The problem with biofuels in general is that they're always sold as "from byproducts". But of course as soon as you set up a market for fuel it becomes a product in its own right. So they tend to drive the conversion of natural habitat into land managed like agricultural land, which has all the same problems as normal agriculture (habitat destruction, use of ecosystem-destroying pesticides, pollution from fertilizer runoff, soil erosion, etc.) and it's not even producing food. Land usage for food crops (destruction of tropical rainforest habitat for soy and palm oil, destruction of atlantic rainforest for sheep farming, etc.) is already contributing to a rate of species lost three orders of magnitude higher than the expected background rate. And there's a limit to how much we can eat; the amount we can burn as fuel is almost unlimited.
"Sustainable" solutions that incentivise turning over more land to agriculture are nothing of the sort. And it's really the incentives that matter more than whether the initial prototypes are using existing byproducts.