The paper reviews analytical challenges for assessing the environmental impact of bioenergy production in the context of global greenhouse gas emissions and global biofuel production targets. The main environmental issues associated with bioenergy production are briefly explained and used to describe different analytical approaches for assessing the environmental effects of bioenergy production. The paper discusses the relevance of suitable system boundaries in analysing the sustainability of bioenergy production. This includes the need for achieving coherence between several policy areas such as agriculture and food, energy and transport, climate and environment as well as international development. The review concludes with a range of research and policy challenges in the bioenergy field.