Background: A currently held idea is that substituting wood for fossil fuels and energy intensive materials reduces greenhouse gas emissions. This is supported by the values usually attributed to the displacement factors that normalise the emission reduction to the wood carbon mass (typically, 0.5 tC/tC for fossil fuel substitution, 2 tC/tC for building material substitution). These values are based on the “carbon neutrality” assumption of harvested wood, which is claimed valid as long as forests are sustainably managed, but holds true in static conditions only. Harvesting disturbs forest growth and wood carbon storage for a long term. Therefore, the carbon footprint of harvested wood and related displacement factors must be assessed as time-dependant quantities, and the effect of substitutions should be appreciated relatively to specific time horizons. In this study, the meaning, values and use of the displacement factors are reconsidered according to this new line of thinking. Results: When taking into account the forest carbon dynamics, the presumed values of the displacement factors under the carbon neutrality assumption are achieved only in steady-state conditions, a very long time after harvest. Shortly after harvest, and even for time horizons comparable with climatic deadlines, the transient values of these factors appear much less than the steady-state values, and may even be negative. This is especially the case for the substitution of wood for fossil fuels which first increases the carbon emission for the same energy released. An additional weakness of the ordinary concept of displacement lies in possible misevaluations of carbon benefits from substitution, especially when large sectors of wood products are concerned or when the market conditions are disregarded. Corrective measures are proposed for this. Conclusions: The use of inadequate constant values of displacement factors under the carbon neutrality assumption and the supposition that wood substitution for other fuels or materials is always possible and effective leads to overestimations of carbon benefits. These overestimations erroneously incite the increase in harvesting and wood utilisation, which may be counter-productive for climate change mitigation objectives, especially when wood is used as a fuel. Keywords: Forest carbon, Harvested wood products, Carbon accounting, Carbon neutrality, Sequestration parity, Energy and material substitution, Displacement factors, Climate change mitigation.

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