This briefing argues that biofuels can help tackle climate change problems and improve rural employment and livelihoods. They may also help diversify energy portfolios, ameliorate trade balances and improve air quality. There are however limitations and problems with biofuels. These include expansion of agricultural frontiers, the impacts of biofuel production on food security, labour practices and on the distribution of costs and benefits along the trade chain. Suggestions are made on how national governments and the international community can address these issues to realise opportunities and minimise risks:At the national level:developing-country governments need to identify the types of biofuels and feedstock that are most suitable for the achievement of their sustainable development goalsthe international community could assist by providing evidence on the sustainable development impacts of different types of biofuels and energy crops through analyses of the entire chain from production to consumptionnational governments need to have a clear understanding of the potential sustainable development benefits; identify the right policies for the industry to take off; invest in environmentally suitable farming practices and technologies; policies should enable the fair participation of small farmers in the supply chainsocial consequences of the move to biofuels must be considered, as must the potential trade-offs with food security. At the international level: identify key barriers affecting trade, and the best ways and arenas in which to address themanalyse the impacts of policies in industrial countries on biofuel trade and on the sustainable development of developing countriesapply evidence from other areas (e.g. greenhouse gas emissions) to build on the experience of certification schemes in the agriculture and forestry sectorsa better understanding of how these schemes can be beneficial to small producersproliferation of certification systems in the North, with insufficient consideration of conditions in producer countries, could be detrimental to sustainable trade and place a significant burden on small producersdevelop a coherent international trading system that is well equipped to facilitate the industry’s contribution to sustainable development, and for mechanisms that can deal with the negative aspects.