Biofuels are used where other types of fuels are used. Biodiesel, for example, is similar on a molecular level to regular diesel. Other types of fuels can be created with living matter as well.
Diesel, petroleum and other fuels are more similar to biological matter than many imagine. Diesel and petroleum, like many plants and algae, are composed primarily of long carbon chains dotted with hydrogen cells. As a result, converting biological material to diesel and petroleum is not as difficult as some imagine.
Biodiesel is used as a means of recycling oils, which are relatively easy to convert to regular diesel fuel. After it has been refined, biodiesel works in regular diesel engines as well as diesel fuel. Experts are studying means of turning plant matter into ethanol, which is used in a small but significant number of cars.
Biofuels release carbon dioxide, but the carbon dioxide release is offset by the carbon dioxide the plant absorbed while it was alive. Because of this, biofuels are considered carbon-neutral. However, the high cost of growing material and refining it has slowed the development of these technologies, and they will remain prohibitively expense unless there is a breakthrough technology that lowers costs considerably.