Anaerobic fermentation of carbohydrates by yeasts and bacteria leads to the production of a range of alcohols, acids and esters. Three alcohols, ethanol, isopropanol and butanol, are currently made industrially by fermentation, though, in most places, production from petroleum is cheaper than the biological conversion. The conversion of glucose to ethanol can be achieved at approaching the theoretical maximum efficiency of 51% (by mass) based on the biochemical route, retaining 93% of the energy content of the carbohydrate. However, the cost of carbohydrate feedstock and the processing cost are generally high compared with the value of the alcohol. The costs and energy balances for alcohol production from a range of feedstocks are discussed. Technological improvements, particularly in reduction of capital and energy requirements, could substantially reduce the processing costs. Developments can be expected in (i) the application of continuous fermentation and immobilized cells; (ii) the development of organisms with increased tolerance to alcohols, wider substrate ranges and higher temperature optima; and (iii) lower energy requirements for recovery of alcohols. Given reasonable technical progress, the wider adoption of bioconversion of carbohydrates to alcohols and similar bulk chemicals will depend on the relative costs of carbohydrate to fossil hydrocarbons. In some regions of high agricultural productivity, and without petroleum, bioconversion processes are already in use and it seems likely that this trend will become more widespread over the next few decades.