Via Kevin Drum, biofuels guru Mike O'Hare says recent studies have shown that, once you take all the factors into account, corn-based ethanol and similar fuels actually dump much more CO2 into the environment.
There is now more than good reason to expect that no biofuel from seeds, possibly none (even cellulosic) grown on land that could grow food, will reduce global warming if substituted for petroleum products...
(There's more...)
The first piece of the puzzle is the recognition that if a piece of forest is cut down, or natural grassland plowed up, to grow biofuel, decay and/or burning of what was there before releases an enormous puff of carbon into the atmosphere that needs to be counted along with the carbon releases of the biofuel crop. Even spreading the initial release over decades of biofuel growing, it is large enough to push almost any biofuel's global warming intensity way above that of gasoline, especially because it all occurs right at the beginning of the future rather than a few years or decades down the line...
Small amounts of diesel and ethanol will probably be available from trash and agricultural waste like the tree branches and bark scraps the logging industry leaves around to decay, or cornstalks, or McDonald's used frying oil, and these are environmentally OK because they don't induce land use conversion....And many smart folks in this business expect that algae growing in tanks in the desert (for example) can eventually be taught to make a lot of diesel cheap, with no land use implications. But for now, and for a while, biofuels generally are going over a very rough patch of road, a patch that may go on for years before new technologies smooths it out again.