Biofuels are derived from biological material, usually plants.
The two most common types of biofuels are ethanol and biodiesel.
Ethanol is an alcohol, the same as in beer and wine. It is made by fermenting any biomass high in carbohydrates through a process similar to beer brewing. Ethanol is mostly used as a blending agent with gasoline to increase octane and cut down carbon monoxide and other smog-causing emissions. Ethanol fuel production results in a net loss of energy after one accounts for the fuel costs of petroleum and natural gas fertilizer production, farm equipment and the distillation process.
Biodiesel is made by combining alcohol (usually methanol) with vegetable oil, animal fat or recycled cooking grease. It can be used as an additive (typically 20%) to reduce vehicle emissions or in its pure form as a renewable alternative fuel for diesel engines. The great advantage of biodiesel is that it can be used in existing vehicles with little or no adaptation necessary. Biodiesel is, naturally, a compromise for this reason, but still balances positively on the energy scales.
There are various current issues with biofuel production and use, which are presently being discussed in the popular media and scientific journals. These include: the effect of moderating oil prices, the food versus fuel debate, carbon emissions levels, sustainable biofuel production, deforestation and soil erosion, impact on water resources, human rights issues, poverty reduction potential, biofuel prices, energy balance and efficiency, and centralized versus decentralized production models.