Regional production and utilization of biomass in Sweden is analysed, considering the potential of replacing fossil fuels and producing new electricity. Extensive utilization of biomass will decrease biomass-transportation distances. The average distance for biomass transportation to a large-scale conversion plant suitable for electricity or methanol production will be 30–42 km when the conversion plant is located in the centre of the biomass production area. The total energy efficiency of biomass production and transportation will be 95–97% and the emissions of air pollutants will be small. In areas where energy crops from agriculture constitute the main part of the biomass, the transportation distance will be two to three times shorter than in areas where logging residues from forestry dominate. When present Swedish fossil-fuel use for heat and electricity production is replaced, more than 75% of the biomass required can be produced locally within the county. The average transportation distance of the remaining part will be between 130 and 240 km, increasing the cost of this biomass by 15–20%. Increased use of biomass by 430 PJ/yr, the estimated potential for increased utilization of energy crops, logging residues and straw, will lead to an excess of about 200 PJ/yr biomass after fossil fuels for electricity and heat production have been replaced. This biomass could be used for methanol or electricity production. The production of biomass-based methanol will lead to a low demand for transportation, as the methanol produced from local biomass can mainly be used locally to replace petrol and diesel. If the biomass is used for electricity production, however, the need for transportation will increase if the electricity is cogenerated in district heating systems, as such systems are usually located in densely populated areas with a deficit of biomass. About 60% of the biomass used for cogenerated electricity must be transported, on average, 230 km. Changing transportation mode when transporting biomass over large distances, compared with short distances, however, will lead to rather low specific transportation costs and environmental impact, as well as high energy efficiency. Replacing fossil fuels with biomass for heat and electricity production is typically less costly and leads to a greater reduction in CO2 emission than substituting biomass for petrol and diesel used in vehicles. Also, cogeneration of electricity and heat is less costly and more energy efficient than separate electricity and heat production.