Sounds like a no-brainer, right? Business Week disagrees. According to a recent special report, cellulosic ethanol E-85 hybrids are cleaner and cheaper than diesel hybrids and plug-in hybrids. Not all of their readers agree with their points, but they're worth considering. One point they make is that biodiesel blends higher than 5% void factory warranties. That's not a problem for a lot of green fuel enthusiasts, but for the mass market, it's critical, and E-85 doesn't void the warranty if the car is designed to use it. Another point is that plug-in hybrids take the batteries to higher and lower charges than they're designed to run on, which may shorten the life of the batteries (they last so long on gas hybrids because they maintain a charge of 40-60%). Business Week also looks at CO2 emissions, and provides a smart analysis concluding that E-85 emits far less than biodiesel hybrids or gas hybrids.
I'm sure that the debate isn't over yet, but the article is definitely fuel for discussion. [Source: Business Week, and thanks again to Joel A.]