Biofuels are liquid or gaseous fuels made from plant matter and residues, such as agricultural crops, municipal wastes and agricultural and forestry by-products. The term biofuels can refer to fuels for direct combustion for electricity production, but is generally used for liquid fuels for transportation. Biofuels are made from biomass through biochemical or thermochemical processes. Currently much attention is fo cused on utilization of ethanol, methanol, biodiesel, biocrude, and methane as biofuels. The European Union is on the third rank of biofuel production world wide, behind Brazil and the United States. In Europe, Germany is the largest, and France the second largest producer of biofuels. Most biofuels in commercial production in Europe today are based on sugar beet, wheat and rapeseed, which are converted to bioethanol/ETBE and biodiesel. The European Commission has set as a goal that by the end of 2005, 2% of the energy used in transportation shall be biofuels. The use of biofuels is then to grow by 0.75% annually. The ambition is to have 5.75% biofuels in transportation by 2010.