There are major issues with butanol that may kill it as a fuel from an environmental perspective. Its low volatility and its water solubility. It has a BP of 117'C and is water soluble. It will leach into ground water in the same manner as MTBE, which was an additive and not the primary fuel. So there will likely be more butanol ground water contamination than there ever was for MTBE.
Aren't they mutually exclusive? If it evaporates easily, wouldn't it tend to dissapate instead of leaching into the soil?......
The bp of 117C is about the same as gasoline, so no real difference there. "Water solubility" is more of a problem with getting excess water in the fuel. Since this is an "even numbered" alcohol, I suspect there are already "critters" in the soil that will "eat" any spilled.
"n-Butanol demonstrates an overall low order of toxicity.3 Acute (24 hours or less in duration) overexposures may cause irritation to the eyes and skin or can be harmful if inhaled. Prolonged (greater than 24 hours), excessive exposure to vapors may cause serious adverse effects, and even death. Birth defects have been observed in animals exposed to high concentrations of n-butanol which also caused serious adverse effects to the exposed mothers.4 See Health Information."
"n-Butanol is practically non-toxic to aquatic organisms and birds on an acute basis. The material is readily biodegradable.5 "
http://www.dow.com/productsafety/finder/nbut.htm
The difference is that n-butanol can be biologically degraded. It oxidizes in vivo, for example, into butanoic acid, which is what makes rancid butter stink. Butanoic acid can be degraded along the usual lipid-metabolism pathways. That doesn't mean you want to drink it, but it does mean that soil bacteria can detoxify it, at least in small amounts.
Of course n-butanol has acute toxicity at sufficiently high dosages, but so does everything else. (Water and ethanol included.)
MTBE, OTOH, is strictly a synthetic, with no relationship to anything biological. It's not going to biodegrade readily, because there are no natural enzymes with any capacity to bind to it. So it sits around. Stuff that sits around like that is typically carcinogenic. Benzene is the same sort of thing; enzymes generally don't know what to do with it, so it sits around.