today’s and tomorrow's timber resources: can we ... futures conference 8 november 2007,...

Wood Futures Conference8 November 2007, London

Today’s and tomorrow's timber resources: Can we sustainably meet rising demand?

Ed PepkeForest Products Marketing SpecialistUNECE/FAO Timber Section, Geneva


Subjects

I. Forest resourcesII. Forest products marketsIII. Certified forest productsIV. Wood energyV. ConclusionsVI. RecommendationsVII. Questions and discussion


Main information sources• UNECE Timber Committee & International Softwood Conference,

October 2007• UNECE/FAO forums on wood energy and mobilization, Jan. and Oct. 2007• UNECE/FAO/University of Hamburg/EC Study on wood resources:

availability, demand, and effects of renewable energy policies, Oct. 2007• UNECE/FAO Forest resources assessment• UNECE/FAO Timber database• UNECE/FAO Forest Products Annual Market Review• FAO Statistics• State of Europe’s Forests 2007 by Ministerial Conference for the Protection

of Forests in Europe, November 2007


I. Forest resourcesGlobal, then European


Where are the world’s forests?

24%

16%

16%

21%

18%

5%

Europe withRussiaN. America

Africa

Latin America &CaribbeanAsia

Oceania

Source: FAO Global Forest Resources Assessment 2006


World’s forests with Russia identified5%

20%

16%

15%

21%

18%

5%

Europe

Russia

N. America

Africa

Latin America &CaribbeanAsia

Oceania



Change in annual forest area, 1990-2000

-5

-4

-3

-2

-1

0

1

2

3

Mill

ion

hect

ares

Natural Plantation Total

Europe

Asia &Pacific

AfricaS. America

MideastNorth

America

Central America



Change in annual forest area, 1990-2000 (million hectares)

-9.4+5.2-14.6World

+2.9+3.3-0.4Temperate

-12.3+1.9-14.2Tropics

Net changeIncreaseDeforestation

Note: The change in annual forest area was recalculated at -7.3 million ha per year from 2000 to 2005 by the FAO Global Forest Resources Assessment in 2005.



Causes of deforestation• Forest conversion

– Agricultural, including• Pastures for animals• Bioenergy plantations: palm oil, sugar cane

– Urbanization

• Unsustainable forest management– Poor harvesting practices– Insufficient regeneration– Fire, insects, disease– Over harvest of fuelwood

• Poverty and over population


Forest resources in Europe*

• Only 60% of the annual growth is harvested

• Forest volume increases ~700,000 m3 daily

• Forest area growing: ~700,000 ha annually

* Europe = 43 countries for the UN Economic Commission for Europe

Source: UNECE/FAO Forest Resources Assessment


State of Europe’s forests• Volume and area increasing• Concern for health, vitality and fire• Protected forests (to some degree): 12%• Productive functions maintained• Plantations: 3%• Biodiversity an issue• Socio-economic functions important


Increasing forests in the UNECE region: % of annual growth harvested

80%North America34%Russia60%Europe

Sources: State of the World’s Forests, 2007 and UNECE/FAO Forest Resources Assessment


Summary of forest resources• Temperate forests: Annual harvests below growth,

“overproduction” in forests• Great variation in utilization of annual growth• Standing timber volume increasing constantly in temperate

forests• Plantations increasing in area and volume• Deforestation generally in tropical forests; some exceptions• Increased demands on forests for non-wood products and

services, e.g. recreation• Escalating demand for wood fuels


020406080

100120140160180200

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990Volu

me

dam

aged

by

stor

ms

in E

urop

e (m

illio

n m

3)

1999

Greenhouse effect on growth?Species substitution?Storms and their damage?

Factor “X” for forests: Climate change

Source: UNECE/FAO Forest Products Annual Market Review


Storm damage in Swiss forests, 1972-2005A

nn

ual

loss

es (

CH

F m

illio

ns)

Cu

mu

lati

ve (

CH

F m

illio

ns)

Source: Institute fédérale de Recherche Suisse, 2007


II. Forest products markets


World roundwood production

0500

1000150020002500300035004000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Mill

ion

m3

Industrial Fuelwood

Source: FAO Statistiques

51%


Roundwood production in UNECE region

0

100

200

300

400

500

600

700

Mill

ion

m3

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Europe Russia N. America

Total roundwood = logs, pulpwood, fuelwood, other. Sources: UNECE/FAO TIMBER database & UNECE Timber Committee Forecasts, October 2007


World industrial wood production

0200400600800

10001200140016001800

1996199719981999200020012002200320042005

Mill

ion

m3

HardwoodSoftwood

Industrial roundwood = logs + pulpwood + others (no fuelwood) Source: FAO Statistiques


Industrial roundwood production in UNECE region

0

100

200

300

400

500

600

700

Mill

ion

m3

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


Sources: UNECE/FAO TIMBER database, UNECE Timber Committee forecasts, October 2007


World trade of industrial roundwood

00.5

11.5

22.5

33.5

44.5

5

Expo

rts,

Mill

ion

$

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Softwood Hardwood

(Worldwide, exports = imports) Source: FAO Statistiques

Storm 1999 Record


Wood fuel production

0

20

40

60

80

100

120

Mill

ion

m3

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008


Sources: UNECE/FAO TIMBER database, UNECE Timber Committee forecasts, October 2007


French fuelwood production

0

5

10

15

20

25

30

35

40

Mill

ion

m3

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

2006. New French studyon consumption andproduction. Old statisticsnot yet corrected.

Sources: UNECE/FAO TIMBER database, and UNECE Timber Committee forecasts, October 2007


European pulpwood prices rising

0102030405060

2005 2006 2007

Euro

s /

m3

Pin Epicia Aspen Boulot

Source: Latvian Forest Industry Federation


Softwood log prices

020406080

100120140160

1Q 2003 3Q1Q 2004 3Q1Q 2005 3Q1Q 2006 3Q1Q 2007

$/m

3

World Nordic Europe-central Europe-east

Source: World Resources International


Softwood log prices(Second semester, 2007)

0

25

50

75

100

125

150

175

Chile

Cana

da, w

est

Braz

ilUS S

outh

Cana

da, e

ast

New Ze

aland

Russ

ia, w

est

US Wes

tPo

land

WORL

DSw

eden

Japa

nLa

tvia

Czec

h Rep

.Au

stria

Finlan

dGer

many

Inde

x. W

orld

= 1

00

Source: Wood Resource Quarterly


III. Certified forest products


Global distribution of certified forest area as a percentage of total forest area by countries, 2007

Sources: Individual certification systems, Forest Certification Watch, the Canadian Sustainable Forestry Certification Coalition, and FAO


Distribution of certified forests, 2007

58.1

35.7

3.6 1.3 10

10

20

30

40

50

60

70

N. America Europe Latin America Africa Oceania

Perc

ent

of f

ores

ts c

ertif

ied

Sources: Individual certification systems, Forest Certification Watch, the Canadian Sustainable Forestry Certification Coalition


Certification summary• ~300 million hectares, 8% world’s forests• Mostly temperate, only ~6% tropic• Equivalent of industrial roundwood

– ~400 million m3

– ~25% of world production• New drivers

– Public procurement policies– Biomass certification


UNECE Timber Committee on certification• Chain-of-custody tracing important to achieve full

certification benefits • N. American drivers

– Paper industry holds most chain-of-custody certificates– Publishers, as paper consumers

• US Green Building Council is driving certification via LEED rating systems

• Green building rating systems should accept all internationally recognized sustainable forest management standards

• Woodfuels certification to drive further certification


IV. Wood energy(the oldest and newest market)

Nice discovery Og,but what aboutglobal warming?


Situation today

• Record high petroleum prices• Energy sources security problems• Climate change policies• Wood industries’ raw material needs increasing• Wood energy production increasing• Roundwood and residue prices increasing


Record oil prices

0

10

20

30

40

50

60

70

80

90

100

2001 2002 2003 2004 2006 2007

$/ba

rrel

Source: US Dept. of Energy, Nov. 2007

$ 97/barrel on 6 November 2007


Energy security

• European oil and gas imports from Russia• China’s energy consumption escalating• War in Iraq (2002+)• Conflict between Turkey and Kurds (Oct. 2007)• Desire for secure sources, especially domestic

and price stabilization


Climate change policies

• Kyoto Protocol• European Union

– 20% renewable energy in 2020– 20% increased efficiency in 2020

• Biofuels rapidly expanding – policy push


Renewable energy percentage, European Union, 2005

EU: 6.4%

United Kingdom: 1.6%

Source: EurObserv'ER, 2007


Source: EurObserv'ER, 2007EU Renewable energy sources, 2005


0

10

20

30

40

50

60

70

80

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Mto

e

Wood & wood waste in households & services

Other wood & wood waste

BiogasMuniciple waste

Liquid biofuels

Utilization of biomass in the EU

Wood 80%

Source: EurObserv'ER, 2007


Wood for the wood-based industries

• Increasing demand forecast • Wood raw material prices climbing• Competition for roundwood and residues

– Local and regional– Short-term intense!– Medium term?


Demand for wood and fibre in western Europe, without energy, 1960-2020

0

100

200

300

400

500

600

700

800

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Year

Am

ount

(in

mill

ion

cubi

c m

etre

s WR

ME

)

Recovered paperNet pulp importsIndustrial roundwoodTotal wood and fibre requirement

Source: UNECE/FAO European Forest Sector Outlook Study, 2005WRME = Equivalent de bois brut

Growth in demand without energy

Gap = residues


Results of a UNECE/FAO study on“Wood resources availability and demands:Implications of renewable energy policies”

• Wood is the major renewable energy source in Europe

• Woodfuel consumption much greater than previously measured

• Lack precise statistics• Increasing wood energy changes long-term

forecasts for the sector’s wood needs


Dilemma or opportunity?(million m3)

-44812748252020

-1859767912010

-478217752005

“Gap”DemandSupplyYear

Source: UNECE/FAO “Wood resources availability and demands: Implications of renewable energy policies”, 2007.


How to fill the “gap”• Increase harvests from European forests

– More of annual growth– More standing timber

• Remove more biomass from forests– Tree tops– Branches, needles, leaves

• Harvest wood outside forests (urban, hedgerows)• Increase wood recycling and residue reuse• Import biomass, wood fuels• Improve energy use efficiency


Possible consequences of a future gap

• Renewable energy targets not achieved• Goals achieved, but not only with wood

– Other sources of biomass– Other renewable energy sources

• Wood industry growth slowed– Raw material unavailable– Price of raw material too expensive


0

10

20

30

40

50

60

70

80

90

Bill

ion

m3

1990 2000 2005

Europe-Annual growth

Europe-Annual harvest

Europe-Growing stock

Russia-Annual growth

Russia-Annual harvest

Russia-Growing stock


Import more fibre? From Russia??


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

Bill

ion

m3

1990 2000 2005

Europe-Annual growthEurope-Annual harvestRussia-Annual growthRussia-Annual harvest


Import more fibre? From Russia??Annual growth vs. annual harvests

34%

59% ATTENTION!

New Russian export taxes

April 2008: € 15/m3 conifers

Jan. 2009: € 50/m3 conifers

Jan. 2011: € 50/m3 birch


Mobilize more wood• Remember ~40% of annual growth remains

in Europe’s forests each year• Confederation of European Forest Owners

estimates on private forest lands– 150 million m3 more harvest possible

(~half of surplus 40%)– 25% more production through better

silviculture• How many billion cubic metres of standing

timber are enough?


V. Conclusions


UNECE Timber Committee on “Energy”• Entire forest sector being transformed by increased wood

energy in the UNECE region– Forest owners and managers– Wood industry and markets– Bioenergy industry

• Growing wood energy is both a challenge and an opportunity• Government policies must consider

– Needs of the forest sector, especially the wood industry– Needs for bioenergy


• Interaction of policies and markets is complex• Policies promoting bioenergy

– Strongly increase wood energy consumption– Open important markets– Create new trade

UNECE Timber Committee on “Energy”


Policies can level or distort the playing field

• Laws, duties, tariffs, taxes, regulations

• Raw material costs

• Labour costs & benefits

• Manufacturing costs

• Goal: Raise standard of living and domestic consumption of wood products


• Pellet demand at record level• Pellet prices at new highs• Increasing pellet trade

– Especially strong in Germany, Sweden, Austria– 80% of N. American production exported to

Europe• Consumption of wood energy much greater than

previously known

UNECE Timber Committee on “Energy”


Pellet consumption et production

0

1000

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

N. American productionEuropean productionOther productionTotal productionN. American consumptionEuropean consumptionOther consumptionTotal consumption

Pelle

t pro

duct

ion

(100

0 to

ns)

Source: Canadian Wood Pellet Association, 2007


Swedish imports of wood fuels

Source: UNECE/FAO Forest Products Annual Market Review


• N. American markets forecast to decline due to crash in US housing market

• Positive developments in Europe and Russia– Prices at record highs in 2007– Roundwood production forecast to increase in

2007 with demand from wood and paper– Russian export taxes will halve exports in 2008

UNECE Timber Committee on “markets”


• New processes overcome some traditional weaknesses of wood– Sensitivity to moisture– Dimensional instability– Lack of resistance to fungi

• New materials are opening up new marketing possibilities • Wood should take market share from competing building

materials

UNECE Timber Committee on “new markets”


Timber Committee on procurement

• Public agencies, trade associations and private companies establishing procurement policies to ensure sustainable and legal sources

• Purchasers aim to minimize the environmental impact of whole systems, through “green building”requirements – directly influencing markets for forest products


Timber Committee: corporate social responsibility

• Trade associations issuing codes of conduct• Companies developing CSR policies to demonstrate

their positive social impact• CSR policies are a means to

– Shape consumer perceptions– Gain competitive edge– Improve international recognition and perception

• Mutual recognition of trade associations’ CSR policies could facilitate trade.


Timber Committee on wood promotion

• Several European countries target parliamentarians • 2010 Vancouver Olympics and the 2012 London

Olympics: major opportunities to showcase wood • Consistent approach needed on wood specifications

to aid choices for construction • Certification of sustainable forest management is an

important communication tool.


Forest sector mitigates climate change

• Replacement of non-renewables– Energy: wood for fossil fuels– Materials: wood for concrete, steel, plastics

• Storage of carbon– Forest ecosystem– Wood and paper products

• Burning wood is carbon neutral• Wood-based insulation for energy efficiency

Source: State of Europe’s Forests 2007


Conclusions from State of Europe’s Forests, 2007

• European forests in comparatively good state• Sustainable forest management progressing• Political commitment to SFM• Threats to forests being addressed• New challenges require effective policies and action

– Increasing risks to forests– Increasing demands

• More diverse, including from other sectors• More stakeholders

Source: UNECE/FAO & MCPFE, 2007


Future of the forest sector

• Integrated production of wood & paper products with energy production

• Greater value of energy production by integrated plants than by “primary wood & paper” products?!

• Profitability of the sector linked to wood energy– Challenge for certain industries, e.g. panels– Opportunity for forest owners, sawmills, energy

suppliers


VI. Recommendations

• Know the provenance of your wood – be sure it’s sustainable and legal, not only for your company today, and for your company tomorrow, but for the sake of the entire sector's reputation

• Work together to increase wood demand through effective promotion

• Use wood efficiently, with highest values first, and eventually recycle for new products and energy


VII. Discussion &

questions


Ed PepkeForest Products Marketing Specialist

UNECE/FAO Timber Section448 Palais des Nations

CH-1211 Genève 10, SuisseTel. +41 22 917 2872Fax +41 22 917 0041

www.unece.org/trade/[email protected]

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