In Sweden today, power production with bioenergy systems is more costly than with fossil energy systems, New technology under development, such as integrated gasification and combined cycle technology (IGCC), and reduced biomass costs would improve the competitiveness of bioenergy systems. The CO, mitigation costs are lower for biomass systems using IGCC technology than for natural gas systems using decarbonization. Considering the temporary reduced greenhouse gases from the soil when short-rotation forest (Salix) replaces annual food crops on mineral soils, the CO, mitigation costs could be reduced further by about 10% for bioenergy systems. The cost of Salix can be reduced in the future by about 30% because of improvements in plant breeding and cultivation methods, and even more if Salix plantations are used for the treatment of municipal waste water. This would further improve the competitiveness of bioenergy systems, Several data used in the cost calculations are uncertain, especially regarding new technologies such as IGCC, decarbonization, and waste water treatment in Salix plantations, and will vary with local conditions. The results are, however, most sensitive to changes in the fuel costs and particularly so in the case of natural gas systems.