In view of the realization that fossil fuels reserves are limited, various options of generating energy are being explored. Biological methods for producing fuels such as ethanol, diesel, hydrogen (H2), methane, etc. have the potential to provide a sustainable energy system for the society. Biological H2 production appears to be the most promising as it is non-polluting and can be produced from water and biological wastes. The major limiting factors are low yields, lack of industrially robust organisms, and high cost of feed. Actually, H2 yields are lower than theoretically possible yields of 4 mol/mol of glucose because of the associated fermentation products such as lactic acid, propionic acid and ethanol. The efficiency of energy production can be improved by screening microbial diversity and easily fermentable feed materials. Biowastes can serve as feed for H2 production through a set of microbial consortia: (1) hydrolytic bacteria, (2) H2 producers (dark fermentative and photosynthetic). The efficiency of the bioconversion process may be enhanced further by the production of value added chemicals such as polydroxyalkanoate and anaerobic digestion. Discovery of enormous microbial diversity and sequencing of a wide range of organisms may enable us to realize genetic variability, identify organisms with natural ability to acquire and transmit genes. Such organisms can be exploited through genome shuffling for transgenic expression and efficient generation of clean fuel and other diverse biotechnological applications.