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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
Wood Futures Conference8 November 2007, London
Subjects
I. Forest resourcesII. Forest products marketsIII. Certified forest productsIV. Wood energyV. ConclusionsVI. RecommendationsVII. Questions and discussion
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
I. Forest resourcesGlobal, then European
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
World’s forests with Russia identified5%
20%
16%
15%
21%
18%
5%
Europe
Russia
N. America
Africa
Latin America &CaribbeanAsia
Oceania
Source: FAO Global Forest Resources Assessment 2006
Wood Futures Conference8 November 2007, London
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
Source: FAO Global Forest Resources Assessment 2000
Wood Futures Conference8 November 2007, London
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.
Source: FAO Global Forest Resources Assessment 2000
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
II. Forest products markets
Wood Futures Conference8 November 2007, London
World roundwood production
0500
1000150020002500300035004000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Mill
ion
m3
Industrial Fuelwood
Source: FAO Statistiques
51%
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
World industrial wood production
0200400600800
10001200140016001800
1996199719981999200020012002200320042005
Mill
ion
m3
HardwoodSoftwood
Industrial roundwood = logs + pulpwood + others (no fuelwood) Source: FAO Statistiques
Wood Futures Conference8 November 2007, London
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
Europe Russia N. America
Sources: UNECE/FAO TIMBER database, UNECE Timber Committee forecasts, October 2007
Wood Futures Conference8 November 2007, London
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 Futures Conference8 November 2007, London
Wood fuel production
0
20
40
60
80
100
120
Mill
ion
m3
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Europe Russia N. America
Sources: UNECE/FAO TIMBER database, UNECE Timber Committee forecasts, October 2007
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
European pulpwood prices rising
0102030405060
2005 2006 2007
Euro
s /
m3
Pin Epicia Aspen Boulot
Source: Latvian Forest Industry Federation
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
III. Certified forest products
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
IV. Wood energy(the oldest and newest market)
Nice discovery Og,but what aboutglobal warming?
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
Climate change policies
• Kyoto Protocol• European Union
– 20% renewable energy in 2020– 20% increased efficiency in 2020
• Biofuels rapidly expanding – policy push
Wood Futures Conference8 November 2007, London
Renewable energy percentage, European Union, 2005
EU: 6.4%
United Kingdom: 1.6%
Source: EurObserv'ER, 2007
Wood Futures Conference8 November 2007, London
Source: EurObserv'ER, 2007EU Renewable energy sources, 2005
Wood Futures Conference8 November 2007, London
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 Futures Conference8 November 2007, London
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?
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
Dilemma or opportunity?(million m3)
-44812748252020
-1859767912010
-478217752005
“Gap”DemandSupplyYear
Source: UNECE/FAO “Wood resources availability and demands: Implications of renewable energy policies”, 2007.
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Source: UNECE/FAO Forest Resources Assessment
Import more fibre? From Russia??
Wood Futures Conference8 November 2007, London
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
Source: UNECE/FAO Forest Resources Assessment
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
Wood Futures Conference8 November 2007, London
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?
Wood Futures Conference8 November 2007, London
V. Conclusions
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
• 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”
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
• 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”
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
Swedish imports of wood fuels
Source: UNECE/FAO Forest Products Annual Market Review
Wood Futures Conference8 November 2007, London
• 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”
Wood Futures Conference8 November 2007, London
• 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”
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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.
Wood Futures Conference8 November 2007, London
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.
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
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
Wood Futures Conference8 November 2007, London
VII. Discussion &
questions
Wood Futures Conference8 November 2007, London
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]