Second-generation, dedicated lignocellulosic crops for bioenergy are being hailed as the sustainable alternative to food crops for the generation of liquid transport fuels, contributing to climate change mitigation and increased energy security. Across temperate regions they include tree species grown as short rotation coppice and intensive forestry (e.g. Populus and Salix species) and C4 grasses such as miscanthus and switchgrass. For bioenergy crops it is paramount that high energy yields are maintained in order to drive the industry to an economic threshold where it has competitive advantage over conventional fossil fuel alternatives. Therefore, in the face of increased planting of these species, globally, there is a pressing need for insight into their responses to predicted changes in climate to ensure these crops are ‘climate proofed’ in breeding and improvement programmes. In this review, we investigate the physiological responses of bioenergy crops to rising atmospheric CO2 ([Ca]) and drought, with particular emphasis on the C3Salicaceae trees and C4 grasses. We show that while crop yield is predicted to rise by up to 40% in elevated [Ca], this is tempered by the effects of water deficit. In response to elevated [Ca] stomatal conductance and evapotranspiration decline and higher leaf–water potentials are observed. However, whole-plant responses to [Ca] are often of lower magnitude and may even be positive (increased water use in elevated [Ca]). We conclude that rising [Ca] is likely to improve drought tolerance of bioenergy crop species due to improved plant water use, consequently yields in temperate environments may remain high in future climate scenarios.