It's been obvious for some time that using food crops as fuel (first generation biofuels) is a terrible idea. Well, obvious to everyone except the governments subsidising them.

What people are still interested in is 2nd gen - converting inedible biomass (mainly cellulose) into liquid fuel - and 3rd gen - growing algae, which have all sorts of cool properties. In theory, you can engineer the algae to produce a usable fuel directly. In practice, it's still proving tricky.

No. Not all ethanol is made from corn or wheat - for instance, in Brazil it's made from the rejects of sugar cane, the other half goes for sugar.

The real problem is that you compete with food crops and water for fertile land, or destroy native forests.

"Competing with food crops" is a curious notion. When did we run out of space for food crops? Not on this planet.

Corn grown in Iowa could feed 2 United States. So we make all sorts of other things out of it, or the govt pays folks (me for instance) to NOT grow corn and keep the price up.

At this point in history, with our current distribution system, biofuels can make money. In the future they will become more efficient, perhaps orders of magnitude more in ways we haven't thought of yet (oil-drop lenses on the leaves; kelp that fills its pods directly with waxy carbohydrate films; seeds that can be eaten OR converted to fuel etc).

The dumb thing would be to stop innovating now, because of FUD about imaginary issues.

It competes with food crops for fertile land. That means: it pushes food production to places with worse water, farther from consumption centers, increasing waste and costs related to transport.

Maybe in the US the situation is not clear because you have vast plains so it doesn't matter if you cover the entire surface with corn, but here in Brazil, my state vanished with an entire forest just for sugar cane and soy crops. Google "Atlantic Forest".

Oh that's easy to solve: simply insert a gene that makes biofuel corn toxic to humans, rendering them non-edible and solving the fictitious moral dilemma.

I think you were joking, but the sad part is, yes, that is what they do (minus the genetics) in order to avoid import restrictions (that apply to food but not "denatured", inedible corn/biofuel).

And it's long been practice to make alcoholic substances toxic if they're not intended for human consumption so that they avoid regulations and taxes that apply to alcoholic beverages.

Depends on the biofuel. I remember watching something a few years ago where Brazil (I think it was Brazil) was processing sugar cane waste into bio-fuel. Granted, sugar cane waste is a much better bio-fuel than corn ethanol is (I think on the order 8 times better).

Edit: Should have read @hcarvalhoalves's comment. ^^;;

How is its edibility relevant? Being edible means it's in a certain configuration that the human "engine" can process. I don't think it's obvious that this configuration is inherently inefficient for non-biological engines, even if it is the case.

Well, there is the definition of modern argiculture, which goes something like:

"Modern agriculture is the process of converting hydrocarbons to carbohydrates."

In other words, the way we feed the large human population, is by leveraging a diminishing supply of fossil fuels to grow food. Replacing fossil fuels with food in that equation doesn't really work; we need to think of something else.

Not because making biofuel is impossible, but because one of the main uses for fuel would be to make food -- and making food and making biofuel is in direct competition for resources.