Liquid biofuels are being produced to displace fossil fuels for transportation, with bioethanol and biodiesel being the primary biofuels produced for this purpose in the world today. While there is consensus on the need for a sustainable biofuels industry, there is little consensus on how to proceed to avoid environmental and social degradation with global biofuel production. A literature review of Life Cycle Analysis (LCA) data, and the generic Strategic Life-Cycle Management (SLCM) and Template for Sustainable Product Development (TSPD) approaches, helped to inform the creation of a specific tool for sustainable industrial biofuels development, called the TSPD for biofuels. Other data collection involved expert and industry dialogue, as well as stakeholder feedback, on the content of the TSPD. Results showed a variety of sustainability challenges and opportunities, the most significant of which concerns agricultural production. Compelling measures for a sustainable biofuels industry include: cooperation among all stakeholders using a systems approach based on strategic sustainable development, sustainable biofuels certification; and government policies to stimulate research into new technologies and feedstocks, as well as to reduce consumption and increase efficiency.