With the limitations of ethanol as a biofuel and the need to expand beyond food crop-based biofuel production, there is a pressing need for second — and third-generation biofuels. Since there appears to be little consensus on the meaning of second, third, and further generations of biofuels, we will adopt the term advanced or next-generation biofuels. Next-generation biodiesel is a triglyceride derived fatty acid methyl ester (FAME), which does not originate from food crop sources. Additionally, there are clear limitations in some non-food crop terrestrial plant sources of triglycerides for biodiesel, such as palm oil and jatropha. Palm oil is rapidly becoming a major source of biodiesel to fulfill the European Union mandate of 10% liquid transportation biofuels by 2010 (European Parliament, 2009). Europe is a much larger consumer of diesel fuel for passenger vehicles with approximately 50% of the passenger cars sold in the EU currently having diesel engines (Smolinska, 2008). Unfortunately, the net result of the substantial increase in demand for palm oil has been an accelerated rate of palm plantation development and deforestation in tropical ecosystems. Another promising group of next-generation biofuels are the alcohols with longer chains than ethanol, such as butanol and branched-chain alcohols. These fuels have a higher energy density than ethanol, do not absorb water as ethanol does, and possess very favorable combustion characteristics, such as high octane ratings. These alcohols are somewhat more unusual and rare in nature, but one example of a microorganism that is adept at producing these compounds is Clostridium acetobutylicum. Regrettably, there are limitations on the use of this slow growing anaerobic organism for biofuel production. A search for other means for producing these promising longer and branched-chain alcohol biofuels in photosynthetic organisms is currently underway (Fortman et al., 2008).

While ethanol produced from cellulosic biomass is commonly touted as a promising advanced biofuel solution, the end product is still ethanol, which has all of the limitations stated above. There is strong motivation to move beyond ethanol, but what other means are available? Conversion of the sugars released by deconstruction of cellulosic biomass could easily be directed more usefully to one of the more desirable next-generation biofuels, such as microorganism-derived biodiesel or branched-chain alcohols. In a throwback to biofuels efforts of World War I, recently there has been renewed interest in the ability of Clostridial species to produce butanol and possibly other longer chain alcohol biofuels (Sillers et al., 2008). With the availability of genomes for these anaerobic bacteria, means to genetically enhance their productive capacities may be at hand. However, there are still a number of significant barriers to overcome for anaerobic fermentation to be a truly viable means of biofuel production. Alternatively, microbes such as bacteria and microalgae show promise as a renewable feedstock for a biofuels ranging from ethanol to biodiesel. The capacity of photosynthesis to capture solar energy is particularly attractive for producing renewable fuels because no intermediate chemical feedstock is required.