Biomass is an abundant, domestically available source of clean energy that has the potential to greatly reduce greenhouse gas emissions. Production of biofuels from cellulosic biomass is attractive because of its low fossil energy-to-carbon ratio compared to corn and other grain-based technologies. However, biofuel production systems are not simple. They are subject to multiple factors: energy supply, economic development in rural communities, land and ecosystem protection, potential for reduction of greenhouse gas emission, and social training. This paper provides a brief overview of the environmental and economic impacts of bioenergy development. Different regions should have their own optimized portfolio of biomass species or energy crops according to regional climate and ecological conditions. Near-future biotechnology challenges include understanding and manipulation of biomass formation and breakdown of cell wall, biomass pretreatment and selection of plant variants with improved sugar yields, and high throughput characterization and selection of enzymes and microbes for cellulose deconstruction. Life-cycle assessment and development of sustainable criteria and indicators are addressed in addition to the emphasis of the importance of environmental security and public health associated with bioenergy development.