Directive 2009/28/EC established a common framework for the use, production and promotion of energy from renewable sources. Subsequently, each European Union Member State was required to prepare a national Renewable Energy Action Plan (REAP) which specifies the share of energy from renewable sources to be consumed in transport, as well as in the production of electricity and heating, in 2020. The Hungarian REAP was published in December 2010. In order to identify what further steps are required to meet the targets set by the REAP, in this article we review the current situation and the potential in Hungary for the production and use of biomass, biogas and biofuel. We conclude that the annual quantity of required biomass is already available and it should be possible to meet the demand for solid biomass for direct combustion without the need for significant areas dedicated to energy crops. The establishment of biogas power plants is determined both by electricity generation and by waste management considerations. Targeted financial support and new regulations are required to promote the injection of upgraded biogas into the natural gas grid. Hungary has great potential to produce first generation biofuels, particularly ethanol, not only for domestic needs but also for export.