Abstract Wood biomass is turned into industrial fuel through chipping. The efficiency of chipping depends on many factors, including chipper knife wear. Chipper knife wear was determined through a long-term follow-up study, conducted at a waste wood recycling yard. Knife wear determined a sharp drop of productivity (>20%) and a severe decay in product quality. Dry sharpening with a grinder mitigated this effect, but it could not replace proper wet sharpening. Increasing the frequency of wet sharpening sessions determined a moderate increase of knife depreciation cost, but it could drastically enhance machine performance and reduce biomass processing cost. Since benefits largely exceed costs, increasing the frequency of wet sharpening sessions may be an effective measure for reducing overall chipping cost. If the main goal of a chipper operator is to increase productivity and/or decrease fuel consumption, then managing knife wear should be a primary target.