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We study the opportunities to increase the use of wood in the Dutch residential construction sector and assess the effects on material related CO2 emission. Four house types are modeled with increasing quantities of wood used in constructions. CO2 emission reductions of almost 50% are technically possible. We assess the innovation characteristics of these wood applications to create insights in the complexity of the necessary change process. Then we relate the innovation characteristics of the wood options to the context in which implementation of the technologies take place. The options vary strongly in the required technical and network changes and so do the opportunities to implement them. Based on this we expect that a 12% CO2 emission reduction related to material use for residential buildings is possible in the short term by an increased share of wood use. We also study the possibilities for increased wood recycling practices. A large technical potential exists. To achieve this potential a significant policy effort is needed since significant changes in both technical and network dimensions are necessary. To stimulate innovation in the use of wood in residential construction, important focus points of policy making should be the culture in the Dutch construction sector, the way new building projects are commissioned, research areas within the building sector, and stabilization of building networks.