Setting challenging targets for forest carbon sinks in western Europe would move the reductions in loggings elsewhere – European forest industry would have to re-think its future

If the EU would limit its forest harvesting due to the climate change, Finland would face a difficult problem: which could be the means to limit timber trade, who would be the purchasers and sellers of wood who face the limits and how. In addition to this, if there were more timber left in the forests, loggings in the rest of the world would increase by almost the same amount. Photo: Erkki Oksanen|

If the increase of forest loggings in western Europe was to be limited in order to reach more ambitious target levels for forest carbon sinks, almost all of what would not be logged in Europe would be logged somewhere else. The same development would be seen in forest industry production.

How much of loggings and forest industry investments in terms of cubic metres and euros would be undertaken elsewhere, depends on the decisions taken by the European Union and its member states. At the moment it looks like limits will not be imposed on logging in Finland, at least.

”Our starting point is that it will be possible to carry out all market-driven loggings,” says Heikki Granholm, Forest Counsellor at the Finnish Ministry of Agriculture and Forestry. Granholm has followed closely the progress of the proposed LULUCF legislation on forest carbon sinks and land use in the EU institutions.

A Finnish-Norwegian study on the effects of logging limitations has recently been published. According to Maarit Kallio, Senior Research Scientist at Natural Resources Institute Finland and member of the research team, the research was carried out when the EU had not yet taken any decisions regarding to the LULUCF proposals. The aim of the study was to examine in advance the effects of different decision options.

This being so, not all of the figures in the study should be taken as set in stone. ”Our aim was not to say what would happen, but to answer questions starting with ’what if the EU decides to do this or that’ and if the member states then adjust their logging volumes according to each case,” says Kallio. She stresses that the actual consequences can only be evaluated after the final decisions on LULUCF are known.

Competitors would win

Still, many influential stakeholders demand that limitations are imposed on logging. Therefore it is also justifiable to discuss what consequences they might have.

The main finding of the study led by Liisa Käär, Project Manager at the consulting company Tapio, is clear: if the future increase in loggings in the EU and Norway remains below the market-driven level, the volumes between the market-driven level and that allowed in EU and Norway will be procured from somewhere else. This is because the global demand for forest industry products would not decrease because of decisions made by the EU.

Loggings elsewhere in the world would increase to correspond to some 80 percent of the volumes not logged in the EU and Norway. Also, some of the timber thus coming to the market would be imported to the EU and Norway as raw timber.

In the worst case, the supply of raw timber in western Europe would still decrease by more than two thirds, forcing the European forest industry to decrease its production. At the same time the demand for new forest industry products, such as textiles, will increase. The study also estimates that the demand for wood energy products will increase substantially.

The EU would almost completely fail to reach its global carbon sink target. In 2030, major share of the increased loggings outside western Europe would be carried out by the competitors of the western Europe’s forest sector, which would gain the biggest advantage of the logging limits in Europe – unless similar targets were set in the rest of the world.

However, there are no signs of anything like this elsewhere, though many countries keep a close eye on the carbon balance of forests.

R&D would suffer

All this would entail a significant change for forest industry in the EU and Norway. Compared with a situation where no constraints would be imposed on loggings, the loss of jobs could be significant. Investments could also decrease.

According to Jussi Manninen, Programme Manager at VTT Technical Research Centre of Finland, the forest industry would have to consider whether it could find a better business environment somewhere else.

For Finland in particular, the results could be unpleasant. ”It could lead to a situation where society loses its desire to invest in forest sector research and development,” says Manninen.

The loss would be irreparable. ”Once the know-how is lost, it is extremely difficult to regain,” says Manninen.

The forest industry would also need to re-assess its possibilities of creating new, fossil-free products. ”The decrease of business in Finland would also lead to a decrease in R&D, or to taking higher risks. At the moment the situation is good in that the forest industry is able to research a wide range of topics that make sense from the business point of view,” says Manninen.

According to the study, limitations on logging could lead to the increased use of competing raw materials that are usually more harmful for the climate than wood is.

Forest damage can ruin the carbon sink

To begin with, it would not be the forest owners who would suffer most because of the logging limitations, as they would also lead to a rise in timber prices. Moreover, implementing the limitations could involve special compensations for forest owners, as this might be the only practical way for the authorities to achieve implementation.

The forest industry, its customers and citizens at large would be the ones to pay the costs. The world outside Europe would gain a corresponding advantage. In a longer run, the forest owners would also reap losses if the business environment of the forest industry deteriorated.

The researchers also point out that a significant share of European forests are close to becoming mature for logging. Previous research suggests that the ability of such forests to sequester carbon is decreasing and will partly be lost at some point. Unmanaged forests like this are easily damaged by storms, insects, fungi and fires, all of which would destroy the dearly-acquired carbon storage.

This is why the researchers warn that by imposing logging limitations, Europe might not necessarily meet the targets it has set for itself as regards combating the climate change.

Link to the research study: A. Maarit I. Kallio ym.: Economic impacts of setting reference levels for the forest carbon sinks in the EU on the European forest sector. Forest Policy and Economics, Volume 92, July 2018, Pages 193-201


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