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Comparative analysis of the energy and carbon balances of wood vs. non-wood products is a complex issue. In this paper we discuss the definition of an appropriate functional unit and the establishment of effective system boundaries in terms of activity, time and space, with an emphasis on the comparison of buildings. The functional unit can be defined at the level of building component, complete building, or services provided by the built environment. Energy use or carbon emissions per unit of mass or volume of material is inadequate as a functional unit because equal masses or volumes of different materials do not fulfil the same function. Activity-based system boundaries include life cycle processes such as material production, product operation, and post-use material management. If the products compared are functionally equivalent, such that the impacts occurring during the operation phase are equal, we suggest that this phase may be dropped from the analysis allowing a focus on material flows. The use of wood co-products as biofuel can be analytically treated through system expansion, and compared to an alternative of providing the same energy service with fossil fuels. The assumed production of electricity used for material processing is another important energy-related issue, and we suggest that using marginal production data is more appropriate than average production. Temporal system boundaries include such aspects of the wood life cycle as the dynamics of forest growth including regeneration and saturation, the availability of residue biofuels at different times, and the duration of carbon storage in products. The establishment of spatial boundaries can be problematic, because using wood-based materials instead of non-wood materials requires more land area to capture solar energy and accumulate biomass. We discuss several possible approaches to meet this challenge, including the intensification of land use to increase the time rate of biomass production. Finally, we discuss issues related to scaling up an analysis of wood substitution from the micro-level to the macro-level of national, regional or global. [ABSTRACT FROM AUTHOR]