Upgraded biogas, also known as biomethane, is increasingly being used as a fuel for transport in several countries and is regarded as an environmentally beneficial option. There are, nevertheless, few studies documenting the environmental impacts of biogas as a transport fuel compared with the alternatives on the market. In this study, life cycle assessment (LCA) methodology was applied to compare the environmental performance of biogas used as a fuel for bus transport with natural gas, electricity fueled buses, biodiesel, and fossil diesel. A sensitivity analysis was performed for the biogas alternative to assess the importance of the underlying assumptions. The results show that biogas has a relatively low contribution to the environmental impact categories assessed. Emissions of greenhouse gases are dependent on assumptions such as system boundaries, transport distances and methane leakages.