This study develops an analytical framework for deriving the supply of biomass feedstock and subsequently electricity and CO2 displacement generated from the biomass. This systematic approach minimizes the total cost of both feedstock and electricity production and involves the determination of the optimal power plant size and the derivation of the supply curves. The analytical framework is applied to the case of logging residues in the US. Both the theoretical and empirical results point to the importance of simultaneously considering feedstock production, energy conversion, and environmental benefits/costs in bioenergy project development, leading to useful policy implications for bioenergy development and deployment. (C) 2007 Elsevier Ltd. All rights reserved.