Developing renewable clean biofuels using wildly available bioenergy can help alleviate the worsening world energy crisis and reversing the trend of deteriorating global environment caused primarily by the ever-increasing use of fossil fuels. Here we will review three kinds of conversion routes，their corresponding products，and the scale of biofuel production and application worldwide. Then we will analyze the pros and cons of biofuels，and discuss the challenges for the development of biofuels on large scales. Finally，we will examine the current status of China’s energy structure，and explore the prospects of developing biofuels in China. In order to promote the long term goal of sustainable development，we propose that developing biofuels should not be considered only as a way of gaining energy，but rather an important part of the diverse and multifunctional landscapes and production systems. In other words，the development of biofuel industry can be integrated with resources management，biodiversity conservation，and economic development，which together provide the solution to sustainability in a particular region.