The current debate over biofuels produced from food crops has pinned a lot of hope on 2nd-generation biofuels produced from crop and forest residues and from non-food energy crops. This report, produced jointly by the IEA with IEA Bioenergy, examines the current state-of-the-art and the challenges for 2nd-generation biofuel technologies. It evaluates their costs and considers policies to support their development and deployment.