Europe does not possess enough fossil energy resources to cover its needs and thus consumption of imported fossil fuels is growing, placing threats upon economic stability. At the same time Europe is struggling to reduce its carbon dioxide emissions. In order to combat these challenges, renewable energy sources and biomass in particular are expected to be wider spread and play a more significant role in Europe’s energy mix in the future. This book examines biomass utilization in the energy sector for heat, electricity and liquid biofuel production. The number of possible conversion routes gives different possibilities of carbon emission reduction with different contribution to security of energy supply. Installation and production costs also vary among the options. So, the question about “optimal” allocation of biomass pursuing carbon emission reduction is arising. The study reveals the policy options that exist in Europe to support a biomass allocation that can be considered as the most desirable.