Other than from the starch contained in grains, ethanol can be produced from cellulose, the main component of plant cell walls and is the most common organic compound on earth. The following feedstocks are being considered for bioethanol production:

• Agricultural residues (crops residues eg. stalks, leaves, and husks of corn plants)
• Forestry wastes (chips and sawdust from lumber mills, dead trees, and tree branches)
• Municipal solid waste (household garbage and paper products)
• Food processing and other industrial wastes (black liquor, a paper manufacturing by-product)
• Energy crops (fast-growing trees and grasses) developed just for this purpose
• Cellulose - the most common form of carbon in biomass, accounting for 40%-60% by weight of the biomass. It is a complex sugar polymer whose crystalline structure makes it difficult to convert it into usable sugars for ethanol production.
• Hemicellulose - another major source of carbon in biomass, is a complex polysaccharide made from a variety of five- and six-carbon sugars which can easily be hydrolyzed into simple sugars, even though the sugars are difficult to ferment to ethanol.
• Lignin - a complex polymer, which provides structural integrity in plants. After the sugars in the biomass have been converted to ethanol, its high energy residual material can be burned to produce steam and electricity for the biomass-to-ethanol process.

   Making use of cellulose to make ethanol dramatically expands the types and amount of available material for ethanol production such as wood chips or energy crops of fast growing peas and grasses. It would also lead to a great increase in the volume of fuel ethanol that can be produced in the world. However, it is more difficult to break down cellulose to convert into usable sugars for ethanol production. Therefore, a new process has been developed which uses enzymes to break down the cellulose in woody fibers, so that the crop residue, as well as trees and grasses, which require less energy to produce than corn, can be used to make ethanol. Producing ethanol out of crop residues and other plant waste offers new jobs and opportunities for economic growth outside the grain belt. For example, Iogen corporation in Ottawa, Canada produce just over a million gallons annually of cellulose ethanol from wheat, oat, barley waste products. Enzyme companies such as Genencor International and Novozymes, have reduced enzyme cost and increase enzyme life and durability to make commercial production of cellulose ethanol more economical.

    At the present time it is not cost-effective to produce ethanol from plant waste. Scientists are developing new hybrid trees that can be harvested in less than ten years and any perennial grasses that can be established in one year and can produce two harvests a year for many years. These new energy crops will not require constant tending or fertilizers, and their root systems will rebuild the soil to prevent erosion and offer habitats for wild animals.

Two reactions are involved in the process of converting biomass is to bioethanol:

• Hydrolysis - is the chemical reaction that converts the complex polysaccharides in the raw feedstock to simple sugars. Acids and enzymes are used as catalysts in this reaction.
• Fermentation - is a series of chemical reactions caused by yeast or bacteria feeding on the sugars and converting sugars to ethanol. Ethanol and carbon dioxide are produced as a result. The simplified fermentation reaction equation for the 6-carbon sugar, glucose, is: