Abstract: The Taiwanese rice paddy land set-aside program diverts a substantial land area. Given today’s high energy prices and interests in energy security, that set-aside area could be converted to produce bioenergy feedstocks. This study evaluates the economic and environmental impacts of such a policy change using a Taiwanese agricultural sector model. The results show that such a strategy provides increased farm revenue, increased rural employment, increased energy sufficiency and reduced greenhouse gas emissions but also increased government expenditures. These outcomes indicate that the agricultural sector could play a positive role by producing renewable energy.