and their reasons are pretty good (for a change). According to some analysis, it takes as much or more energy to grow and harvest the biomass and to distill it to produce the ethanol as you get from burning it. In practice, at least here in the US, ethanol has become more of a farm subsidy than an energy alternative. There is also some concern that ethanol will increase summertime smog due to higher nitrous oxide emissions.

Even this ethanol advocay site points out some of the problems. For example, the linked article cites that 95% of the ethanol produced in the US is made from corn (probably for political reasons more than anything else) but you only get about a 25% return on the energy. Making ethanol from grasses and other biomass products would probably be a more effective solution but politically, its a tough sell. It also points out that ethanol has less energy per gallon and costs more to produce than gasoline.

The economic case against making a massive commitment to ethanol is that cellulosic ethanol currently costs too much to compete with gasoline. The refinery gate price of gasoline is about $0.80 per gallon; transportation, storage, and retailing add about $0.40 per gallon; and taxes raise the price at the pump to roughly $1.50 per gallon. Producing cellulosic ethanol costs about $1.20 per gallon (1.80 per gallon, gasoline equivalent, since ethanol has two-thirds of the energy of a gallon of gasoline). Assuming that the per-gallon distribution costs are the same for ethanol and holding total tax revenue constant, ethanol would sell for $1.80 per gallon at the pump. However, this is equivalent to $2.70 per gallon in order to get as much energy as in a gallon of gasoline. Technology improvements promise to reduce this cost, but it is unlikely to fall below the cost of producing gasoline.

As for cars, it might be better to run ethanol in newer cars. Ethanol is a solvent. Its use can clog fuel filters in some cars as it partially dissolves the sludge in the bottom of older gas tanks. Some hoses and gaskets don't stand up very well to ethanol, either. This may not be a concern with most newer cars.