Biomass is the most used renewable energy source now and in future. There are two global biomass-based liquid transportation fuels that might replace gasoline and diesel fuel. These are bioethanol and biodiesel. It is generally held that biofuels offer many benefits, including sustainability, reduction of greenhouse gas emissions, and security of supply. The recent use of ethanol as fuel has increased its production. Most ethanol is currently being produced from sugar cane or from corn. Yeast is used to ferment sugars into ethanol. In the case of carbohydrates (such as corn), a pretreatment step of converting carbohydrate into sugars is needed. The advantages of biodiesel as diesel fuel are its renewability, portability, ready availability, higher combustion efficiency, higher biodegradability, non-toxicity, lower sulfur and aromatic content, higher flash point (non-flammable), and higher cetane number. The major disadvantages of biodiesel are its high price, higher viscosity, lower energy content, higher cloud point and pour point, higher nitrogen oxide emissions, lower engine speed and power, injector coking, engine compatibility, and greater engine wear. The sources of biodiesel are vegetable oils, used plant oils, and fats. Biodiesel is obtained from vegetable oils by reacting methanol using a process called transesterification. The purpose of the transesterification process is to lower the viscosity and oxygen content of the vegetable oil. The cost of biodiesels varies depending on the feedstock, geographic area, methanol prices, and seasonal variability in crop production.