This paper examines the possibilities of increasing the use of wood from private forests in Lithuania for bioenergy purposes. Potential wood fuel supply and consumption were investigated using a literature review and analysis of statistical data. Costs of wood chips production were calculated applying economic simulation. The analysis showed that 0.6 Mm(3) (1.2 TWh) of firewood is produced and about 0.3 Mm(3) (0.6 TWh) of forest logging residues could be used annually for fuel in private forests. The available volume will increase in coming decades. In total, Lithuanian households had increased wood fuel consumption by five times during 10 years and exceeded 2.3 Mm(3) (4.6TWh) in 2003. Firewood production for home consumption is one of the most important forest owners' objectives. The cost of forest chips varied from 19 to 36 euro m(-3) in pre-commercial thinnings and from 20 to 28 euro m(-3) in final thinnings. The lack of specific policies supporting the use of natural resources is causing a lack of incentive to increase the use of local fuels. (C) 2007 Elsevier Ltd. All rights reserved.