Biofuels are promoted as a low-carbon substitute for fossil fuels due to their potential benefits in lowering greenhouse gas (GHG) emissions and the consequent climate change impact of the automotive industry. However, with their expanding use comes the possibility of unintended environmental impacts. Biofuels’ impacts on climate change and other environmental issues have been the subject of numerous life cycle assessment (LCA) studies. Nevertheless, the estimations vary widely, and their outcomes are frequently incoherent. The biofuels impact biodiversity will depend on the type of biofuel crop and the prior land use. If suitable plants are cultivated in appropriate settings, biofuels may promote biodiversity. Additionally, they may indirectly maintain biodiversity worldwide if they contribute to reducing the effects of climate change. The biodiversity of that region is already known to be at risk, regardless of whether natural ecosystems are abruptly changed to biofuels or non-degraded land is subtly converted to biofuels. When biofuel production spread into the tropics, it destroyed wetlands and tropical forests and pushed into set-aside lands in temperate zones. Based on current data, first-generation biofuels can have lower greenhouse gas emissions than fossil fuels in the absence of land-use change (LUC); however, for most feedstocks, the reductions are not high enough to achieve the GHG savings required by the European Renewable Energy Directive (RED). Second-generation biofuels have a greater chance of lowering emissions if there is no LUC. Since third-generation biofuels release more greenhouse gases into the atmosphere than fossil fuels, they are not a practical choice at this stage of development. Better land-use planning will surely be necessary in conjunction with sustainability regulations, as these are likely to give only part of the solution.