Biofuels are being promoted as an important part of the global energy mix to meet the climate change challenge. The environmental costs of biofuels produced with current technologies at small scales have been studied, but little research has been done on the consequences of an aggressive global biofuels program with advanced technologies using cellulosic feedstocks. Here, with simulation modeling, we explore two scenarios for cellulosic biofuels production and find that both could contribute substantially to future global-scale energy needs, but with significant unintended environmental consequences. As the land supply is squeezed to make way for vast areas of biofuels crops, the global landscape is defined by either the clearing of large swathes of natural forest, or the intensification of agricultural operations worldwide. The greenhouse gas implications of land-use conversion differ substantially between the two scenarios, but in both, numerous biodiversity hotspots suffer from serious habitat loss. Cellulosic biofuels may yet serve as a crucial wedge in the solution to the climate change problem, but must be deployed with caution so as not to jeopardize biodiversity, compromise ecosystems services, or undermine climate policy.