Many factors enforce the intensification of grassland utilization which is associated with significant environmental impacts subjected to various legislative constraints. Nevertheless, the need for diversification in agricultural production and the sustainability in energy within the European Union have advanced the role of grassland as a renewable source of energy in grass biomethane production with various environmental and socio-economic benefits. It is underlined that the essential question whether the gaseous biofuel meets the EU sustainability criteria of 60% greenhouse gas emission savings by 2020 can be met since savings up to 89.4% under various scenarios can be achieved. Grass biomethane production compared to other liquid biofuels either when these are produced by indigenous of imported feedstocks is very promising. Grass biomethane, given the mature and well known technology in agronomy and anaerobic digestion sectors and the need for rural development and sustainable energy production, is an attractive solution that fulfils many legislative, agronomic and environmental requirements.