Introducing bio-fuel powered road traffic is a significant step towards the elimination of the dependence of fossil fuel and greenhouse gases in the transport industry. Nonetheless, the actual energy efficiency and emission advantages of biofuels depend heavily on the operating conditions of traffic, especially in urban and peri-urban settings that are typified by congestion and high frequency of stops and highly transient operation of vehicles. Poor traffic flow causes too much idling, stop and go driving and repetitive engine transients which reduce the combustion efficiency, fuel consumption and exhaust aftertreatment performance. With the assistance of advanced sensing, communication, and data-driven control strategies, smart traffic management systems have high potential to reduce such inefficiencies by streamlining traffic congestion and empowering energy-sensitive car motion. The chapter gives a detailed discussion on the traffic state estimation and prediction, intelligent traffic management strategies and bio-fuel powered vehicles that are especially relevant to eco-operation methods. Combined modeling and simulation systems of energy and emission effects are also introduced and the obstacles to implementation and met requirements of future research are analyzed. In the chapter, the operational implementation of the biofuels full sustainability potential that entails coordinated vehicle-infrastructure intelligence is noted to be crucial in the management of traffic dynamics and not as an external force that cannot be controlled.