What is ethanol? - Ethanol is the best known of the biofuels, and they in turn are any fuels derived from recently living organisms or their by-products. So wood and straw are biofuels, as is camel dung.

But in practice today biofuels are mainly alcohols or other hydrocarbons distilled from the residues of specially-grown crops such as sugar cane, sugar beet, oilseed rape or maize, and used as substitutes for petrol or diesel in the engines of motor vehicles.

Is there an advantage?

Biofuels have one enormous, overwhelming plus-point, which is that - in theory - they are carbon-neutral. When the fossil fuels, oil, gas and coal are burned in cars or power stations, they add substantially to the net amount of atmospheric carbon dioxide (CO2), the greenhouse gas which is the principal cause of global warming. The carbon they release is new to the atmosphere, because it has been buried deep beneath the earth for millions of years. On the other hand, when biofuels are burned, they are only releasing the CO2 which was absorbed from the atmosphere by the crops used to produce them as they grew. It was there already - so there is no net increase. Biofuels are therefore classed as a renewable energy source, along with wind, wave and solar power.

So is ethanol the answer to reducing our CO2 emissions?

It would certainly seem so at first sight, not least because the fastest growing greenhouse gas emissions are those from the transport sector, and it is in road transport that biofuels have an immediate application. The best known biofuel, ethanol, which is made from sugar cane or sugar beet, is already being widely used as a motor vehicle fuel in Brazil, which is the world's biggest producer, making 16 billion litres of the stuff annually. Brazil went down the ethanol road all by itself after the oil shocks of the Seventies, being poor in domestic oil but rich in agricultural land. Now ethanol is everywhere on Brazilian roads, up to 55 per cent cheaper than conventional petrol, and "flex-fuel" vehicles which can run on either have grabbed two-thirds of the Brazilian new car market. So a biofuelled transport system, with much reduced net CO2 emissions is already a reality, not just a pipedream.

Should the world follow Brazil?

Biofuels are taking off world-wide. The US has recently woken up to their attractions and is surging ahead with production; by 2010 its output will rival Brazil's. But this is not just for environmental reasons: anything that reduces American reliance on oil imports is welcome, and furthermore biofuels provide a big new market for American farmers. The European Union is also boosting ethanol production. Indeed, some of the enormous quantity of surplus wine that Italian and French growers are producing - the so-called "wine lake" which Brussels is desperate to shrink - is currently being distilled into ethanol at a cost of half a billion euros a year.

But this is a short-term measure as making biofuel from grapes is prohibitively expensive; you are unlikely to be filling your tank with inferior Beaujolais in the years to come.

What about Britain?

Britain entered the biofuel age in November when the Government announced the Renewable Transport Fuels Obligation (or the biofuels obligation, for short). This will require UK oil companies such as Shell and BP to blend a fixed proportion of biofuels - 5 per cent by 2010 - with all the petrol and diesel they sell. Petrol will be blended with ethanol (or a similar biofuel, butanol), and diesel will be blended with biodiesel from oilseed rape or recycled vegetable oil.

At present, Britain produces a modest amount of biodiesel but virtually no ethanol at all (although the first major British ethanol plant is being built in Norfolk by British Sugar), so most of the biofuel will at first have to be imported from Brazil and elsewhere. The new mixes will make little practical difference to the motorist - they will go straight into standard engines and will not push up pump prices because of lower Treasury duty on biofuels - but the Government fervently hopes they will make a difference to Britain's carbon emissions.

Announcing the obligation, the then Transport Secretary, Alastair Darling, said it would save about a million tonnes of carbon dioxide by 2010, which would be the equivalent of taking 1 million cars off the road. So although some might see biofuels as the way to energy security, or to keep farmers in business, the British government's involvement with them is for solidly environmental reasons.

Are there any drawbacks?

The initial enthusiasm of environmentalists for ethanol and other biofuels has been tempered as they have thought through the implications of using them on a large scale, and groups such as Greenpeace, while still supportive in principle, are starting to have major reservations. The key point is this: a certain amount of biofuels can be produced to make a difference at the margin of CO2 emissions, without major changes in land use, but to make a real, substantive difference to emissions, vast amounts of new cropland would be necessary. The biofuel market might become so big that this demand would be a powerful driver of rainforest destruction. For example, the production of palm oil, which is increasingly important in biofuels, has been one of the biggest causes of the devastation of the rainforest in Borneo and Sumatra. Are we going to reduce CO2 emissions by wrecking somebody else's rainforest? Friends of the Earth says that is hardly a just, let alone a sustainable solution.

Is ethanol a green alternative to fossil fuels?

Environmentalists reject the idea that biofuels could be a "drop-in" solution to go into the tank of your gas-guzzling 4x4 and suddenly turn it green. They might contribute to a truly green solution in cars that were hyper-fuel-efficient, says Greenpeace, but by themselves they do not do it: it is the demand for fuel which has to be cut back in the first place. The planet will not be saved by putting a different fuel, however carbon-neutral it might be, into more and more, bigger and bigger cars.

Are biofuels a way to save the planet?

Yes...

* They are carbon neutral and so do not add to net emissions of greenhouse gases

* They can lessen global demand for fossil fuels

* They involve the transport sector where carbon emissions are growing fastest

No...

* Vast areas of rainforest might have to be cut down to provide the cropland necessary to grow enough of them to make an impact on CO2 emissions

* They can be exploited for 'green-washing' motor transport, making gas-guzzlers look environmentally friendly

* They might provide a toehold in Europe for producers of GM crops