Consequences from intensive fossil-fuel combustion are increased GHG emissions to the atmosphere and changes in the world’s ecosystem. Considering climate change problem produced and utilized biofuel can be one of the direct and more environmentally friendly alternative solutions to traditional petroleum fuel (petrol or diesel). Worldwide tendency, considering sustainability requirements and scientific-technical development, is step by step shift from first generation to advanced biofuels production and consumption. Therefore, consistency with European Union law and policy, long-term national strategy and amendments in the legal framework should be elaborated to stimulate development of advanced biofuel industry in Latvia. Considering EU and broader international perspective, objective of study is legal analysis for transition and development in sustainable way from first generation to the next generation biofuels in Latvia. Analysis is based on the best known examples from EU and international practice of different initiatives and economical support mechanisms to stimulate development of advanced biofuel industry.