Cement manufacturing is a hard-to-abate industrial sector that accounts for 5–8% of global anthropogenic emissions. Approximately 80–90% of these emissions occur during limestone calcination and fuel combustion processes. Decarbonising these two emission and energy-intensive processes requires a sustained and regenerative supply of low-carbon resources. Unlike other renewables such as solar or wind, biomass is uniquely positioned to abate emissions from fuel combustion, and process emissions by substituting clinker with biomass ash. Moreover, bioenergy with carbon capture utilisation or storage offsets the energy penalties and associated emissions due to the deployment of carbon-capturing technologies. The sustainable transition towards biomass-based industry involves multifaceted socio-technical conflicts across bioenergy and cement sectors. This review uncovers opportunities, challenges and interplay involved in the sustainable transition of the cement industry through the lens of circular bioeconomy and multi-level perspective. The review found that 20–30% of fossil fuels can be replaced with biofuels without significant capital investments. This can be further enhanced through pre-processing of biomass and process optimisation. Clinker substitution with biomass ash is reported to be in the range of 3–80%. To increase the uptake of biomass, key aspects of circular bioeconomy are good starting points for transition at an organisation level, but system-wide change demands policy interventions. The policy intervention points presented in this study will serve as focus areas for practitioners and policy makers. •Biomass potential in the carbon-intensive manufacturing processes is discussed.•Opportunities and challenges in uptake of biomass were examined.•Key aspects of circular bioeconomy to initiate the transition are presented.•Policy intervention points to achieve a sustainable transition are proposed.