While ethanol is the most mature biofuel technology, microorganisms can also ferment higher molecular weight alcohols, such as butanol (a 4 carbon alcohol as compared ethanol which is a 2 carbon alcohol). In addition to cellulosic ethanol technologies, Arbor Fuel is developing yeast strains to produce cellulosic butanol from biomass, because butanol as a next-generation biofuel will have several significant advantages once it can be produced economically.

Some of the advantages of butanol are that it has an energy density similar to gasoline and therefore has similar MPG ratings, it does not absorb moisture and is not corrosive, it is compatible with ethanol blending, it can be produced with existing ethanol production facilities with relatively minor modifications and it can be blended with diesel.

Under current US Environmental Protection Agency (EPA) regulations, butanol can be blended with gasoline in concentrations up to 11.5%. The EPA considers blends of 11.5% or less butanol with gasoline to be "substantially similar" to pure gasoline.