I have read much about how biofuels would reduce greenhouse gas emissions but the counter argument has always been the fact that producing these biofuels entail emissions too, that should be included in computing the net effect of using biofuels. Luckily a study by researchers from the Colorado State University and the US Department of Agriculture (Agricultural Research Service) will shed some light into the matter.
The study showed that ethanol and biodiesel from corn and Soybean reduced greenhouse gas emission by about 40 percent, if reed canary grass is used GHG emissions are reduced by 85 percent, if switch grass and hybrid popular are used, by 115 percent!

Apart from reducing the dependence on oil imports, it now looks very clear that using biofuels will have a net positive impact on greenhouse gas emissions from the point of production to the point of consumption. You can find this study in the April 2007 issue of Ecological Applications and the rest of the details here.