Traditional coppice stands represent a sizable proportion of the Mediterranean forests and are generally geared to the production of firewood, which is eventually fed to traditional stoves for residential heat generation. In recent years, an alternative use has developed whereby trees are chipped whole and chips are fed to centralized heating plants. This latter system allows full mechanization of all supply chain steps and is considered more suited to modern living habits; at the same time, its introduction has raised concerns about possible new impacts on sustainability. This study presents a sustainability impact analysis (SIA) of the two systems, conducted with the Tool for Sustainability Impact Assessment (ToSIA). The results indicate that the new system is generally preferable. All indicators point at the superiority of the new system over the traditional one, except for employment potential. Compared with traditional firewood systems, the innovative system requires fewer workers, but it pays better and offers much safer workplaces. While the energy efficiency of a district heating system is not much higher than that of modern firewood stoves, the larger centralized plant can be fitted with better filters and emits much less particulate matter, which makes it especially suited to support development at a local level. Even if mechanized cutting caused a 20% reduction of coppice yields - which has yet to be proven - the new system would still prove more sustainable than the traditional one.