Biofuels are energy sources made from recently grown biomass (plant or animal matter). Biofuels have been around for a long time, but petroleum and coal have been used primarily as energy sources due to their high abundance, high energy value, and cheap prices. Fossil fuels such as coal and petroleum also come from biomass but the difference is that they took millions of years to produce. Biofuels are making a resurgence due to increasing oil prices, dwindling fossil fuel reserves, the desire to have a renewable, reliable source of energy and as a way to mitigate the effects of climate change. Biofuels are a renewable resource because they are continually replenished. Fossil fuels on the other hand are not renewable since they require millions of years to form. There are three types of biofuels: 1st, 2nd and 3rd generation biofuels. They are characterized by their sources of biomass, their limitations as a renewable source of energy, and their technological progress. The main drawback of 1st generation biofuels is that they come from biomass that is also a food source. This presents a problem when there is not enough food to feed everyone. 2nd generation biofuels come from non-food biomass, but still compete with food production for land use. Finally, 3rd generation biofuels present the best possibility for alternative fuel because they don’t compete with food. However, there are still some challenges in making them economically feasible.