Modern bioenergy or biofuels refer to biomass converted to higher value and more efficient and convenient energy carriers, such as e.g. pellets, biogas, ethanol and biodiesel. Beyond this, future technologies are emerging to make biofuels use even more efficient, cleaner, and provide greater greenhouse gas reductions (the so-called second generation biofuels).

There are two main applications of modern bioenergy: transport and stationary applications.

• Transport
• Stationary Applications

Transport

The transport sector is often considered the world's largest single source of energy use (about a quarter of the world energy demand) with fossil fuels servicing almost all of it. Due to the growing demand from the transport sector and increasing oil prices, liquid biofuels, such as ethanol and biodiesel, which require little or no changes to today's vehicles and infrastructure, have strong potential as near-term alternative fuels.

Ethanol is an alcohol based fuel produced from biological feedstock that has a high content of sugar (sugarcane or sugar beet), starch crops (corn) or any cellulosic crops. The alcohol is mainly produced through a repetitive fermentation process which involves soaking, crushing or chemical extraction. Ethanol can run in an ordinary petrol car engine without modifications up to a 10% blend level (some manufacturers warrant 5% only, some warrant up to 15%). In Brazil, all cars operate with engines slightly modified to run on blends up to 25% ethanol. A car engine can be further modified (in its design and configuration) to be "flex fuel", i.e. to operate on fuel blends of anywhere from 0% up to 85% ethanol.

Biodiesel is a fatty acid methyl ester (FAME) produced through a series of chemical reaction-transesterifications from oil, which can be sourced from oil seed crops such as rapeseed, soy bean, sunflower or jatropha and from waste oil such as cooking oil. Water and other contaminants are removed from the oil and the fatty acid content present in the oil is separated and transformed into FAME. Biodiesel can be blended with conventional diesel in vehicles. In many countries conventional diesel vehicles are operating on petroleum diesel fuel blended with 20% biodiesel or higher.

Many countries are promoting the production and use of biofuels in the transport sector, either through taxes or through voluntary or mandatory biofuel content targets. The European Union has set voluntary targets (2% in 2005 and 5.75% by 2010) for the use of biofuels in the transport sector. Brazil started its sugar cane-alcohol programme in 1975, and the programme has evolved over the past 30 years. The current policy requires a 20-25% blend of ethanol in all motor fuel.

Stationary Applications

Stationary applications of bioenergy include use of biomass for heat production and generation of electricity and combined heat and power (CHP, also known as cogeneration), mainly used for industrial processes and domestic households.

Burning wood and other solid biomass is the oldest energy technology used. Combustion is a well-established commercial technology with applications in most industrialized and developing countries. Modern types of fuels for combustion include: wood pellets, wood chips, wood residues, briquettes and straw bales.

Pyrolysis is a process for thermal conversion of solid fuels in the complete absence of oxidizing agent (air/oxygen) or with such limited supply that gasification does not occur to any appreciable extent. Commercial applications are either focused on the production of charcoal or production of a liquid product, the bio-oil. The latter is potentially interesting as a substitute for fuel oil and as a feedstock for production of synthetic gasoline or diesel fuel.

Gasification is the conversion by partial oxidation (i.e. use of more oxidizing agent than for pyrolysis but less than for complete combustion) at elevated temperature of a carbonaceous feedstock such as biomass or coal into a gaseous energy carrier. Although significant progress has been achieved and new improved technologies are being demonstrated, gasification of biomass remains in the development stage, with rare exceptions. The reasons are its relatively high cost compared to combustion and the low reliability for long-term operation.

Anaerobic digestion is a bio-chemical process and means the bacterial breakdown of organic materials in the absence of oxygen. This biochemical process produces a gas, called biogas, principally composed of methane and carbon dioxide.