Final answer:
The three categories of biofuels are ethanol, biodiesel, and hydrogen, which are important for transportation and can replace petroleum products, but they also come with environmental and social issues.
Step-by-step explanation:
The three different categories of biofuels are ethanol, biodiesel, and hydrogen. These liquid biofuels are significant because they have the energy density and versatility necessary for transportation applications, which is not the case with other energy sources like solid biomass or wind power.
Ethanol and biodiesel, commonly derived from plants like sugar cane, corn, rapeseed, and soy, can be used as viable replacements for petroleum-based fuels in vehicles. However, the production of biofuels also raises environmental and social concerns, such as the competition between land for fuel versus food production, which can impact food prices and availability, and the destruction of natural habitats to make way for biofuel crops.