Sugar cane is the most cost-effective biofuel. It takes much less energy to convert sugarcane to ethanol than other sources of ethanol such as corn. The downside with sugarcane is that it needs to be processed within 48 hours of being cut down.
Despite being the most cost-effective, sugarcane and other sources of ethanol still contribute their share of environmental costs. Growing biofuels requires a significant amount of land which often results in deforestation and the like. In the end it comes down to a cost-benefit analysis which doesn’t necessarily place biofuels on top.
In addition to the points mentioned by pbdesai, growing corn for ethanol in the US requires fertilizer. Run-off from the growing areas (Iowa and vicinity) flows down the Mississippi River and is the primary culprit behind the growth of the Dead Zone in the Gulf of Mexico.
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