Ethanol is traditionally made from food crops like corn and sugarcane, but it can also be made from cellulosic feedstocks, non-food crops or inedible waste products. Examples of sources for cellulosic biofuel are: crop residues, Miscanthus grass, switch grass, paper pulp, packaging, cardboard, sawdust, wood chips, rice hulls, corn stover and the byproducts of lawn and tree maintenance. Once the raw material to make the cellulosic biofuel is broken down with enzymes, it can be fermented to make ethanol. This chart shows how cellulosic biofuel, and other alternative fuels, can be used to reduce greenhouse gasses:
There are tons of cellulose containing raw materials that could be used to produce ethanol that are simply thrown away each year in the U.S. alone. Examples of this are over 100 million dry tons of urban wood wastes and forest residues and over 150 million dry tons of corn stover and wheat straw. That material plus just a fraction of the other paper, wood and plant products that could be used to create ethanol instead of garbage would be enough to make the U.S. independent of foreign oil if processed into ethanol and used. This theme is true in other parts of the world as well.
Financial concerns stop cellulosic biofuel from really taking off and providing a consistent source of fuel. This type of ethanol production involves an additional step, the breakdown of the raw material into glucose with enzymes, which translates into a higher cost. However, the raw material is abundant, and the reduction of greenhouse gas emissions from cellulosic biofuel can be up to 90% compared to fossil fuel petroleum, significantly greater than those obtained from traditional 1st generation biofuels. Cellulosic raw material can be easily grown in land marginal for actual agriculture, or simply be diverted from landfills, reducing the costs associated with landfills, in order to make the production of cellulosic biofuel more cost-effective. Cost-effective processes, such as using inexpensive enzymes to break down the cellulose, are being researched and developed as well.
Please see: renewable energy: biomass and biofuel