Fossil fuel substitution with biomass is one of the measures to reduce carbon dioxide (CO2) emissions. This paper estimates the cost-effectiveness of raising industrial steam and producing materials (i.e. chemicals, polymers) from biomass. We quantify their long-term global potentials in terms of energy saving, CO2 emission reduction, cost and resource availability. Technically, biomass can replace all fossil fuels used for the production of materials and for generating low and medium temperature steam. Cost-effective opportunities exist for steam production from biomass residues and by substitution of high value petrochemicals which would together require more than 20 exajoules (EJ) of biomass worldwide in addition to baseline by 2030. Potentials could double in 2050 and reach 38-45 EJ (25% of the total industrial energy use), with most demand in Asia, other developing countries and economies in transition. The economic potential of using biomass as chemical feedstock is nearly as high as for steam production, indicating its importance. The exploitation of these potentials depends on energy prices and industry's access to biomass supply. Given the increasing competition for biomass from several economic sectors, more resource efficient materials need to be developed while steam production is already attractive due to its high effectiveness for reducing CO2 emissions per unit of biomass.