Liquid biofuels offer a range of attractive qualities, including the potential for increased energy independency and reduced greenhouse gas emissions. However, the market penetration and supply of biofuels may be constrained by a number of factors. In this chapter, the use of alcohols and biodiesel in internal combustion engines is discussed and the technology of flexible-fuel vehicles is described. It is shown how iso-stoichiometric ternary blends of gasoline, ethanol and methanol can serve as drop-in fuels for E85 flex-fuel vehicles. The chapter goes on to further explore ways in which biofuels can become part of a wider sustainable energy system based on carbon-neutral liquid fuels for the transport sector, enabling a gradual evolution of both vehicle and fuel technology. © 2014 Woodhead Publishing Limited. All rights reserved.