Cellulosic ethanol is probably the MOST viable source of ethanol - much better than distilling corn, and perhaps better than even sugarcane distillate ( I have not read anything to dispute this, nor to support this) -
assuming that the enzyme technology is really at the point that the American Coalition for Ethanol claims it to be. And
HEMP would be the most viable crop for the job. Why? Because it grows without lots of maintenance and without pesticide. And because it is a very prolific crop that yeilds much more cellulose fiber than almost every other crop. Most countries already allow hemp farming for fiber and for biofuels. Only America is still wasting billions on the eradication of ditchweed hemp, which does not contain viable amounts of THC. And to think... once upon a time in America people recognized this crops value.
Still, with the claim that cellulosic ethanol is down to about $1.15/gallon, you are still looking at no net savings to the consumer. E85 has only 73% of the energy of gasoline, meaning a loss of 27% fuel economy. This equates to $1.58 for an equivelant amount of energy output, and this is before any taxes or profit.
Not considered by many is that as more land is used for fuel crops, and less is used for food crops, the cost of the food sitting on your table will increase. Lose at the pump and lose at the grocery store also. Nice.
I find the claim of "simple modifications" to be dubious. You would have to completely change out your fuel system (alcohol doesn't agree with many types of rubber and seals) and you would have to recalibrate your carbs. If you are EFI, then you get to buy larger injectors and reprogram your computer. Sure it can be done, but not simple or cheap - not by my standards.