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New European Wood Market: Shortage or Surplus?

New European Wood Market: Shortage or Surplus?. Ed Pepke Forest Products Marketing Specialist Food and Agricultural Organization & UN Economic Commission for Europe Geneva, Switzerland. Topics. Wood markets in the UNECE region UNECE region's markets fit into the global situation

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New European Wood Market: Shortage or Surplus?

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  1. New European Wood Market: Shortage or Surplus? Ed Pepke Forest Products Marketing Specialist Food and Agricultural Organization & UN Economic Commission for Europe Geneva, Switzerland

  2. Topics • Wood markets in the UNECE region • UNECE region's markets fit into the global situation • Forest resources • Rise in demand for wood for energy in Europe • Availability of wood to meet elevated demands • Shortage or surplus?

  3. Info sources • UNECE/FAO workshop proceedings • UNECE/FAO European Forest Sector Outlook Study • UNECE/FAO Forest Resources Assessment • UNECE/FAO TIMBER Database • Forest Products Annual Market Review • FAOStat

  4. I. Wood markets in the UNECE region

  5. Consumption in UNECE region Source: UNECE/FAO Forest Products Annual Market Review, 2005-2006

  6. Consumption in UNECE region Demand for wood and wood products at record high levels in 2005 & based on UNECE Timber Committee forecasts higher again in 2006 and 2007 Source: UNECE/FAO Forest Products Annual Market Review, 2005-2006

  7. Exports of primary products C.I.S.: Source: UNECE/FAO Forest Products Annual Market Review, 2005-2006

  8. UNECE Timber Committee forecasts for 2007 • Forest products markets forecast at record levels in the UNECE region in 2006 and 2007 • Chinese forest industry rapidly reshaping marketplace • Continuing concern about illegal logging, climate change • Record high energy prices and energy policies driving wood energy markets • Despite forest growth outstripping removals, increased competition for timber

  9. II. UNECE region's markets fit into the global situation

  10. UNECE region’s share of world consumption of primary forest products, 2005 55 to 80% Sources: UNECE/FAO TIMBER database, FAO statistics, 2006.

  11. UNECE region’s share of world production of primary forest products 62 to 78% Sources: UNECE/FAO TIMBER database, FAO statistics, 2006.

  12. UNECE region’s share of worldexports of primary forest products 75 to 98% Sources: UNECE/FAO TIMBER database, FAO statistics, 2006.

  13. Top-5 importers of builders joinery and carpentry Demand for joinery, millwork, profiled wood, is mostly within the UNECE region – same as flooring. Sources: Eurostat, Trade Statistics of Japan by Ministry of Trade and Customs, USDA Foreign Agricultural Service

  14. III. Forest resources

  15. Where are the forests? Source: FAO State of the World’s Forests 2007

  16. European forests, including Russia Source: UNECE/FAO Forest Resources Assessment

  17. Industrial roundwood exports Softwood and temperate hardwood exports increasing through 2007, especially from Russia – but new Russian export taxes could cut exports. • Tropical exports generally falling: • Countries banning log exports • Promotion of value-added Source: FAO Stat

  18. Where’s the wood? Source: FAO State of the World’s Forests 2007

  19. Wood volume per hectare

  20. UNECE region's forests fit into the global situation World forests vs. UNECE region forests UNECE 63% Source: State of the World’s Forest, 2007.

  21. Annual change in forest area, 2000-2005 Asia & Pacific Europe N America Near East Africa S. America Latin America & the Caribbean Source: FAO State of the World’s Forests 2007.

  22. Annual change in forest area, 1990-2000, (million hectares) Source:FAO Global Forest Resources Assessment 2000 Note: Annual change in forest area recalculated as –7.3 million Ha per year from 2000-2005 by FAO Global Forest Resources Assessment 2005

  23. Reasons for deforestation • Conversion to other land uses • Agricultural, including • Grazing • Conversion to palm oil • Urbanization • Unsustainable silvicultural practices • Unmanaged harvesting • Poor regeneration • Fire, insects and diseases • Over harvesting fuelwood • Poverty and overpopulation

  24. Forest resources in Europe • Only 60% of wood grown is harvested • Forest volume increases ~2 million m3 daily • Forestland increases by 500,000 hectares per year

  25. State of Europe’s Forests • Resources and area increasing • Forest health and vitality are critical • Productive functions maintained • Biodiversity is a focus • Plantations are only 3% • Protective forests are 12% • Socio-economic functions important

  26. Forest resources in Russia • Only 16% of wood grown is harvested • Forest volume increases ~3 million m3 daily • Forest area 1990 to 2000: no significant change

  27. Forest resources in N. America • 80% of net annual increment harvested • Forest volume increases ~3 million m3 daily • Forest area 1990 to 2000 • USA +0.2% • Canada, no significant change

  28. Forest resources: growing stock Billion m3 Source:Temperate and Boreal Forest Resources Assessment 2000

  29. Net annual growth vs. fellings Billion m3 Source:Temperate and Boreal Forest Resources Assessment 2000

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

  31. Deforestation & the wood processing industry • Consumers confused about deforestation • Middlemen asking for assurance of source • Sustainable forest management • Legality • Retailers want to sell legal, sustainable • Industry, governments, organizations want • Sustainable economic development • Sustainable forest management

  32. Deforestation & the wood processing industry • Manufacturers’ info, including labels • Retailers’ labels, e.g. IKEA • Promotional campaigns’ labels • Certification systems’ labels, including chain-of-custody certificates

  33. 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

  34. Geographical distribution of total certified forest area, 2007 Sources: Individual certification systems, Forest Certification Watch and the Canadian Sustainable Forestry Certification Coalition, 2007.

  35. 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 • Mostly North America, 13%, then • Europe, 11% • New driver: public procurement policies

  36. Certification summary • UNECE Timber Committee: “Channel of communication”. But communication without labels? • Expanding more slowly • Conflict between schemes • Consumer confusion • Multiple certification of same forests and products (especially Sweden)

  37. Forest resources summary • Removals considerably below growth in temperate forests • Wide variance in utilization rates of NAI • Growing stock increasing in Europe • Southern hemisphere plantations expanding • Statistical oversupply compared to demand for wood • Increasing alternative demands on forests, including for energy

  38. X factor for resources: Climate change • Growth, species … long term • Storms … sudden

  39. Swiss storm damage Cumulative damage, CHF (millions) Annual damage, CHF (millions) Source: Swiss Federal Research Institute

  40. IV. Rise in demand for wood for energy in Europe • Climate change awareness has increased political and public interest in wood energy • EU launched ambitious energy policies • Wood pellet markets are growing throughout Europe

  41. Background issues • Increasing fossil fuel prices • Energy security • Policies to reduce climate change • Wood industries’ wood needs

  42. Background issues • Increasing fossil fuel prices Source: International Energy Agency, 2007

  43. Background issues • Increasing fossil fuel prices • Energy security • Middle East instability • Russian supply interruptions • Growing consumption, e.g. China • Nuclear safety

  44. Background issues • Increasing fossil fuel prices • Energy security • Policies to reduce climate change • UNECE region • Kyoto Protocol • European Union & member countries • 20% renewable energy in 2020 • G8 • United States’ government lagging behind

  45. Background issues • Increasing fossil fuel prices • Energy security • Policies to reduce climate change • Wood industries’ wood needs • Increasing demand • Increasing raw material prices • Competition • Local can be intense • Short-term can be intense

  46. Wood energy in 12 European countries, 2005 Source: UNECE/FAO, 2007.

  47. EU biomass use, 1990-2004 Wood now +80% Source: Eurostat, 2007

  48. Pellet production and consumption Source: Canadian Wood Pellet Association, 2007

  49. Sweden’s woodfuel imports Source: UNECE/FAO Forest Products Annual Market Review, 2005-2006

  50. Sweden’s woodfuelimports, 2005 Source: UNECE/FAO Forest Products Annual Market Review, 2005-2006

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