Negative environmental consequences of fossil fuels and concernsabout petroleum supplies have spurred the search for renewabletransportation biofuels. To be a viable alternative, a biofuel shouldprovide a net energy gain, have environmental benefits, be eco-nomically competitive, and be producible in large quantities with-out reducing food supplies. We use these criteria to evaluate,through life-cycle accounting, ethanol from corn grain and biodie-sel from soybeans. Ethanol yields 25% more energy than theenergy invested in its production, whereas biodiesel yields 93%more. Compared with ethanol, biodiesel releases just 1.0%, 8.3%,and 13% of the agricultural nitrogen, phosphorus, and pesticidepollutants, respectively, per net energy gain. Relative to the fossilfuels they displace, greenhouse gas emissions are reduced 12% bythe production and combustion of ethanol and 41% by biodiesel.Biodiesel also releases less air pollutants per net energy gain thanethanol. These advantages of biodiesel over ethanol come fromlower agricultural inputs and more efficient conversion of feed-stocks to fuel. Neither biofuel can replace much petroleum withoutimpacting food supplies. Even dedicating all U.S. corn and soybeanproduction to biofuels would meet only 12% of gasoline demandand 6% of diesel demand. Until recent increases in petroleumprices, high production costs made biofuels unprofitable withoutsubsidies. Biodiesel provides sufficient environmental advantagesto merit subsidy. Transportation biofuels such as synfuel hydro-carbons or cellulosic ethanol, if produced from low-input biomassgrown on agriculturally marginal land or from waste biomass,could provide much greater supplies and environmental benefitsthan food-based biofuels.