The increasing atmospheric CO2 concentration has caused a transformative shift in global energy systems, which is contributing to an increased use of renewables. Sweden is among the countries trying to shift to a fossil-fuel-free system in all energy sectors. This paper addresses the fuel demand and supply in the transportation sector in the county of Västmanland in Sweden. A Mixed Integer Linear Programming optimization model is developed to minimize cost in the studied system. The model is further used to investigate the influence of three different scenarios on production planning of regional Combined Heat and Power (CHP) plants: (1) straw-based biofuel production integrated with existing CHP plants to fuel combustion engine vehicles, (2) use of electric vehicles, and (3) use of hybrid vehicles fueled by both electricity and bioethanol. Potential solar power generation from rooftop solar cells is also included in the model. The energy system in scenario 2 is found to have the highest overall system efficiency; however, a large amount of power needs to be imported to the system. Hybrid vehicles can potentially reduce the electricity import and CO2 emissions compared to the current situation. Electricity production from rooftop solar collectors could provide the energy needs of the vehicles during summer, while regionally produced straw-based bioethanol integrated with CHP plants can satisfy the fuel needs of the vehicles in winter. This approach could affect the production planning of CHP plants, result in less fuel use and increase the share of renewable resources in the regional transportation system.