Short rotation bioenergy crops for energy production are considered an effective means to mitigate the greenhouse effect, mainly due to their ability to substitute fossil fuels. Alternatively, carbon can be sequestered and stored in the living biomass. This paper compares the two land use categories (forest land and non-forest land) for two management practices (short rotation vs. long rotation) to study mitigation potential of afforestation and fossil fuel substitution as compared to carbon storage. Significant carbon benefit can be obtained in the long run from using lands for growing short rotation energy crops and substituting fossil fuels by the biomass thus produced, as opposed to sequestering carbon in the biomass of the trees. When growth rates are high and harvest is used in a sustainable manner (i.e., replanting after every harvest), the opportunities for net carbon reductions appear to be fossil fuel substitution, rather than storage in ecosystem biomass. Our results suggest that at year 100 a total of 216 Mg C ha-1 is sequestered for afforestation/reforestation using long rotation sal (Shorea robusta Gaertn.f) species, as opposed to offset of 412 Mg C ha-1 for carbon storage and fossil fuel substitution for short rotation poplar (Populus Deltoides Marsh) plantations. The bioenergy option results in a continuous stream of about 3 Mg C ha-1 yr-1 of carbon benefits per year on forest land and 4 Mg C ha-1 yr-1 on non-forest land. Earlier studies have shown that in India waste land availability for establishing energy plantations is in the range of 9.6 to 36.5 Mha. Thus, using the 758 Tg biomass per year generated from 9.6 Mha waste land gives a mitigation potential in the range of 227 to 303 Tg C per year for carbon storage and fossil fuel substitution from poplar plantation for substituting coal based power generation. Depending upon the land availability for plantation, the potential for energy generation is in the range of 11,370 PJ, possibly amounting to a bioenergy supply of 43% of the total projected energy consumption in 2015. Further studies are needed to estimate the mitigation potential of other species with different productivities for overall estimation of the economic feasibility and social acceptability in a tropical country like India