Europe’s future wood demand for energy is expected to increase by 10 million to 200 million m3 in the period 2010- 2030. This will be supplied by both domestic sources (forests, industrial residues post-consumer wood waste), but also from sources outside Europe. The EU-28 predicts a near future (2020) gap between solid biomass supply and demand for renewable energy: 21.4 million tonnes of oil equivalents (MTOE). This is estimated via preliminary renewable energy action plans (NREAP’s) per country. The EU-28 expects wood pellet import will merely complete this gap of 21.4 MTOE, with more than 50 million tonnes of pellets. This implies a feedstock need of 125 million m3 of wood from forests and other sources outside the EU-28. A practical approach to include bioenergy in wood sector models should start with the input of wood pellets. Ideally, three types of bioenergy markets should be considered, in which pellets and the other major woody feedstock are included: 1. Large scale power production (the UK, Belgium, the Netherlands, all importing pellets from outside the EU-28); 2. Medium scale combined heat and power (CHP’s) including those in the forest sector (Nordic countries use pellets and chips for energy, merely imported from the EU-28); 3. Small scale residential heating (Germany, Austria and Italy, using wood pellets and logs from regional sources). We suggest starting with inclusion of medium scale CHP’s, followed by large scale power production. Small scale heating is relatively stable and should not have large impacts on future markets