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(harvesting residues, industrial by-products such as chips and sawdust, and recycled post-consumer wood). On the other side is the demand, where wood is utilised for material production or as energy. A key principle influencing this balance is the cascade use of wood, which maximises wood resource efficiency through sequential utilisation, prioritising material application, followed by recycling before eventual energy generation.


This directly influences the wood resources balance by increasing supply: recycling and reuse continuously feed secondary sources back into the balance, effectively extending wood availability and significantly reducing pressure on primary sources. And by optimising demand, prioritising material use avoids premature wood loss to energy. The extent to which cascade use increases available wood volumes on the supply side is expressed by the so-called cascade factor, previously calculated at approximately 1.57 in 2010. EPF says the panel industry exemplifies cascade use by relying on only 8% of total primary roundwood, whereas the energy sector uses over 40% of primary roundwood and 64% of total wood resources.


The EPF maintains that EU policies significantly shape this whole landscape through regulations and targets. On the supply side this includes the Carbon Removal Certification Framework, LULUCF Regulation, Forestry/Biodiversity Strategy, and Nature Restoration Law. On the demand side it includes, RefuelEU Aviation / FuelEU Maritime, Renovation Wave Strategy New European Bauhaus, Construction Products Regulation Circular Economy Action Plan, and Renewable Energy Directive. EPF says the Nature Restoration Law limits the amount of wood available for harvest, while the Carbon Removal Certification Framework could lead forest owners to choose earning carbon credits over harvesting timber, further reducing wood supply. The LULUCF Regulation also impacts wood availability through carbon sink targets, with effects varying by country implementation.


The Renewable Energy Directive (RED III) increases demand for biomass for heat, power and biofuels. Stricter sustainability rules and specific mandates are pushing this demand in particular towards wood residues and waste, Conversely, the Energy Efficiency Directive aims to reduce overall heat demand, which could lower biomass consumption in the long run.


EU Green Deal initiatives (New European Bauhaus etc) actively promote the use of wood products, increasing demand. The Packaging and Packaging Waste Regulation creates uncertainty. Stricter rules on recyclability, reuse and documentation might


limit the growth of fibre-based packaging demand.


Increased sawn timber production inherently generates additional sawmill by-products, industrial wood, and energy wood. Prioritising these by-products for material applications over energy use is a key necessity.


MODELLING


In the report, AFRY has modelled scenarios using a bottom-up approach, using their detailed data on consumptions to accurately model demands. Working regularly for all-wood industries, including energy, they provide a complete picture.


The Modern Growth scenario for the Wood Resource Balance 2040 shows a notable shortfall in wood supply compared to demand – amounting to 117 million m3 wood under bark.


solid


Demand for sawn timber and panels grows moderately. Fibre based packaging and pulp demand also rises slightly, while biomass demand for heat and power declines and demand for biofuels and biochemicals increases with a net effect close to zero. But policies like the Nature Restoration Law could moderately reduce harvesting potential, while the Biodiversity Strategy and Forestry Strategy may limit wood availability. RED III promotes strict cascading, restricting direct bioenergy use of certain wood assortments, favouring material use. The other scenario presents a much more challenging picture for the wood industries. The Bioenergy Penetration scenario results in a significant supply shortfall of approximately 190 million m3


by 2040. This


scenario also anticipates increased demand for wood and packaging/pulp. But bioenergy demand increases significantly by +14% due to increase in conventional demand and the expanded use of bioenergy with carbon capture and storage (BECCS), which represents additional wood demand equivalent to around 12 Mt/a of biogenic carbon capture. Supply constraints from EU policies again arise under this scenario.


NET ANNUAL INCREMENT Another key factor is consideration of net annual increment (NAI) – the net yearly growth in forest volume.


On this point, Ragnar Jonnsson of SLU carried out research for the report, looking at top-down analysis comparing NAI with regional demand projections. These calculations include bark, in contrast to AFRY’s calculations, to give a more balanced view.


This approach sees two scenarios: The high demand scenario – This scenario projects higher wood consumption and significantly reduced imports. It is based on


Shell’s Sky 2050 economic outlook (net-zero focus), incorporates higher EU renewable energy targets, and excludes imports from Russia/Belarus


The Low Demand scenario – This scenario projects lower wood consumption with higher imports. It uses Shell’s Archipelagos economic outlook (energy security focus), energy trends from the EU Reference Scenario 2020, and assumes international trade remains at 2019 levels.


The analysis includes regional differences in total NAI.


The result is significant wood supply shortages expected in all regions except the northern Europe region. Forest carbon sinks decrease everywhere. Detailed charts in this analysis give a fuller, more visible picture. This, says EPF, means that Europe’s wood resource balance is under significant strain, threatening sustainable supply and jeopardising climate goals. “We must strengthen Europe’s wood resources by re-balancing policy priorities,” it says.


POLICY RECOMMENDATIONS The paper has three policy recommendations to assist remedying the situation: 1) Prioritise wood for high-value products 2) Reinforce the cascade principle 3) Promote non-wood biomass feedstocks


On the first recommendation – EPF says afforestation must be accelerated to solve long-term supply constraints. In the short term, policies and incentives are recommended that actively channel wood resources towards their highest value, long-life applications, primarily in circular building materials and furniture. The long-term carbon storage potential of wood-based products in the built environment, a critical sector for reducing carbon emissions, enables a smart and circular bioeconomy.


In the second recommendation, EPF is calling for a review and revision of subsidies promoting the burning of wood resources suitable for materials. It wants to see a rigorous enforcement of the cascade hierarchy, reserving energy recovery for end- of-life wood products, while reducing woody- biomass pressure by accelerating deployment of diverse renewable energy alternatives (such as heat pumps, solar, geothermal) and improving energy efficiency.


The final recommendation is to invest in innovation and infrastructure to use non-wood biomass (agricultural residues, waste) for energy and bio refinery products. EPF says policies must prioritise these alternative feedstocks for new demands, such as sustainable aviation fuels (SAF) to protect wood resources within the cascading hierarchy and adapt the policy framework to ease the use of processing streams. ■


www.ttjonline.com | November/December 2025 | TTJ


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