I think the current Lumber mill suffers from being a burner building, somewhat limiting its usage on other planets. Coal, Spoilage, and Peat ONLY is limiting as fuel, requiring you to either ship coal through space platforms and rockets to properly use it on planets without, somehow create one of those things on-hand, or simply not use it. With it being one of the main planetary exports, i feel like its potential fuel list should be expanded, at least to include either solid and/or rocket fuel, ensuring its usable on every planet. Either that, or converting it to an electric building you research post-escaping, akin to the deep miner and noise cancelling tower, and having the early bots be the early-game benefit of the planet.

An alternative solution could also be to add a fuel made out of wood it could use, like condensed wood pellets that it could run on, but that has ramifications outside of the building itself.

That's not intended. It must be a mod messing with the fuel types. All chemical fuels should be allowed. That includes solid fuel. I think rocket fuel has a different type. I'll have a look.

All chemical fuels should be allowed.

Yeah, turns out I'm just dumb. I didn't realize Factorio only shows fuels you have access to and not just all of them, and i was extrapolating to the future and being worried about it. I still think it should be an electric building, but the whole issue about fuel is just because i haven't gotten around to pumping oil yet in my save. You don't need to worry about that part of the post. I hopped into editor and yeah, the fuels work fine. Granted i still think having a burner building for a wood processing building is weird, but nothing is actually wrong.