The possible contribution for bioenergy to reduce CO2 emissions is evaluated in competition with other.options for reducing CO2 emissions. A national costs minimizing energy systems model is used, with maximum allowable CO2 emission rates. Special attention is paid to the transportation sector in the Netherlands, where liquid biofuels would be cost-effective at marginal emission reduction costs of 200 ecu ton-1 CO2. This paper discusses model description and bioenergy input assumptions CO2 emission reduction and costs other environmental aspects and market niches.