The situation in the Finnish forest industry is complicated by the availability of wood. The end of imports from Russia has forced companies to look for replacement wood elsewhere – primarily domestically. This, in turn, has led to an increase in the price of raw wood and local availability problems. Stora Enso said that the reasons for the closure of the Sunila mill were the availability and high price of wood. Already in several years, logging volumes in parts of Finland have exceeded the long-term sustainable logging level for wood production. With the start-up of new production plants and the decrease in wood imports, the competition for wood is getting tougher than before.
The forest sector is also challenged by the acute need to combat climate change and halt nature loss. Logging reduces forest carbon stocks in the short term, and forestry has had a negative impact on biodiversity in many places. This affects the acceptability of the forest sector both in Finland and in Europe, and is increasingly reflected in EU-level regulation.
Although many EU regulations affecting forests are still in the works, the broad lines are beginning to become clear. Forest management will need to be more careful in the future and the area of protected forests must be increased. As a result, the amount of raw wood coming onto the market will decrease. When less wood is used, the operating conditions of existing mills will also deteriorate. Sunila is unlikely to be the last closure in Finland.
Ideally, for the Finnish economy, the scarcity of wood would lead to accelerated product development and a larger share of wood would be used to manufacture higher value-added products. This would also support the fight against climate change by replacing products with higher carbon emissions. In this way, the forest sector would be seen more clearly than at present as a solver of big problems and not just as a user of wood raw material.
Successful product development requires that money be spent on it. According to Statistics Finland, the forest industry's annual investment in product development in Finland has been just under half a percent of turnover. This does not sound like much, but on the other hand, the largest companies only partially carry out product development in Finland. In addition to companies, the public sector plays an important role in R&D activities. The goal of the recent government program to increase R&D spending to four percent of GDP is welcome.
Ideally, product development will also be boosted by regulatory developments. There are some positive signs for the wood processing industry. In the EU, wood construction in particular is clearly seen as a positive thing. The situation is more ambiguous for other wood-based products. It is clear that the use of wood resources for short-lived products, not to mention bioenergy, is not in the favour of the current Commission.
Wood- or bio-based products are not automatically more climate-resilient or ecologically better than other products. However, they have the potential to provide sustainable solutions. In addition to increased R&D funding, support through more long-term and predictable policy and regulatory decisions is also needed.
Matleena Kniivila
research manager
Natural Resources Center
