This paper presents challenging opportunities for production of liquid and gaseous fuels by biotechnology. From the liquid fuels, ethyl alcohol production has been widely researched and implemented. The major obstacle for large scale production of ethanol for fuel is the cost, whereby the substrate represents one of the major cost components. Various scenarios will be presented for a critical assessment of cost distribution for production of ethanol from various substrates by conventional and high rate processes. The paper also focuses on recent advances in the research and application of biotechnological processes and methods for the production of liquid transportation fuels other than ethanol (other oxygenates; diesel fuel extenders and substitutes), as well as gaseous fuels (biogas, methane, reformed syngas). Potential uses of these biofuels are described, along with environmental concerns which accompany them. Emphasis is also put on microalgal lipids as diesel substitute and biogas/methane as a renewable alternative to natural gas. The capturing and use of landfill gases is also mentioned, as well as microbial coal liquefaction. Described is also the construction and performance of microbial fuel cells for the direct high‐efficiency conversion of chemical fuel energy to electricity. Bacterial carbon dioxide recovery is briefly dealt with as an environmental issue associated with the use of fossil energy.
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