So both Ethanol and Hydrogen is still pretty energy consuming to create, and will probably not replace gasoline as fuel.
One of the key problems with our use of ethanol is where it comes from. The US is obsessed with the notion of using corn (to the tune of 95% of our ethanol coming from corn). Corn requires vast quantities of machinery and power to produce and transport. It is also not a very efficient ethanol fuel at all.
In fact, estimates range from saying that it nearly to completely cancels out its positive effects. Gasoline, for all its problems, is remarkably efficient. It only takes 6% of the energy produced by gasoline itself to get it out of the ground (94% effiency, excluding transport and refinement). Estimates put corn ethanol at using 3 gallons of the stuff to produce 4 gallons (25% effiency total). And for that small benefit we put food to the flame. As an actual statistic: corn prices in Maryland, USA have doubled since last year. Guess how many things we use corn for? Look on your lables and find how many products contain "corn syrup." Furthermore, corn requires large quantities of pesticides also and these enter local water systems, polluting them. And because it is now so profitable, farmers want to plant much more.
How does this all affect food supplies? Take Europe for example. If Europe were to convert every single one of their agricultural fields to producing corn for ethanol, they would only be able to supply themselves with something like 25% of the ethanol they would need (assuming a 100% ethanol use, not a blend).
Meanwhile other possible ethanol fuels, like sugar cane are being considered. In fact, President Bush just went down to Brazil a few weeks ago to talk to the President there about a sugar cane for ethanol deal. Guess where Brazil (legally or illegally) gets alot of its land to grow sugar cane? If you guessed "by slashing and burning rainforest" you're a winner.
Finally, there are plants that could provide cellulosic ethanol. Switchgrass is a plant in the Maryland area that can be used to produce ethanol... twice as much as the same amount of corn could. Switchgrass is also perennial, so there is no need for replanting, it is a native plant to Maryland and can grow in marginal land without competing with our food supplies.
However! Though it is cheaper to produce, less wasteful, and produces vastly more ethanol, there are no cellulosic operations in the US because it has a very expensive refining process and estimates say we are about 15 years away from any realistic use of it.
Ethanol isn't an all or nothing proposition. There are many choices to be made in its use.
*Some statistics and facts here are estimates, though only because I didn't want to look up exact numbers- however, they are reasonably accurate. Most are right on having been pulled from
The Bay Journal, April 2007