Petroleum has been important in the energy industry since 19th century when the refining of paraffin from crude oil began. The industry recently appears to be in a downtown and fragile moment despite the price of oil is slowly rising. Renewable alternatives such as biofuels have gained increasing traction while petroleum fuel seemingly concedes to bio-fuels due to the rising public concern on the environment and stricter emission regulations. To be a strategic fuel in the energy security matrix, both fossil and bio-fuels options should be considered. However, the use of bio-fuels to achieve a degree of carbon neutrality is not without challenges. Among the challenges are land development and socio-political issue, carbon neutrality due to ILUC, high 2G bio-fuel feedstock and production cost, competing technology from electric vehicles and the impending fourth industrial revolution, NOx emissions and variation in biodiesel quality. This paper briefly reviews the potential of fuels source diversification and the challenges and how they can raise up to the challenges in order to be sustainable and attractive. In order to achieve this objective, first carbon credit through carbon trading needs to continue to stabilize the energy price. Second, 1G bio-fuel needs to forgo the use of natural, peat forest, rubber estate since these are an effective carbon sink and oxygen source. Third, advanced bio-fuels with high yield, process economics and sustainability need to be innovated. Fourth, the quality and standard bio-fuel that reduces NOx emission need to be improved. Finally and most importantly, carbon capture technology needs to be deployed immediately in fossil fuel power plants.