The development of bioenergy, as a new business model integrated with environment and territory, may be a valuable opportunity for farmers with positive effects both in socio-economic and environmental terms. However, largescale biomass plantations might increase pressure on the productive land and might cause a substantial increase of food prices. The main goal of the current study is to support the policy decision making in the renewable energy sector by quantitatively assessing impacts of alternative policy instruments at the sub-state regional level. The scenario analysis is performed using a multi-regional multi-sector Computable General Equilibrium (CGE) model applied to Basilicata region, Southern Italy, with, given the importance of agriculture in the area, a great deal attention on agricultural production level, food prices and land competition. Results shows that promoting bioenergy sector do not generate negative impact on food price, land use and welfare, supporting the continuation of policies to incentive the bioenergy sector, combining tax policies with other policy tools (e.g. agricultural or climate policies) in order to make the sector more competitive.