Natural disturbances are common in Canadian boreal managed forests. For example, during and after insect epidemics, foresters must deal with significant amounts of degraded or dead wood that cannot be processed into sawn timber or pulp. Bioenergy could be an alternative pathway for this wood. A case study in Quebec (Canada) was used to evaluate the profitability of pellet production for bioenergy using degraded trees from insect epidemics. A bioenergy scenario was simulated in which degraded trees were harvested for bioenergy alongside sound wood for timber and pulp. This scenario was compared to a reference scenario in which degraded trees were left on cutovers. Using wood pellets as a case study, the results showed that at current market prices, harvesting degraded trees for pellet production is not as profitable as leaving them in the forest. Nevertheless, the overall forest operations for procuring wood for timber and pulp were still profitable, even with very high degradation levels. Procuring degraded trees reduced the overall fixed costs per harvested m3 and allowed average savings of C$2.83/harvested m3. The silvicultural savings associated with lower site preparation needs following procurement of degraded trees ranged from C$0/ha to C$500/ha, resulting in average savings of C$2.31/harvested m3. Depending on the stand conditions, the distribution of fixed costs and silvicultural savings of biomass procurement could be either low or significant.