The purpose of this study is to evaluate the economic and environmental impacts of planting energy crop on set-aside acreages in Taiwan. To do so, a Taiwan Agricultural Sector Model (TASM) was built and the data parameters of energy crop were incorporated into this model in order to simulate the economic and environmental impacts. Simulation results show that GHGE mitigation depends on the planting acreage of energy crops in which the optimal planting acreage of energy is determined by the profit of other agricultural products as well as government subsidy on energy crop. Therefore, the mitigation of GHGE depends on the government subsidy on energy crop per hectare. Such subsidy is also suitable for the green box by the regulation of WTO.