Algae, as referenced by 'laidback' is being studied more as a producer of feedstock oil for biodiesel production. As always, the devil is in the details for something like that and I think we're a long way off from that being a viable source of fuel. Unfortunately for the consumer, biofuels in general are not any cheaper than convention petroleum. Which plays into the concept that there is no free lunch. The only reason ethanol and biodiesel fuels are even cost competitive is because taxpayers are already paying part of the fuel cost through tax subsidies. Take away those tax breaks and nobody would buy them. Unless the government did something revolutionary like require them to be put into fuel no matter what.
Most ethanol development in the United States does not come from "waste biomass". In 2010, over 40% if US corn production was used for producing ethanol. You can reach your own conclusion as to the impact on food production and, more importantly for the typical consumer, the cost of items made from corn. Brazil does have a natural advantage over the US because they have more sunlight and a greater natural ability to grow sugarcane and essentially convert the sun's energy to autofuel, which was what you're doing by using ethanol as a fuel.
It is fairly evident, whether one wishes to deny it by citing Brazil or not, that ethanol is damaging equipment, whether it's cars or boats or the small equipment people are having to put ethanol in. I don't think it's a placebo effect where mechanics are making these problems up just b/c they're hearing about it on the news. We have a website http://www.wefixfuel.com which talks about this and other issues with fuels, whether ethanol or regular diesel fuel, biodiesel and others, including LPG.