Since my primary hard disk is encrypted with FileVault2, I also wanted my backup drive to be encrypted. I plugged in my external drive, brought up Disk Utility, and went to erase/format the disk. I chose Mac OS X Extended (Journaled, Encrptyed). However, I couldn't find out what kind of encryption it uses. Does anyone know (and/or know how I would look this info up via a command or system utility)? Is it the same as FileVault2?
Yes - it's the same whole disk encryption. In both instances you end up with a volume wrapper and key storage to unlocks the encrypted file system where the data is safely stored. Disk Utility is a bit of a chore to set up encryption of an external drive, so I usually just wipe the drive and set it for Backups and then tell Time Machine to encrypt the drive. It handles the formatting, generating the crypto keys and lets you choose a passphrase to unlock the keys.
You can use
Here is what a fully encrypted and locked USB drive looks like when you set up Time Machine and instruct it to encrypt backups to an external drive: