellulose in/ethanol out (kg/kg)
2. Production economics
3. Whether there is anything left to go back into the ground where the sugar cane grew.
Hat tip to After Guttenberg