The provision of renewable energy by agriculture so-called agroenergy-is a key element of the Europe 2020 Strategy and has sparked public and research debates on the bio-based economy. Hot topics involve direct and indirect land use change and the ability of agroenergy to foster or hinder food and energy security. Worldwide research has dealt with these and other issues associated with the sustainability of the diffusion of agroenergy generation systems, but the subject is still open. This paper contributes to the ongoing debate on the sustainability of agroenergy. We propose an empirical model to simulate the diffusion of farm biogas installations and estimate a set of indicators covering the economic, environmental, and social dimensions of sustainability at the regional level. Model results show that the current incentive mechanism does not allow to meet EU's energy targets at the local level. To do so, the policy mix needs an improved design accounting for regional peculiarities across the EU. Model results show that agroenergy production can help farmers stabilise their income and keep viable rural areas, despite some trade-offs among socioeconomic and environmental indicators. Major drawbacks are environmental risks associated with farming intensification.