Biofuels are fuels created from materials derived from biological sources. The most common biofuels are ethanol and biodiesel.

Many of these fuels are considered "green" because they produce fewer types of greenhouse gas than traditional fossil fuels.

Generations of Biofuels


First-generation biofuels were made from food crops, such as corn and sugarcane, from which they take their names. The most commonly used ethanol in fuel comes from these crops.

First-generation biofuels remain a popular choice due to their relative affordability. These fuels are also compatible with existing engines, though concerns exist about their production methods, which can harm ecosystems.


Second-generation biofuels are made from lignocellulosic biomass, such as trees and grasses. They are cheaper to produce than first-generation biofuels because they do not require food crops gathered from croplands. Like ethanol, biodiesel is a type of second-generation biofuel.

Larger-scale production of second-generation fuels offers a promising alternative to first-generation biofuels, though these fuels have yet to become mainstream.


The third generation of biofuels remains in development, but many experts see it as the future of the industry.

Third-generation biofuels are created from non-food biomass, including waste products and algae.

This kind of fuel is advantageous because it could be produced anywhere with water and CO2, giving companies greater control over costs and environmental impact.


Fourth-generation biofuels include solar fuels and advanced biofuels.

These fuels come from CO2 captured from power plants, meaning production does not need land clearing or harvesting crops via traditional methods. Thus, this biofuel is more environmentally-friendly than previous generations.

Fourth-generation biofuels can potentially reduce greenhouse gas emissions more than second-generation biofuels, though they remain in the research stage.

Types of Biofuels



Wood gas is a type of biofuel created by burning wood.

It is an alternative to petroleum for its use in transportation. Wood gas contains no sulfur or other elements that would cause problems with the engine, which makes it the most efficient form of biofuel.

Unfortunately, the difficulties producing this fuel without destroying forests mean using wood gas increases carbon emissions. Replanting trees after harvesting their biomass for fuel production could avoid such a situation.


Biogas is methane produced from organic waste products through anaerobic digestion.

The process yields large amounts of methane gas, which powers vehicles.

Biogas has the advantage of replacing petroleum without significant changes or sacrifices for consumers. However, producing this gas requires large amounts of organic waste, creating difficulties in adopting it on a large scale.


Biodiesel is created by eliminating two steps from traditional diesel fuel creation: the removal of glycerin and the chemical reaction with lye.

Consequently, biodiesel offers numerous advantages over traditional diesel fuel sources. It increases engine lubrication due to its non-glycerin nature. Biodiesel also offers fewer particulates than standard diesel fuel.

However, because so much of the current biodiesel production relies on palm oil, some experts express concern that biodiesel might exacerbate deforestation.


Methanol, also known as wood alcohol or wood spirits, can be produced through bioconversion of biomass without oxygen via hydrogenation using a catalyst.

Methanol has potential advantages over ethanol in that it is blendable with gasoline while remaining stable at lower temperatures.

It is also easier to store and transport highly-concentrated methanol for use in vehicles than other biofuels.


A type of alcohol made by fermenting organic substances, such as corn, wheat, sugarcane, barley, and potatoes, ethanol is the world’s most commonly used biofuel.

It is blendable with gasoline at low percentages and provides a cleaner-burning fuel than traditional petroleum. This form of biofuel releases fewer types of greenhouse gas and other air pollutants when burned than petroleum.


Butanol is an alcohol that occurs naturally in different foods, such as fruit, honey, seaweed, and sugarcane juice.

It has been used as an alternative fuel source because it produces less carbon monoxide when burned than methanol or ethanol.

The advantage of butanol over ethanol is its high octane level — higher than even premium gasoline — which makes it a good substitute for high-performance vehicles.

The Difference Between Advanced Biofuels and Biofuels

Biofuels are relatively easy to produce at low cost in large quantities, making them the most affordable renewable alternative fuel source. They are derived from renewable resources, such as crops or trees.

Advanced biofuel sources offer even more potential advantages over standard biofuels because they are made from non-food feedstocks, such as algae, or non-edible plant parts, including sawdust, stalks, cobs, husks, and shells.

Advanced biofuel sources also require less land to produce their biomass than traditional crops for food production, such as corn or sugarcane.

These sources make the fuel more expensive to produce because of the extra steps required to remove harmful impurities.

However, advanced biofuels might offer environmental benefits over traditional crop-based biofuels because their production does not require deforestation.

Benefits of Biofuels


Environmentally Sustainable

Compared to petroleum, biofuels emit less carbon monoxide and other types of greenhouse gas when burned.

This makes them a preferable alternative fuel source for vehicles that produce high levels of air pollution.

Economically Sustainable

Biofuels are typically less expensive than petroleum, although the products to create them can prove costly.

However, they pose little threat to food prices since crops used in their production can provide food and produce biofuels. This means they do not need to compete with food markets for resources required in production.

Reduces Use of Fossil Fuels

Biofuels are crucial alternatives to petroleum and are in high demand for powering vehicles.

This is especially true when petroleum prices increase, creating a need for an alternative fuel source at reasonable costs.

Lessens Air Pollution

Burning biofuels releases fewer greenhouse gas emissions and other air pollutants in the environment than burning fossil fuels. This means they are healthier, environmentally-friendly alternatives to traditional energy sources.

Low Cost

Biofuels typically cost less than equivalent amounts of traditional fossil fuels, which makes them suitable renewable fuel source options.

This also makes them economically sustainable choices for reducing dependence on oil or petroleum products.

Discourages Monopoly

The use of biofuels as an alternative to petroleum encourages growth in the renewable energy industry.

This makes it more difficult for major oil companies to monopolize oil or petroleum resources. Those seeking new sources of fuel can choose from different options, which reduces the monopolization by petroleum producers.

Promotes Agriculture

Biofuels are often produced through processes involving crops grown across large swaths of land.

They help promote agricultural business and encourage growth in farming communities. Additionally, they require less farmland than traditional sources for food products, such as corn or sugarcane. Thus, more land is available for other types of agricultural cultivation.

Final Thoughts

Biofuels offer a renewable and environmentally sustainable alternative to petroleum. This makes them an attractive choice for those looking to reduce their dependence on oil or fossil fuels.

While advanced biofuels hold even more potential than traditional biofuels, they require careful research before adopting them as widely used fuel sources.


1. What is a biofuel?

A biofuel is any product made from organic matter — including plants, animal waste, algae, and even food scraps. They are typically burned to create energy in the form of heat or electricity at power plants.

2. What are the environmental drawbacks of using biofuels?

Burning biofuels releases greenhouse gases in the atmosphere that contribute to global warming. They also produce other air pollutants, which can harm ecosystems and human health.

3. Why is land use a major factor to consider in evaluating the use of biofuels?

Biofuels are typically produced by combining multiple types of crops to maximize their energy output. This means they can require large swaths of land for use, which puts the cultivation of food products at risk.

4. What does the term "generation" mean when discussing different sources of biofuels?

Generation refers to how far the process has progressed between creating fuel from one particular source and using it as an alternative energy source for powering vehicles or producing electricity at power plants.

5. What is the difference between the carbon dioxide produced by biofuels and carbon dioxide produced by fossil fuels?

Fossil fuels and biofuels have carbon as an end product of the combustion process. However, the carbon produced by biofuels naturally occurs and is a renewable energy source. The carbon dioxide produced by fossil fuels is a non-renewable resource that contributes to greenhouse gas emissions and global warming.


Attend Our Next Webinar

Attend Our Next Webinar

Join our next Sustainable Investing 101 webinar, get our favorite DIY options, and walk through how we build our portfolios.

Watch Now
Get Our Newsletter

Get Our Newsletter

Go a level deeper with us and investigate the potential impacts of climate change on investments like your retirement account.

Talk To A Human

Talk To A Human

Joining a new investment service can be intimidating. We’re here for you. Click below to email us a question or book a quick call.

Ask a Question


Sustainable Investing Topics

View our list of some topics below.