The recently identified limitations of 1st-generation biofuels produced from food crops (with perhaps the exception of sugarcane ethanol) have caused greater emphasis to be placed on 2nd-generation biofuels produced from ligno-cellulosic feedstocks. Although significant progress continues to be made to overcome the technical and economic challenges, 2nd-generation biofuels production will continue to face major constraints to full commercial deployment. The logistics of providing a competitive, allyear-round, supply of biomass feedstock to a commercial-scale plant is challenging, as is improving the performance of the conversion process to reduce costs. The biochemical route, being less mature, probably has a greater cost reduction potential than the thermo-chemical route, but here a wider range of synthetic fuels can be produced to better suit heavy truck, aviation and marine applications. Continued investment in research and demonstration by both public and private sectors, coupled with appropriate policy support mechanisms, are essential if full commercialisation is to be achieved within the next decade. After that, the biofuel industry will grow only at a steady rate and encompass both 1st- and 2nd-generation technologies that meet agreed environmental, sustainability and economic policy goals. (C) 2009 Elsevier Ltd. All rights reserved.