Does that seem a daft question, comparable to the legendary story about Detroit holding back technology that would allow you to run your auto on tap water?

Is it?

First of all lets look at the availability of wood. Since it has the highest production in Canada, the province of British Columbia should provide a good example. B.C. produces 8.8 million tonnes of wood waste per year, although this will change as global warming continues to slowly push the forests North.
The current pine beetle infestation in British Columbia has, as of this writing, spread to 8.7 million hectares of forest, a total of 42 billion cubic feet of lumber in a beetle infected forest, most of it irrecoverable as timber. ¹

And that's just one source of wood, interesting because it is available at an attractive cost and is not being used (generally) for lumber production.

The larger, uninfected forests of timber are regularly harvested and total over 14 billion board feet of export lumber per year. The timber harvesting creates timber "waste" which has been burned or allowed to break down at site. This amount of cellulose adds up to the 8.8 million tonnes as mentioned but unfortunately only about two thirds is easily accessible, leaving nearly 6 million tonnes. Using present methods that would produce over 3.5 billion gallons of ethanol.

That's just from ONE province in a year.

The beetle infested pine forests are estimated to be able to produce 21 billion gallons IN ADDITION to the 3.5 billion gallons mentioned above. That's almost a half a gallon for every man, woman and child in England ² and surely you can borrow Robert, your mother's brother's share!³

How is it done?

The wood chips are added to water, "cooked" (that is to say boiled, usually under pressure) to remove the binding substance in wood called lignin. The separated lignin used in the production of glue (naturally enough) or further treated⁴ and all the remaining cellulose is broken down to sugars by enzymes then allowed to ferment. ⁵ The resulting "beer" is distilled to produce a 95% alcohol ethanol that is referred to as "cellulosic" ethanol. This ethanol burns cleanly, creating only carbon dioxide and water, unlike the pollution created by gasoline (or if you insist, petrol). Using oxygen rich alcohol instead of fossil-fuels to run cars is not a new idea. In 1925 Henry Ford made the statement that ethyl alcohol was the "fuel of the future" and a motor car fuelled by ethanol was driven all the way from Rio de Janeiro to Sao Paulo,⁶ 249 miles or 400 kilometers. During World War II Ford and other automobile manufactures had trucks and autos with carbueretors that ran on pure ethanol for economic and availability reasons. In the postwar period, gasoline was so plentiful and cheap that ethanol lost its attraction. Presently many modern autos can run on a mixture of up to 10% ethanol and 90% gasoline and with fairly minor modifications they can run on "pure"⁷ ethanol. It can also be used in the production of biodiesel but that is another discussion.

Why is wood cellulose better than corn or other plant substances?

First of all corn and many of the other producers of ethanol are food and reducing the food supply is a disaster in the making. The recent Tortilla Riots in Mexico have been linked with the increase in cost of corn due to ethanol production. Another source is straw but GMO yeast is commercially used in that method for a more efficient method of breaking down cellulose which could potentially escape into the xylose⁸ rich world we live in and cause considerable harm to Mother Nature.

Second, wood waste is being produced in any case during the process of making the paper you read and perhaps the chair you were sitting on when you read it. Despite protests about logging old growth forest, the vast majority of lumber harvested is from tree "farms" which have been planted since early in the previous century making them a renewable resource with negligible net carbon production.⁹ Replacement trees are planted at a rate of over 175 million seedlings per year in B.C. to reforest areas after logging, wildfire or insect infestations and an increase is planned for additional carbon off-setting. Petrochemicals that produce fuels are not renewable and do nothing but create energy and pollution including the carbon they have had locked inside for millennia.

Lastly the decreasing use of the controversial compound methyl tertiary butyl ether (MTBE) as an octane boost and substituting ethanol is a good "leg-up" on decreasiing production costs.

What is the downside?

The obvious downside is economic, the process has to be cheaper than the obtaining and refining of petrochemicals but luckily, with the price of crude oil rising, that magic number is fast approaching. In addition, the climate change that spurs the quest for alternate energy is also causing the habitat of the trees to change. Even the beetle that is destroying so much of the forest can adapt to changes more rapidly than can a tree. The resulting shift of forest will be a very slow process, leaving fewer and fewer trees but providing more and more "waste" wood.

The process to produce commercially viable amounts of ethanol would be long term project but could possibly have a finite life-span. The ethanol produced would create negligible pollution and produce far less net carbon dioxide but mass production would have to be followed up with a drastic increase in tree planting and a search for changing-climate hardy stock.

All in all perhaps a good choice for the long term if carefully enabled. Can it be done? Yes, as one researcher pointed out, when we 'seize opportunity where once we saw dust' and it is certain that Britons will rise to the challenge to consume more alcohol!