A novel synergistic approach to reducing emissions from residential wood combustion (RWC) is presented. Wood energy fuel cycle optimization (FCO) aims to provide cleaner burning fuels through optimization of forestry and renewable energy management practices. In this work, beech and spruce forests of average and high quality were modelled and analysed to determine the volume of fuel wood and its associated bark fraction produced during typical forestry cycles. Two separate fuel wood bark production regimes were observed for beech trees, while only one production regime was observed for spruce. The single tree and stand models were combined with existing thinning parameters to replicate existing management practices. Utilizing estimates of initial seedling numbers and existing thinning patterns a dynamic model was formed that responded to changes in thinning practices. By varying the thinning parameters, this model enabled optimization of the forestry practices for the reduction of bark impurities in the fuel wood supply chain. Beech forestry cycles responded well to fuel cycle optimization with volume reductions of bark from fuel wood of between ~10% and ~20% for average and high quality forest stands. Spruce, on the other hand, was fairly insensitive to FCO with bark reductions of 0–5%. The responsiveness of beech to FCO further supports its status as the preferred RWC fuel in Switzerland. FCO could easily be extended beyond Switzerland and applied across continental Europe and North America.