The objective of this study is to analyze the biofuel potential in Europe fromlignocellulosic waste (wood waste and paper and cardboard waste). Ethanol from fermentationand Fischer-Tropsch (FT) diesel from gasification are the two biofuels considered. As thosebiofuels are not yet commercially available, the optimal locations of the production plants haveto be determined. The analysis is carried out with a geographic explicit model that minimizes thetotal cost of the biofuel supply chain. A mixed integer linear program is used for theoptimization. The results show that ethanol production plants are selected in a majority of thestudied cases. Ethanol plants are mainly set up in areas with a high heat demand and/or highelectricity or heat price, whereas FT diesel production plants are set up in areas where the heatdemand is low all year round. A high cost for emitting CO2 as well as high transport fossil fuelprices favor the selection of FT diesel over ethanol production plants. With a CO2 cost of 100€/tCO2 applied, the biofuel production from waste can potentially meet around 4% of theEuropean transport fuel demand.