Climate change, rising oil prices and concerns about future energy supplies have contributed to a growing interest in using biomass for energy purposes. Several studies have highlighted the biophysical potential of biofuel production on the African continent, and analysts see Mozambique as one of the most promising African countries. Favorable growing conditions and the availability of land, water and labor are mentioned as major drivers behind this potential. Moreover, the potential of biofuel production to generate socio-economic benefits is reflected in the government's policy objectives for the development of the sector, such as reducing fuel import dependency and creating rural employment. This article provides an overview of biofuel developments in Mozambique and explores to what extent reality matches the suggested potential in the country. We conclude that biofuel developments mainly take place in areas near good infrastructure, processing and storage facilities, where there is (skilled) labor available, and access to services and goods. Moreover, our analysis shows the need to timely harmonize current trends in biofuel developments with the government's policy objectives as the majority of existing and planned projects are not focusing on remote rural areas, and - in absence of domestic markets - principally target external markets. (C) 2010 Elsevier Ltd. All rights reserved.