Several studies have suggested that corn ethanol makes a modest improvement over gasoline in terms of greenhouse gas emissions. However, none took the concept of carbon debt into account.
Carbon is stored in the soil through the process of photosynthesis. Plants and grasses take in carbon dioxide from the air, and store it in their shoots, leaves, and roots as organic carbon. When these plants decompose, they leave some of their carbon in the soil. When land is cleared and soil is tilled to plant corn, or any other crop, the carbon from soil and the vegetation cleared is released into the atmosphere.
This release of carbon dioxide is called carbon debt, and when you take into account this debt along with the production process to create corn ethanol, ethanol can become worse than gasoline in terms of greenhouse gas emissions.
Therefore, even though ethanol may help reduce reliance on foreign oil, once you take into account the consequences of any related changes in land use, total greenhouse gas emissions may actually exceed those from gasoline.
For more information, watch Iowa: Corn and Climate.