Using fuels and chemicals derived from fossil sources underpins much of our everyday life and industrialized economy. However, obtaining carbon from oil and gas presents a number of environmental, economic, and political challenges. One solution to these challenges is to derive fuels and chemicals from renewable sources of carbon such as biomass or atmospheric carbon dioxide, thereby closing the carbon loop and moving towards a carbon neutral economy. Biological systems have evolved to harness carbon and energy from the environment for their own survival and can be engineered to produce fuels and chemicals. Although much progress has been made in this area, we present several challenges and areas of opportunity for development. We suggest that the primary barrier to large-scale commercialization of bioderived fuels and chemicals is the availability of feedstocks, which makes the conversion yield (feedstocks to fuels) a critical parameter in determining the impact and sustainability of biofuels processes. Engineering fuel-producing organisms to more efficiently capture carbon and energy, route metabolic fluxes to desired products, and tolerate industrial production conditions is a significant opportunity to increase the yields and economics of biofuels.