Wood biomass in Serbia is traditionally used for energy. However, the manner of its use is outdated, and efficiency is very low. Annually over 3.5millionm3 of wood is cut down for energy needs in Serbia. In order to better exploit all forms of woody biomass, especially the one that is now treated as waste, and in order to fulfil the obligations from the outlined Convention on Climate Change it is necessary to switch to a modern way of production and utilization of woody biomass. Serbia is now at the very beginning of this process. This paper gives an overview and an analysis of the possibilities of utilization of wood waste as a renewable source of energy and the problems that producers in Serbia are facing due to undeveloped markets and excessive funds that are needed to start the production of briquettes and pellets. The ecological and economical advantages of using woody biomass, as well the possible support measures for the use of woody biomass in Serbia are also the topic of this paper. The present situation in this area, the manner of waste management in sawmills and the reasons for the necessity of future development of this industrial production are also briefly described.