The European Union (EU) has promised to cut its energy consumption by 20% by 2020. As a result, the use of petroleum products has continually decreased, and the use of renewable energy sources has increased. For the EU as a whole, however, the use of wood for energy has been fairly constant, even if its use has increased in several countries, for example, in the Nordic countries, the United Kingdom (UK), and Germany. As the consumption grows, the demands are increasingly met by imports of wood pellets, especially in countries with small forest areas such as Denmark and the UK, but also in Germany. Even if the forest area is increasing in many European countries, the land use change for urban development and nature conservation efforts have furthermore reduced the contribution of the forest sector in some countries. Given this situation, this chapter analyzed how managed and unmanaged temperate forests of the deciduous broad-leaved European beech (Fagus sylvatica) and the evergreen coniferous Norway spruce (Picea abies) species, to see how these forests can best help to mitigate climate change by storage of carbon in the forest and substitution of fossil intensive materials. The assessment was based on yield tables, wood assortment tables, deadwood and product-decay functions, and on the measured growth data from managed and unmanaged forests. All results are expressed as wood volume (m³/ha) that either store carbon or is made available for substitution through harvesting. The time frame is based on a suggested natural life cycle of unmanaged forest which is 230 years for beech and 350 years for spruce. In such time frames, the mitigation effect by storage is approximately zero for unmanaged forests, as the produced biomass is subject to natural mortality and input to deadwood pools that decompose and return the CO₂ to the atmosphere. In unmanaged forests the mean volume stock over 350 years was 324±252 m³/ha for beech and 406±295 m³/ha for Norway spruce. For managed forests, there are, in the same time frame, also no or only minor storage effects in the long term, unless substantial changes take place in forest management or wood use. But it is also important to protect these stocks and the stocks of wood products, which together were 543 m³/ha for managed beech and 624 m³/ha for managed spruce, and of these, 279 and 342 m³/ha are stored in the forest, respectively. The forest management effect only becomes apparent through substitution effects for fossil intensive materials and the fossil fuels. In this context the role of wood energy and products is complex. Only some wood residues substitute the fossil energy and only some products substitute materials with high energy cost. Products are a transient pool of wood, which is feed by forest harvest, and which loses wood during processing and after consumption for energy or other use. The total supply of wood for energy is 1177 m³/ha over 230 years in beech (5.1 m³/ha/year) and of 3395 m³/ha over 350 years in spruce (9.7 m³/ha/year). Thus the contribution for climate change mitigation is larger for coniferous than for broadleaved species, and managed forests contribute more than unmanaged forests to storage. The implications of nature conservation, land use change are discussed, together with various options for improving incentives for forest management through international greenhouse gas accounting systems, which must still avoid double accounting.