During the last decade, many countries have taken policy decisions to use non-fossil fuels for both heat and electricity generation, and by 2005, have achieved global shares of 10% and 2% respectively, in the two sectors. European countries have taken the lead in investing on renewable energy resources such as biomass and wind energy systems as well as adopting bio-fuels in transport. The climate change concerns of avoiding fossil fuel burning have resulted in additional funding being channeled to developing countries including Sri Lanka for undertaking alternative energy projects, where a 4% share of alternative sources has been achieved in the electricity sector. Studies carried out in Sri Lanka have shown that a short coppice crop, Gliricidia sepium, is suitable for planting in underutilized land estimated at 1.0 - 1.6 Mha for extracting biomass for use in thermal energy and dendro power generation. It is suggested that a new crop – sweet sorghum - be promoted for generating thermal energy as well as manufacturing bioethanol and to promote Jatropha circus for producing biodiesel. Estimates made with new land allocated equally among Gliricidia, sweet sorghum and Jatropha, and using other marginal land show that Sri Lanka has the potential to become self-sufficient in energy in the medium term, except in the replacement of diesel where only a 20% share could be achieved. A significant contribution for meeting domestic energy needs particularly in rural areas could be obtained from biogas digesters fed with the waste from over 1.5 million cattle. It is also found that if the new technology of synthesising methanol and dimethyl either from carbon monoxide and hydrogen present in syngas is adopted, gasified biomass could produce fuel which could be used in the transport sector and in domestic and commercial cooking and heating, replacing all imported fuel, including diesel. In order to ensure energy security in all sectors, efforts should be attempted to exploit the inexhaustible resources such as solar and wind energy available freely within the country, especially to meet individual requirements. Sri Lanka should also have a long-term strategy to utilize these resources to generate hydrogen to take advantage of the upcoming fuel cell technology in the near future.