The increase in worldwide demand for energy is driven by the rapid increase in population and exponential economic development. This resulted in the fast depletion of fossil fuel supplies and unprecedented levels of greenhouse gas in the atmosphere. To valorize biomass into different bioproducts, one of the popular and carbon-neutral alternatives is biorefineries. This system is an appropriate technology in the circular economy model. Various research highlighted the role of biorefineries as a centerpiece in the carbon-neutral ecosystem of technologies of the circular economy model. To fully realize this, various improvements and challenges need to be addressed. This paper presents a critical and timely review of the challenges and future direction of biorefineries as an alternative carbon-neutral energy source.