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Harvested wood products (HWP) may contribute to climate change mitigation by storing carbon and by replacing energy‐intensive materials and fossil energy, reducing greenhouse gas (GHG) emissions. However, when assessing improved HWP utilisations, interactions between wood use pathways, the carbon stock dynamics, and the resulting effect on the GHG balance are still not well‐understood. This research aims to assess the carbon sequestration effects of alternative wood product utilisations in four European Union (EU) countries. We conducted a material flow analysis of wood uses in France, Finland, Germany, and Spain for 2017 taking into account national production, imports, and exports. Then, we quantified the future dynamics of carbon stock in the HWP through time, assuming the same as in 2017 input and ignoring the forest sink. We then ran six alternative scenarios: two energy‐focused (Energy, Energy+), two material‐focused (Cascading, Material), one with extended half‐life of the wood products (HL) and one as business as usual. For the simulation period (2020–2050), the material scenario leads to the highest mitigation benefits with a cumulative HWP net CO2 removals of −502 Mt CO2 for Germany, −290 Mt CO2 for France, −118 Mt CO2 for Spain, and −116 Mt CO2 for Finland over the 30 years. The Energy+ scenario with an increase in wood usage for bioenergy generates a loss of the HWP pool of 351, 80, 77, and 6 Mt CO2 for the same countries, not accounting for energy substitution effects. Overall, our results suggest that the HWP carbon stock can be increased in the short‐medium term by prioritizing the use of wood for material purposes, while maintaining constant harvest. The HWP mitigation potential differed greatly according to national wood industry characteristics. Hence, tailoring the HWP mitigation strategies to the specific characteristics of the national wood chain would enhance the HWP climate benefits. [ABSTRACT FROM AUTHOR]