1. Renewable Raw Materials Group, Brussels, 02/04/2014 “Study on the wood raw material supply and demand for the EU wood-processing industries” Jeremy Wall European Commission, DG Enterprise and Industry Unit-F3 «Raw Materials, Metals, Minerals and Forest-based Industries»

2. ENTR G3 ENTR F3 F-BI scope wider: woodworking; furniture; pulp & paper; printing Forest-based Industries Advisory Committee ad-hoc Working Group (European industry representatives + member-state observers + experts): five meetings throughout 2012(NB wood study in parallel) Review of the challenges and actions in the 2008 EU Sectoral Strategy and in-depth discussion of new challenges arising since and possible areas for remedial actions (NB total of 12 challenges) Basis for DG ENTR’s "Blueprint for the EU forest-based industries" (SWD(2013)343) - input to Commission’s 2013 sectoral package, including the Commission Communication on "a new EU Forest Strategy: for forests and forest-based sector" (COM(2013)659) (See section 3.3.2) EU Forest-based Industries (F-BI) Strategy 2014-20

3. ENTR G3 ENTR F3 1. Stimulating growth 2&3. EU resource & energy efficiency objectives 4. Raw materials, their sources and their flows 5. Logistics (wood harvesting, infrastructures & transport) 6. Structural adaptation 7. Innovation & RTD 8. Education, training & skills, including shortages; ageing workforce 9. Coherence of EU legislation and costs arising 10. Implementation of EU climate policy, including beyond 2020 11. International competition, trade and co-operation 12. Information, communications and image 2013 EU Strategy: Challenges facing the F-BI:

4. ENTR G3 ENTR F3 Resource & energy efficiency: Promote cascading use of wood Follow-up of EU Waste Framework Directive review (targets) Catalogue and good practice guidance on resource- & energy- efficient measures for wood-processing, esp. for SMEs Raw materials supply and logistics: Implementing the actions of the European Innovation Partnership on Raw Materials Increased sustainable wood mobilisation, including facilitate transport within and outside forests Vigilance on recovered paper and roundwood exports Coherence of EU legislation and costs arising NB initiatives for CCA (cumulative cost assessment) cascade & mobilisation under European Innovation Partnesrship for Raw Materials 2013 EU Strategy: selected activities

5. ENTR G3 ENTR F3 Main study objectives: to evaluate the respective wood raw material (wood, recovered wood, recovered paper) supply and demand situations for the EU wood-processing industries (woodworking; furniture; pulp & paper) and biomass- based bio-energy sector for the recent past (2001-2010), present (2011) and future (2016) to identify the inter-actions between these sectors in the context of the prevailing EU and member-state policy and legislative frameworks; to analyse the present and future competitiveness (quantitative; qualitative) of EU wood-processing industries vis-à-vis competitors in five global regions; to assess the scope to increase wood raw material supply from domestic (EU) sources, international sources, as well as to increase the efficiency of wood uses.

6. ENTR G3 ENTR F3 Main conclusions - quantitative: the EU annual wood harvest should grow from 436 to 454 Mm³ by 2016, but further increase will be constrained by less than 75% of the forest area being legally available and owners’ limitations on the rest; by 2016 a 63 M m³ wood raw material supply shortfall will exist for bio-energy. This equates to 16 % of the roundwood going to wood-processing or 9.6 % of their total wood raw material supplies. Without EU and MS remedial measures, imports of wood, e.g. pellets from N. America, Russia et al. will increase significantly; the EU “cascade factor” (multiplier of wood re-use) rose from 1.96 in 2000 to 2.07 in 2011 and 2.10 is projected in 2016. However, the factor varies regionally and, if forest residues are included, their increased use for bio-energy reduces the factor to 1.88 in 2011 and 1.83 by 2016, against the trend needed to meet biomass demand from the emerging bio-economy;

7. ENTR G3 ENTR F3 Main conclusions - qualitative: widespread purpose-grown energy-wood plantations are unlikely, given resistance from agriculture; whereas bio-energy can be produced from combusting any species, shape, size or form of wood, the manufacture of wood- based products depends on specific varieties, qualities, dimensions and quantities of wood. Thus, not all wood types are mutually substitutable; sawmills for example can only use large- dimensioned rondwood (sawlogs); EU sawmilling is a pump of the wood “cascade” on which other processors and bio-energy depend for wood. EU sawmilling and hence other wood processing are shrinking, given the world’s highest wood, energy and labour costs, exacerbated by sawlog exports. However, EU wood-processing can remain globally competitive by retaining leadership in labour productivity; a decline in the quality of EU recovered paper is likely, due to decreased EU high-grade pulp manufacture, following less use of graphic papers, and non-standardised recovery and sorting.

8. ENTR G3 ENTR F3 Main recommendations Supply side: domestic EU wood supply can be addressed through: better motivation and organisation of the owners of small private forests; a wider use of forest residues and wood from outside the forest; more recovery and use of used wood, using standards and legislation; better forest and public infrastructures are needed to bring more wood to market more efficiently and cheaply; market transparency should be increased through better information; improve recovered paper quality, using separate collection streams and international standards. Consider waste legislation and/or trade measures to control its export and also of sawlogs; demand side: encouraging sustainable building at EU and MS levels could improve markets for wooden building products, e.g. sawnwood, which comply with the Construction Products Regulation and are price-competitive. Public housing procurement could also offer scope; Bio-energy generation from (woody) biomass and its use must be efficient, to reduce pressure on wood supplies and prices. Combined heat and power (CHP) should be prioritised.

9. ENTR G3 ENTR F3 DG ENTR study (Indufor Oy.) Forest-based sector: region types

10. ENTR G3 ENTR F3 Furnitur e Pape Drivers Consumption Net trade Consumption Production Consumption Production Net trade Wood pulp & recovered paper Roundwood & other wood biomass Sawnwood and wood-based panels Drivers Consumption Production Net trade Production Net trade Industrial residues/ by- products Forest residues Other uses Dispos al Drivers Consumption Production Net trade Drivers Bioenergy Recovered wood Recovered paper collection Recovered paper utilisation Printing Furniture EU-wood-processing and sector & bio-energy sectors Paper & paperboard

11. ENTR G3 ENTR F3 11 Raw material types Sawn- wood PlywoodPulp, Paper & Board Oriented Strand Board (OSB) Particle Board Medium Density Fibreboard (MDF) PelletsCHP Combined Heat and Power wood Pulpwood Sawlogs Forest residues industrial Residues Bark Chips Sawdust recycled Material Recovered paper Recovered wood Strong usageRAW MATERIAL SOURCES FOR VARIOUS END USES Medium usage Low usageNB: WOOD PRODUCTS’ RAW MATERIALS ARE FURTHER LIMITED BY SPECIES, QUALITY No usageAND DIMENSIONS BUT BIO-ENERGY CAN USE ALL WOOD SOURCES

12. ENTR G3 ENTR F3 Inter-relationships: solid wood products Roundwood dominates throughout the EU region. Use of industrial residues between 20-25% in countries with significant reconstituted panel industries.

13. ENTR G3 ENTR F3 Inter-relations – Pulp and Paper Recovered paper to increase its dominant share in raw material use over roundwood. Industrial residues have a role in countries with significant sawmill industry.

14. ENTR G3 ENTR F3 Inter-relations – Bioenergy Roundwood to retain its importance and forest residues to increase strongly. However, significant differences among Member States.

15. ENTR G3 Inter-relations – Raw Material by Type Roundwood clearly the most used material type, followed by recovered paper and industrial residues. Use of roundwood and forest residues to increase the most.

16. ENTR G3 Changes to 2016: Pulp and Paper and wood products to remain relatively unchanged whereas bioenergy to increase significantly. In addition, energy related raw material gap expected in 2016. Total Raw Material Use in EU-27 Change in Raw Material Use in EU-27 Mm3 (RWE)

17. ENTR G3 ENTR F3 Competitiveness – Cost Structure In the wood-working industry, as well as in bioenergy, Examples of cost structures in different wood-processing sectors: wood price is a key issue, especially for sawmilling Note: Cost structure of the average European producer

18. ENTR G3 Competitiveness – Raw Material Sawmilling is a driving force for harvesting EU wood and thus wood supply to other EU wood- processing industries and the bio-energy sector. However, its highest price is in the EU. But EU sawlogs are also exported to low-cost competitors – including potential residues.

19. ENTR G3 ENTR F3 DG ENTR study (Indufor Oy.) Forest-based sector: region types

20. ENTR G3 ENTR F3 Cascade factors for EU wood use (2000-2016): 2000200520102016 Simple cascade1.961.992.07 2.10 factor (roundwood only) Total cascade1.851.861.88 1.83 (roundwood + forest residues) RegionsABC Simple1.732.293.08 Total1.582.062.81 NB cascade factor is the ratio of total new wood material (e.g. roundwood) input to (wood products + pulp & paper+ bio-energy) to their total wood raw material inputs (roundwood equivalents). This cascade factor is thus a multiple of the extent to which residues from sawmilling (1 st process) et al. are re-used as inputs in other processes along the value chain as a whole.

21. ENTR G3 ENTR F3 Section 3.1 of the new EU Forest Strategy,footnote 9: "Under the cascade principle, wood is used in the following order of priorities: wood-based products, extending their service life, re-use, recycling, bio- energy and disposal." Section 3.3.2 (text box): "……develop good-practice guidance for…..the cascade principle…" New EU Forest Strategy (September 2013)

22. ENTR G3 ENTR F3 1.Definition of cascade (inputs only? Outputs? What to optimise? (Raw-material efficiency? Energy efficiency? Added value? Jobs? Carbon?) 2. general principle or mandatory instrument? 3. what about free-market principle? 4. regulated wood biomass markets? 5. compensation for sub-optimal financial options? 6. regional variations 7. who will decide? EU? MS? Regions? Localities? 8. logistics? Cascade: some issues to consider:

23. ENTR G3 Thank you! Merci! Danke! http://ec.europa.eu/enterprise/forest_based/index_en.html

24. ENTR G3 Context More information: Forest-based Industries:: New functional mail-box: entr-f-i@ec.europa.eu F-BI web-site: http://ec.europa.eu/enterprise/sectors/wood-paper- printing/index_en.htm(NB Indufor study) http://ec.europa.eu/enterprise/sectors/wood-paper- printing/index_en.htm EU “Raw Materials Initiative” web-page: http://ec.europa.eu/enterprise/non_energy_extractive _industries/raw_materials.htm European Innovation Partnership Raw Materials: http://ec.europa.eu/enterprise/policies/raw- materials/innovation-partnership/index_en.htm Horizon 2020: http://ec.europa.eu/research/horizon2020