The replacement of fossil fuels by biofuels could be an important means of reducing net carbon dioxide (CO2) emission. An estimation of the CO2 mitigation efficiency of biofuel systems depends on the method and assumptions used. Here, different parameters and methods are discussed for comparing fossil-fuel- and biofuel-based systems. Three parameters are suggested: the monetary cost, the primary energy cost and the biofuel cost of CO2 mitigation. They are defined as the difference in monetary expenditure, primary energy use and biofuel use between the compared systems, divided by the difference in net CO2 emission between the systems. Cogeneration and separate production of electricity and heat is then compared using these parameters and the methods of multi-functional products or subtraction. In both methods, either electricity or heat is regarded as the main product and the other is regarded as a by-product. The multi-functional method is preferable due to its transparency as both the main product and the by-product are part of the functional unit. Using heat as the main product illustrates the typical situation that the heat demand limits the use of cogeneration. When comparing systems the output from them should not differ. If the by-product is not fully, cogenerated part of the by-product has to be produced separately. A logical choice for producing this part of the by-product is to use a similar fuel and technology as used for cogeneration. © 2006 Springer Science+Business Media, Inc.