The worlds energy supply is still primarily based upon fossil fuels such a oil. It has been estimated that the world's oil supply will run out in the next 40 years. Cellulose is an abundant compound that is found within plants and trees that consists of long chains of glucose molecules. It can be broken down to form cellulose bio-fuel, also known as cellulose ethanol. Cellulose ethanol is a viable alternative to fossil fuels in some applications, but has a number of disadvantages.

There are currently only a few large-scale production plants that are capable of creating cellulose ethanol. The few that do exist are pilot projects that have been funded by the government. The breakdown of cellulose into cellulose ethanol requires the use of expensive enzymes. The enzyme cost to produce 1 gallon of cellulose ethanol is $1. When other costs are added, it leads to a overall production cost of $3 per gallon of cellulose ethanol. Significant investment in research from private sources is needed in order to commercialize cellulose ethanol production and reduce overall cost.

Cellulose ethanol has been proposed to be a green alternative to vehicle fuel. Vehicle fuel efficiency is normally quantified by the miles obtained per gallon of fuel. E85, a fuel that is generated from cellulose ethanol, is expected to have a reduced fuel efficiency compared to gasoline. A study carried out by Dan Edmunds and Philip Reed of Edmunds.com, demonstrated that the average fuel economy of E85 was 13.5 miles per gallon, which is lower than the value of 18.3 miles per gallon obtained with gasoline.

Gasoline fuel is normally transported through specially built pipelines, which in the United States, originate in the mid-west. Unlike gasoline, cellulose ethanol absorbs water and is also a corrosive substance. This makes current pipelines incompatible with ethanol transportation, although its possible long-term studies and modifications may allow this in the future. The result is a higher cost of transport through the use of railways or trucks.

Gasoline blends that have no ethanol can be stored for many years without contamination. Unfortunately, ethanol-containing fuels are hygroscopic, which means they readily absorb 50 times more water than conventional fuels. The result is a reduced shelf life in ethanol fuels. For example, E10, an ethanol-blend fuel, has a shelf life of approximately three months and it is recommended that fuel in tanks is replaced every two to three weeks to avoid alcohol- and water-related engine problems.