Unfortunately producing butanol in large quantities is also problematic. Right now, since the envirowakos will not allow drilling ANWAR or gasification of coal, ethanol is the only approach that works economically; despite what the unwashed masses are being led to believe.
Cellulosic will probably not be viable in our lifetimes. Current projected cost to build a commercial sized cellulosic plant is $6.00+ per annual gallon. Not to mention very high operating cost, including the cost of the highly specific enzymes required to prepare the various feedstocks. Guess what groups are behind the ethanol scare stories? If you said big oil and the greenies, you get the prize.
BP is the first major to get behind butanol. They have deep enough pockets to make it happen.
The beauty of butanol is it’s easier to pipeline and blend with gas, so if it’s higher to produce the reduction and transportation costs will offset some of that.