There are very few issues that are as important to our collective future as energy. Like everyone else, Serbia has its stake in reducing energy price, enhancing the security of energy supply, and reducing emissions, including greenhouse gas (GHG) emissions associated with fossil fuels. In the years to come Serbian economy is expected to grow and industry to search and explore the potential of using cleaner alternative fuels. There is a lot that could be done to conserve energy and to reduce environmental footprint. But the most important thing that could be done to enable Serbian industry to reduce emissions is the implementation of a modernized Power Generation system. At the same time the reality can’t be neither sugarcoated nor ignored and alternatives to fossil fuel will succeed only if they are economically feasible for suppliers and users alike. New technologies currently under development should be considered to allow Serbia the use of energy resources in a more efficient ways and with better protection of the environment. If successfully deployed, the development of alternative, renewable fuels will allow Serbian energy sector to effectively decouple its growth from GHG emissions. This paper explore opportunities and the potential of alternative fuels for increasing competition in energy supply, for reducing emissions and in Serbia while decreasing dependence on imported energy.