Biofuels are any kind of fuel made from living things, or from the waste they produce and include: wood (chippings and straw), pellets or liquids made from wood, biogas (methane) from animal excrement and ethanol and diesel, or other liquid fuels made from processed plant material or waste oil.

In recent years the term 'biofuel' has come to mean the last category - ethanol and diesel: made from crops such as corn, sugarcane and rapeseed. Bioethanol can replace petrol, but only a mix of about 5% bioethanol with petrol can be used in an existing car without any problems. A high proportion of bioethanol in petrol may damage parts of the engine, eg. rubber seals and aluminium parts. Some 'flex-fuel' vehicles have been designed, with hardened components, non-rubber seals and larger fuel lines to cope with the abrasiveness of the fuel. Wider use of bioethanol would also require modification of the fuel supply infrastructure: pumps, tankers and storage facilities.

However, the main problem is that carbon emissions from biofuels can be very high, due to land use changes such as deforestation and from the fuel and fertiliser needed to grow and process the crops. When all factors are included, it is unclear if biofuels have lower greenhouse gas emissions than the fuels they replace. There are also concerns about impacts on biodiversity and water availability, and competition for land needed to grow food. The Centre for Alternate Technology, in their 'Zero Carbon Britain 2030' report, advocate for the use of electric vehicles along with a reduction in private car use as the way to reduce carbon emissions from road transport. Making ‘second generation’ biofuels from wood or grasses causes fewer problems, but there will still be limits on the land available. If some biofuel can be produced sustainably, it’s best used where electricity cannot be – such as shipping, some heavy goods vehicles and farm machinery, and aviation.