University of Minnesota researchers have just released a study (available in the Proceedings of the National Academy of Sciences) comparing the full environmental and health costs of gasoline, corn ethanol, and cellulosic ethanol. The results are pretty good... if you're investing in switchgrass:
The study concluded that the total environmental and health costs of making a gallon of gasoline was about 71 cents, compared with a range of 72 cents to $1.45 for corn-based ethanol, and 19 to 32 cents for cellulosic ethanol, depending upon the technology and type of plants used.
A major difference between corn-based and "cellulosic" ethanol is that biorefineries producing corn ethanol need to purchase electricity, while those producing cellulosic ethanol can burn the plant waste and generate their own power, the study said. That adds another source of air pollution to corn ethanol as well [Tom Meersman, "U Study: Corn Ethanol No Better than Gas," Minneapolis Star-Tribune, 2009.02.02].
The problem is not so much in your engine as in everything leading up to it. Corn ethanol production—planting, fertilizing, harvesting, and processing—produces more particulater matter (a.k.a. soot). Cellulosic ethanol production requires fewer inputs and thus produces less pollution and lower health costs.
Now there's still an argument to be made that corn ethanol is at least domestic and reduces the amount we have to spend on the military subsidy for foreign oil. But this new research shows corn ethanol is at best a temporary and dirty measure, while cellulosic ethanol holds the true promise for more energy independence.
In other words, corn is for tummies; grass is for gas!