Wood-processing residues in Europe: material use, bioenergy and circular value

Why residues are the quiet centre of the sawmill business

A sawmill is usually described by its main product, sawnwood. Yet in volume terms a large part of every log leaves the mill as something else. Chips, sawdust, bark, planer shavings and trimmings are sold, burned on site or, in the worst case, stored at a cost. For many mills these streams decide whether the year is profitable. A Finnish review reports that side-streams account for about 15% of revenue for large and medium sawmills (Finland, 2019 review, Verkasalo et al.). That figure is an order of magnitude, not a benchmark for any single mill, but it shows why the allocation of residues deserves the same management attention as log procurement.

This article is a synthesis for sawmill managers, procurement staff and policy watchers. It covers which residues a sawmill produces and in what proportions, where they go, how EU policy (the revised Renewable Energy Directive, RED III) frames the choice between material and energy use, what is known about climate effects, and how a mill can structure the allocation decision. Where a number is quoted, the year, unit, region and source are given. Where the author interprets, the text says so. Points that could not be verified are collected at the end.

What a sawmill produces besides boards

The residue families are fairly standard across Europe, although the names vary by country.

• Bark. Removed at the debarker. It is the only residue whose quantity is driven mostly by log diameter and species rather than by the sawing pattern. Typically wet (high moisture content) and variable in quality.
• Sawdust. Produced by the saw kerf. The share depends on blade thickness, number of cuts and the product mix. Thinner kerfs reduce it (general industry knowledge, not sourced here).
• Chips. Produced either by chipping slabs, edgings and sideboards or directly by chipper-canter lines. Clean, bark-free chips have the highest value and are the preferred raw material for pulp and some boards.
• Planer shavings. Produced in planing and moulding, and therefore dry. They go to pellets, briquettes, panels and animal bedding.
• Offcuts, slabs, trimmings and sanding dust. Mixed streams. Some are chipped; sanding dust is a fine, dry fraction that is often burned or used in pellets.

The Finnish review lists these as wood chips, planer shavings, sawdust, sanding dust, off-cut pieces and bark, and describes them as important raw materials for pulp and paper, wood panel and bioenergy industries (Verkasalo et al., Pro Ligno 15(4), 2019, Finland).

Typical mass or volume shares of log input

Published shares differ, because they are expressed on different bases (solid volume, bulk volume, mass, dry mass) and for different log species and mill types. They should not be added up across sources. The table collects the figures that could be verified.

The Finnish ranges also sum to more than 100% at the upper end (up to about 113%), which confirms that the figures are not strictly additive: they probably mix volume bases, such as solid cubic metres and bulk cubic metres. This is the author's interpretation and was not confirmed by the source text. The practical reading is simple: sawnwood is roughly half of the log, and the rest is a bundle of co-products dominated by chips. The same Finnish review states that 30-55% of roundwood ends up as side-streams, depending on the final product (Finland, 2019).

A Slovak survey adds a Central European data point. In that study, which covered 57 responding companies out of 177 contacted and reported 2020 data, by-products made up 42.1% of sawmill production. Within the output structure, chips were 16.2%, sawdust 8.7%, cut-offs and slabs 6.2% and bark 0.5% (Parobek et al., Acta Facultatis Xylologiae Zvolen 66(2), 2024, Slovakia). The very low bark figure is probably a reporting artefact, since many mills do not record bark as a separate product. This is an interpretation. The national totals reported in the same paper for 2020 were 477,392 m3 of chips, 254,600 m3 of sawdust, 180,650 m3 of cut-offs, slabs and edge boards, 16,853 m3 of bark and 14,205 m3 of shavings.

Where residues go: the market map

Pulp and paper

Chips from softwood sawmills are the classic raw material for sulphate (kraft) pulp, and a large part of the chip stream in Nordic and Central European countries goes there. In Germany, sawmill by-products used in the pulp and paper industry totalled 3.979 million solid cubic metres (Festmeter) in 2021: 3.434 million of softwood and 0.544 million of hardwood by-products. Of the softwood, 0.635 million went to mechanical pulp, 0.725 million to sulphite pulp and 2.074 million to sulphate pulp. Hardwood by-products, 0.544 million, all went to sulphite pulp (Germany, 2021, Thunen Working Paper 253, Jochem and Glasenapp, 2024). Softwood use was roughly stable between 2019 and 2021 (3.489 to 3.434 million Fm), while hardwood use rose from 0.290 to 0.544 million Fm, according to the same paper. The document covers only pulp; it does not give panel, pellet or energy uses.

In Finland in 2018, wood-product industries produced about 9.1 million m3 of wood chips, 4.0 million m3 of sawdust and other residues and 3.3 million m3 of bark. Of the total, 8.6 million m3 went to pulp and paper mills as raw material and the rest to heat and power plants (Finland, 2018, via Verkasalo et al. 2019). The same review cites a split for sawmill side-streams (attributed there to Hassan et al. 2018): 48% to pulp chips, 43% sawdust and bark for energy, and 8% slabs, endings and dry residues for energy.

Particleboard, MDF and other panels

Panel mills use chips, sawdust and shavings, usually together with industrial roundwood and, in many countries, recycled wood. The Finnish review notes that less than 1% of wood-based side-streams there go to chipboard and fibreboard, while about 60% go to energy generation (Finland, 2019). That is a specific national structure: Finland has a large pulp industry that takes the chips and a small panel sector. In Germany or Central Europe the panel industry competes for the same fractions much more intensively. The JRC wood-resource-balance work records that reported uses of woody biomass for products and for heat and power exceed the reported sources in every available year, and attributes the gap mainly to the energy sector (EU, 2021, Jonsson et al., JRC Technical Report EUR 30393). This is relevant because panel producers and energy producers draw on the same poorly measured secondary flows.

Pellets and briquettes

Pellet plants use sawdust and shavings from sawmills and planing mills, and in some regions increasingly other residues. In the EU27 in 2024, wood pellet production was 19.5 million tonnes, 5% lower than in 2023, and consumption was nearly 22 million tonnes, 2% higher. Exports were 9 million tonnes and imports 12 million tonnes (EU27, 2024, Bioenergy Europe Statistical Report 2025). In Finland, about 30 pellet factories use mainly sawdust and planer shavings, and three pulp mills use sawdust continuously (Finland, 2019, Verkasalo et al.). The Bioenergy Europe report does not give a share of sawmill residues in pellet feedstock, so that share is not stated here.

Heat and power in the sawmill, including kilns

Drying sawn timber needs heat, and bark and other residues cover it well. The UPM Korkeakoski sawmill in Finland commissioned a bark-fired heating plant in 2013 that, according to the company's press release of 26 September 2013, generates all the heat and steam the sawmill needs and uses solely bark. The press release said the old plant needed fossil fuel for extra heat, which the new one removed, and it gave no emission or capacity figures (Finland, 2013, UPM press release). The case is an example of a design principle that the author considers standard for Nordic mills: size the on-site boiler to the drying load first and sell everything beyond that. This is an interpretation, not a statement from the source.

Bark in horticulture and landscaping

Bark is a lower-value fraction for most mills, which is why it often goes to the boiler. There is, however, a material market: composted bark and wood fibre are among the main constituents of peat-reduced growing media. A German interview study of growing-media producers found that processing infrastructure affects transport distances and the quality and quantity of material reaching the market, that competition with other sectors limits availability, and that peat remains cheaper than its substitutes, though the advantage may shrink (Germany, interview study, openAgrar record; year and authors were not shown in the page content that was read). No volume or price numbers for bark were available in the source. For a mill, the implication is a possible niche for screened, composted bark where a processor is near; whether it beats burning the bark depends on local prices that this article cannot supply.

Summary of market options

The cascading principle

Cascading means using wood first for long-lived products, then for reuse and recycling, and only at the end for energy. Industry and policy documents describe it the same way. A Canadian pellet association factsheet of October 2025 describes the order as wood-based products, extended service life, reuse, recycling, bioenergy and disposal, and says logs go first to lumber, pulp chips to pulp mills, sawdust and shavings to pellets, and bark mainly to energy (Canada, 2025, WPAC factsheet; an industry publication whose claims are not independently verified in the text).

There is some quantitative support in the academic literature, although mostly for post-consumer wood rather than for sawmill residues. A study of multifunctional wood cascade chains in Germany, using life cycle assessment and exergy analysis, found that cascading required less resource input than primary wood, with a life-cycle resource efficiency of 46% against 21% for the non-cascaded case, and that most of the saving came from avoided primary production in forestry (Germany, 2017, Risse, Weber-Blaschke and Richter, Resources, Conservation & Recycling 126). Note the scope: this concerns chains in which the same fibre serves several material uses before energy recovery. A sawmill chip that becomes pulp and then paper is the first step of such a chain; a sawdust that becomes pellets is a one-step energy route.

Sawmill residues already sit low in the hierarchy in one sense: they are by-products, and the main wood has already been put into a long-lived product. The cascading question for the mill is therefore about the second step. Does the residue go to a panel or pulp product (material) or to energy? Interpretation: for fine fractions without a nearby material buyer, the energy route is the cascade's end point reached early, which is acceptable if no material alternative is available at a viable price.

RED III and the rules that touch residues

What was verified

The revised Renewable Energy Directive, Directive (EU) 2023/2413, was read on EUR-Lex for this article. The following points were verified from its text:

• It sets the binding EU target for 2030 at a share of at least 42.5% renewable energy in gross final energy consumption, and Member States collectively endeavour to reach 45% (Article 1(2)(a), replacing Article 3(1) of Directive 2018/2001).
• It defines industrial grade roundwood as saw logs, veneer logs, round or split pulpwood and other roundwood suitable for industrial purposes (new point (1a) in Article 2).
• Member States must ensure that woody biomass is used according to its highest economic and environmental added value, with the priority order running from wood-based products through extended service life, reuse and recycling to bioenergy and disposal (Article 3(3) as amended).
• Member States may derogate from the cascading principle where necessary for security of energy supply, or where local industry cannot use the forest biomass for higher added value. The listed feedstocks include necessary forest-management thinning or fire prevention, salvage logging after documented natural disturbances and woods unsuitable for local processing (Article 3(3a), points (a) to (c)).
• Member States shall not grant direct financial support for the use of saw logs, veneer logs, industrial grade roundwood, stumps and roots to produce energy (Article 3(3c)(a)).
• Recital 82 refers to lowering the size threshold for the sustainability criteria for solid biomass installations from 20 MW to 7.5 MW. The operative Article 29 text was not available in the portion of the document that could be read, so the thresholds for greenhouse-gas saving requirements are not stated here.

What this means for residues (interpretation)

The author reads the verified text as follows. The direct-support ban targets primary roundwood (saw logs, veneer logs, industrial roundwood, stumps and roots), not sawmill co-products. Sawmill sawdust, bark, chips from slabs and shavings are by-products, and nothing in the verified articles prohibits their use for energy. The cascading principle, however, applies to woody biomass generally and gives a policy argument for steering clean chips and other fractions to material uses where they have a higher value. This reading is not legal advice; national transposition determines what applies to a given mill.

The industry effect is indirect. If national policy reduces the incentive to burn roundwood for energy, wood-fuel buyers look more at residues, and demand for sawmill by-products from energy buyers may increase while panel and pulp producers keep their own demand. That is a hypothesis about market behaviour, not a documented effect.

Not verified

The transposition deadline in the Directive, the exact Article 29 thresholds and greenhouse-gas saving percentages, and the current state of national transposition in individual Member States were not verified for this article. Readers should check the consolidated Directive text and national law before making compliance decisions.

Price and demand shifts

Prices of sawmill residues are not published in open sources in a form that supports tables. What can be said from verified sources is qualitative.

• EUWID, a trade publication, reported on 24 April 2024 that German sawdust prices were falling and woodchip prices for MDF and pulp were largely stable, citing low availability of residual wood and increased requests from Scandinavia as factors in the subheading (Germany, 2024). The article is behind a paywall; no EUR figures were visible, and the full list of drivers could not be read.
• The JRC wood-resource-balance report finds that official data underestimate removals and that the gap between reported sources and uses lies mainly in energy (EU, 2021). A market whose basic volumes are poorly recorded is also a market where price signals are harder to interpret.
• Pellet demand in the EU27 grew slightly in 2024 while production fell by 5%, and imports of about 12 million tonnes were needed to cover consumption (EU27, 2024, Bioenergy Europe). The author's interpretation: a persistent import dependence in pellets means that domestic sawdust competes with imported pellets rather than being the only source, which limits price spikes but also limits the leverage of a mill selling to pellet producers.

A mill's practical planning conclusion is that residue revenue is cyclical and linked to the sawnwood cycle itself. When sawnwood output is low, fewer residues are available for all downstream users, and prices of sawdust and chips rise. When sawmills run at full capacity, residues are plentiful. This is a structural feature, which is why many integrated groups tie sawmills to pulp or energy plants with long-term contracts, as the Finnish examples below show.

Case examples from Nordic and Central European settings

The following cases come from the Finnish review (Verkasalo et al., Pro Ligno 15(4), 2019) and a company press release. They are described as reported; no independent verification beyond the cited documents was possible.

1. UPM Pietarsaari (Finland). A biorefinery on a chemical forest-industry site where the UPM sawmill supplies chips to the sulphate pulp mill, while sawdust, bark and other flows go to the Billerud and Alholma Kraft CHP plants. The design makes the residue destinations fixed by proximity and infrastructure.
2. Metsa Group (Finland). A biorefinery network sourcing side-streams from wood-product mills under long-term contracts.
3. Koskisen (Finland). A large wood-product company with its own further processing and energy plant, which supplies only chips to the chemical forest industry.
4. Woodpolis Kuhmo, Kantola industry park (Finland). Small and medium enterprises forming a local network of basic products, further-processed products and bioenergy.
5. The "virtual sawmill". An individual sawmill that sells sorted side-streams to outside companies.
6. UPM Korkeakoski sawmill (Finland, 2013). A bark-only heating plant that covers the sawmill's heat and steam, described above.
7. Germany (2021). Not a mill case but a flow: about 4 million Fm of sawmill by-products used in pulp (Thunen Working Paper 253), which shows how strongly a Central European residue stream depends on a small number of sulphate pulp mills.
8. Slovakia (2020). A survey covering 57 companies, in which by-products were 42.1% of sawmill production and chips were the largest fraction (Parobek et al., 2024).

A wider observation from the Finnish review: raw material availability, collaboration between companies, logistics, storage and production scale are named as key factors for such ecosystems. The Austrian national wood-flow diagram from the Austrian Energy Agency (reference year 2022, issued November 2024, in million m3) groups sawmill co-products and shows industrial roundwood going to pulp and panels while by-products go to industrial and energy uses, with the energy node covering CHP plants and wood chip, pellet, briquette and firewood boilers. The accessible text of that document gave no numerical flows, so no Austrian numbers are quoted.

Greenhouse gas considerations

Residues are a special case in the climate debate about woody biomass. IEA Bioenergy states that forest industry by-products such as sawdust, bark and black liquor, together with tops and branches and some salvage material, are typically associated with short-term climate benefits, while slowly decaying residues and long-rotation roundwood are the feedstocks most associated with long payback periods. It describes payback as nearly immediate for residues used efficiently, for example in combined heat and power plants and biorefineries, and says the key question is whether greater forest biomass use for energy systematically changes forest carbon stocks and reduces fossil energy use. The page gives no numerical values (IEA Bioenergy FAQ, "Timing of greenhouse gas emissions", copyright 2026, undated).

Three points follow, partly from the source and partly from the author.

1. Counterfactual matters. A sawmill residue that would otherwise be landfilled, left to decay or burned without energy recovery gives a clearer benefit when used for heat. A residue that would otherwise become a long-lived panel does not, because the energy route ends the carbon storage in the product. The panel keeps the carbon stored for the service life of the product; the energy route releases it at once, and the benefit then depends on the fossil fuel displaced. This is the author's reasoning, consistent with the cascading logic above, not a quantified result.
2. Efficiency matters. The IEA text links near-immediate payback to efficient use. A bark boiler that covers kiln heat replaces fossil heat directly; a low-efficiency condensing power plant does less. The numbers depend on the fossil reference and are not provided in the source.
3. Residue extraction from the forest is different. The verified IEA text also notes that management changes that extract more residues can lower forest carbon stocks and should be counted as an emission of the bioenergy system. This concerns logging residues, not sawmill by-products. A Lithuanian life cycle study of Scots pine logging residues (Virbickas, Kliopova and Stunzenas, Sustainability 17(18), 2025) found improved results in 9 of 18 impact categories when residues were used for energy, but that is a forest-residue case and is mentioned only to avoid confusing it with sawmill by-products.

No GHG factor (kg CO2e per tonne or per MWh) is stated in this article, because none was verified from an open source in this research.

A decision framework: sequential allocation of residues

Many mills decide residue allocation by habit or by the nearest buyer. A structured sequence is more defensible. The framework below is the author's own synthesis, built from the cascading principle in RED III and the market facts above. It is not taken from a published model, and it has not been validated empirically.

Step 1: Fix the internal heat demand

Estimate the mill's annual heat demand, principally for kiln drying and building heat, and the fuel needed to cover it. Bark and wet or low-grade fractions that no outside buyer wants are the natural fuel. In the Korkeakoski case, bark covered all heat and steam. The principle: the first claim on the residues is the one that avoids buying fossil fuel and replaces transport.

Step 2: Segregate by quality

Separate bark-free clean chips, bark-containing chips, sawdust, dry shavings, and bark. Quality drives value. Contamination, moisture and species decide which gates a fraction can pass.

Step 3: Offer clean fractions to the highest material use

Test, in order: pulp, panels, other material products, and growing media or mulch (for bark). A fraction should go to a material buyer if the net price after transport and contract risk is at least equal to its energy value plus a margin for risk, and if a buyer takes the volume reliably. In this step the cascade is applied.

Step 4: Offer the remainder to pelletising or briquetting

Sawdust and shavings that do not go to panels or pulp can go to pellets, which are an energy product, but also a standard commodity with a liquid market, and which allow the mill to monetise dry fine fractions. In the cascade logic this is the lowest of the "sold" options, but it keeps the residue out of storage and gives a price reference.

Step 5: Allocate the rest to energy, internally first and externally second

Residue that remains goes to on-site heat or CHP and then to external heat or power customers. The efficiency of the use (heat only, CHP, district heat) should be an explicit criterion, in line with the IEA statement that near-immediate payback is associated with efficient use.

Step 6: Review against policy and market signals

At least annually, test whether (a) national rules transposing RED III change support or sustainability criteria for the plants that take the mill's residues; (b) panel and pulp demand has changed; (c) a new buyer has appeared within an economic transport distance. Re-run steps 1 to 5.

Why "sequential"

Sequential here means that each step's decision depends on what remains from the previous step, and that the decision is repeated over time, with prices, volumes and regulations changing. In a more formal approach, one would model it as a multi-period decision problem with uncertain prices and volumes. The task description for this article referred to a paper with a title along the lines of a sequential decision framework for allocating wood-processing residues between material and bioenergy use. Searches did not locate it (see below), so no formal model from the literature is presented, and the six-step procedure above should be read as a practical heuristic, not as a published method.

Rule-of-thumb criteria (interpretation)

None of the thresholds are numerical because no verified source provides them; each mill needs to calibrate with its own prices.

Outlook and practical conclusions

1. Sawmill residues are a large and structurally important fraction: sawnwood is only about half of the log in the Finnish figures, with chips as the largest co-product.
2. Markets differ strongly by country. Finland channels the bulk of chips to pulp and the rest to heat and power, with little going to panels (Finland, 2018-2019). Germany shows a stable demand from sulphate pulp (2021). Central European panel industries compete more strongly for sawdust and chips. This comparison is the author's interpretation of the separate national data.
3. RED III does not, in the verified text, forbid energy use of by-products; it prohibits direct support for burning roundwood and sets a cascade priority. The compliance details of national law, and the Article 29 thresholds, should be checked by each mill.
4. Climate arguments favour efficient use of residues, with material use first where it is real and not hypothetical.
5. Data are weak. The JRC finds a gap between reported uses and sources in the EU woody biomass balance, attributed mainly to the energy sector (2021). Any mill benchmarking should rely on its own measured mass balance, not on literature averages.

Sources used

The list below contains the sources actually opened and read for this article. Several were secondary or trade-press pages with limited content, as noted in the text.

• Directive (EU) 2023/2413 (RED III), EUR-Lex.
• Bioenergy Europe, Statistical Report 2025 (Bioenergy Landscape).
• Verkasalo et al., Pro Ligno 15(4), 2019, Finnish side-streams (Luke repository and PDF).
• Parobek et al., Acta Facultatis Xylologiae Zvolen 66(2), 2024, Slovakia.
• Jochem and Glasenapp, Thunen Working Paper 253, 2024, Germany.
• Jonsson et al., JRC Technical Report on wood resource balance gaps, 2021.
• Camia et al., JRC, The use of woody biomass for energy production in the EU, 2021 (catalogue page).
• IEA Bioenergy FAQ, Timing of greenhouse gas emissions.
• Risse, Weber-Blaschke and Richter, 2017, Resources, Conservation & Recycling 126.
• Wood Pellet Association of Canada, Cascading Use Principle factsheet, October 2025.
• UPM press release, Korkeakoski sawmill bio heating plant, 2013.
• Forest Research (UK), Forestry Statistics 2018, other softwood products.
• EUWID, sawmill residues Germany, 24 April 2024.
• openAgrar, Peat substitution in horticulture: interviews with German growing media producers.
• Austrian Energy Agency / klimaaktiv, Wood flows in Austria 2022.
• Virbickas et al., Sustainability 17(18), 2025 (logging residues; context only).
• Robin Wood briefing on the JRC study (NGO secondary summary; used only to confirm the existence and general content of the JRC report, not quoted in the article).

Limits of this article

• It is a synthesis from a limited set of open sources, not a systematic review. Several key reports (the full JRC woody biomass report, the Austrian wood-flow diagram, the Eurostat energy balances) could not be read in numerical detail.
• Mass shares come mainly from one Finnish review and a Canadian industry factsheet; they are not harmonised and should not be added up or treated as benchmarks.
• The Article 29 thresholds, the transposition deadline and national implementation of RED III were not verified.
• No residue prices in EUR and no GHG emission factors are given because none could be verified from open sources.
• The sequential allocation framework is the author's own synthesis. A paper on a sequential decision framework for allocating wood-processing residues between material and bioenergy use was searched for on the web and was not located; it is not cited. The Crossref API could not be reached from the research environment, so the search used web search only.
• The article does not replace legal, financial or technical advice for a specific mill.