To obtain the best possible net energy balance of the bioethanol production the biomass raw materials used need to be produced with limited use of non-renewable fossil fuels. Intercropping strategies are known to maximize growth and productivity by including more than one species in the crop stand, very often with legumes as one of the components. In the present study clover-grass is undersown in a traditional wheat crop. Thereby, it is possible to increase input of symbiotic fixation of atmospheric nitrogen into the cropping systems and reduce the need for fertilizer applications. Furthermore, when using such wheat and clover-grass mixtures as raw material, addition of urea and other fermentation nutrients produced from fossil fuels can be reduced in the whole ethanol manufacturing chain. Using second generation ethanol technology mixtures of relative proportions of wheat straw and clover-grass (15:85, 50:50, and 85:15) were pretreated by wet oxidation. The results showed that supplementing wheat straw with clover-grass had a positive effect on the ethanol yield in simultaneous saccharification and fermentation experiments, and the effect was more pronounced in inhibitory substrates. The highest ethanol yield (80% of theoretical) was obtained in the experiment with high fraction (85%) of clover-grass. In order to improve the sugar recovery of clover-grass, it should be separated into a green juice (containing free sugars, fructan, amino acids, vitamins and soluble minerals) for direct fermentation and a fibre pulp for pretreatment together with wheat straw. Based on the obtained results a decentralized biorefinery concept for production of biofuel is suggested emphasizing sustainability, localness, and recycling principles.