Significant efforts have been made in Lithuania to enhance the utilization of bioenergy since the early 1990s. While opportunities are large and signs of development visible, bioenergy still needs technical, institutional and policy-related support for further development side by side with other industries. This paper discusses the existing bioenergy potential in Lithuanian forests, biofuels market formation in the region and possible roads to boost development. The retrofitting of heat plants, forest management and policies ate reviewed as a way to identify opportunities to promote bioenergy in the country. It is shown that the interplay between national and regional forces can promote technological and managerial improvements in the forest industry while also enhancing the biomass supply and sustainability of bioenergy systems. (c) 2006 Published by Elsevier Ltd.