Due to many political, economic and environmental issues, there is a pressing need to reduce the dependence on fossil fuels, particularly petrol and diesel transportation fuels. There is no doubt that biomass-derived fueld (biofuelds) can help to alleviated the increasing concerns over greenhouse gas emissions, ensure future fuel security and stimulate the rural economy. This paper focuses on the scientific and technological challenges that lie ahead, rather than the political and economical concerns. For cost-effective production of ethanol from lignocellulosic feedstocks, high-yield, high-rate fermentation of hydrolysates to ethanol is required. The exact sugar profile of hydrolysate will depend on the feedstock, but glucose and xylose will be predominant. However, there is also an incentive to convert the lesser fractions, such as arabinose, galacturonic acid and rhamnose to ethanol. This will provide a challenge to yeast fermentation.