The long-lived dependence on fossil fuels has led to a slow pace in the transition to renewable energy sources in the heavy-duty sectors of the energy system. While bioenergy might represent a possible alternative, biomass is a limited resource, whose use is restricted by potential technical, environmental and social impliations. Because residual biomass inherently minimises these negative impacts, when its sustainable use is ensured, it could lend itself to multiple options, including production of back-up power, heating and alternative transport fuels. This study investigates different pathways for the optimal use of the most abundant residual biomass in Denmark, i.e. straw, from a technical, economic and environmental perspective. We harness the strengths of two bottom-up model typologies by means of soft-linkage to reveal insights from both perspectives: the multi-sectoral model, TIMES-DK, provides a system assessment of the whole energy sector, while the geographically detailed optimization model, Balmorel-OptiFlow, supports the analysis of biorefinery plant size, location and area-specific recovery of excess heat. Modelling results of carbon- and resource-constrained energy scenarios reveal the increased value of straw in a future decarbonised energy system and the attractiveness of the gasification route with Fischer-Tropsch synthesis for the production of biofuels to supply the heavy segments of the transport sector. Moreover, relying on current domestic biomass resources would not attain the energy self-sufficiency targets in a carbon-constrained case.