Current policies in the European Union (EU) requiring renewable and low greenhouse gas-emitting energy are driving up the demand for wood pellets imported to the EU and burned for energy. This demand provides new markets for U.S. timber exports, increases timber prices, and could even foster conservation of southern forests. Timber markets in the southern coastal region of the were simulated through the year 2040, using both a “business as usual” scenario and an alternative scenario where the production of feedstock for wood energy was increased. This alternative scenario accounted for continued wood energy demands based on the most recent projections of wood consumption by pellet mills and other bioenergy producers. The baseline simulations showed a continuation of current trends in prices, inventory, and removals and also projected that timberland area would decrease. The wood energy scenario, on the other hand, showed that increases in harvest and prices can lead to smaller declines in timberland area and keep inventories higher. The responses in each of the three coastal subregions evaluated also showed that increased demands for wood energy were likely to lead to increased pulpwood prices, which has the positive effect of helping keep land forested as well as the negative effect of increasing costs to conventional timber users.