Air pollution and increased CO2 concentration in atmosphere and other energy related issues caused a transformative shift in energy system which contributes to increased utilization of renewables as alternative to generate green energy carriers. The potential of renewable resources in different region and potential energy conversion have been largely considered by many researcher in many countries. The energy conversion technologies to produce heat, electricity, and transportation fuels have made impressive technical advances. Sweden has also been challenging with mitigation of CO2 emission and trying to shift into a fossil fuel free system in all energy sectors. This paper deals with the current status of fuel demand and supply in the transport sector in a County in Sweden. A scenario for a fossil fuel free transport sector at a regional level is developed to investigate the potential biofuel production from regionally produced straw. The results and analysis indicate that the potential for cereal based bioethanol production in the region is sufficient to meet the biofuel demand of the County. Using the fallow land for cereal cultivation, it is feasible to shift into a fossil fuel free transportation system where all passenger cars are fueled by bioethanol. The results and finding from the current paper will be used to develop further study on optimization of local biofuel production integrated with CHP plants considering application of other feedstock such as municipal wastes.