Ambitious renewable energy targets have been implemented in the EU that can only be attained if further measures are taken to boost biomass production for energy uses on agricultural land. The aim of this discussion paper is to explore consequences for land use and environment if biomass production will be expanded for non-food purposes in Austria. We assess the bio-physical and economic production potentials of energy crops and explore the trade-offs between bioenergy and food production on arable lands in Austria. In a policy experiment, we analyse how costly it is to expand domestic non-food biomass production by employing an integrated modelling framework using an elaborated set of bio-physical and economic data. The results indicate that an expansion of biomass production for first and second generation biofuels would imply significant adjustment costs for the agricultural sector. Furthermore, increasing feedstock production would have significant impacts on land use and fertiliser intensity levels. The economic analysis considers differences of regions and site conditions, which lead to higher opportunity costs, and hence, higher feedstock costs as assumed in previous studies. Subsidising domestic biomass production likely leads to rising regional food and feed prices as well as factor prices (e.g., land renting) in a land constrained economy.