This study aims to scrutinize and compare the environmental impacts of biobased 2,3-butanediol (BDO) and its fossil-based counterpart. BDO is a fundamental chemical in various industries, traditionally derived from petroleum sources. Wood residues, largely available in Nordic countries, are sustainable alternative feedstocks, offering potential environmental benefits. Material flow analysis followed by consequential life cycle assessment (LCA) were employed to quantify the potential environmental burdens associated with various biorefinery stages of wood-based BDO production. The findings indicated that refraining from wood combustion and, instead, utilizing wood in a biorefinery to produce BDO as the main product, with methane and fertilizer as coproducts from the waste residue, resulted in 125%, 52%, and 90% better environmental performance regarding human health, climate change, and resource scarcity, respectively, compared to fossil-based BDO production. The results offer valuable insights for technology developers and policymakers, empowering them to make informed decisions and support sustainable practices.