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Wood Products Prices in The UK & Holland

16-31th July 2009

Report from Europe, the UK and Russia



G8 signal strong support for REDD and SFM initiatives
The G8 meeting held in Europe during July 2009 provided
another strong indication that concern for climate change
has driven tropical forestry issues to the very top of the
international political agenda. It confirmed that the idea of
financially rewarding tropical countries for implementing
measures to reduce emissions from deforestation and
degradation (REDD) is gaining traction. Furthermore,
there was clear acknowledgement that these measures
should look beyond a narrow focus on forest preservation
for carbon storage to include sustainable forest
management (SFM).

The very first commitment in the &Declaration on Energy
and Climate Change* issued by the G8 leaders includes the
following statement: &We will take steps nationally and
internationally, including under the [climate change]
Convention, to reduce emissions from deforestation and
forest degradation and to enhance removals of greenhouse
gas emissions by forests, including providing enhanced
support to developing countries for such purposes*.

Another &Declaration on Responsible Leadership for a
Sustainable Future* explicitly combines the commitment
to reduce emissions from deforestation with a statement of
support for the &promotion of sustainable forest
management globally*. It also talks about the need to
&consider the inclusion of financial mechanisms [for
REDD] within the future global agreement on climate
change* and to &encourage cooperation and the use of
synergies between the UN Framework Convention on
Climate Change (UNFCCC) and other international forestrelated
processes*.

The other major political forestry-related issue of recent
times 每 illegal logging 每 is also referenced in the G8
Declaration. The G8 will &enhance cooperation with
partner countries to combat illegal logging and trade in
illegally-harvested timber*. The G8 reaffirmed their
intention &to promote transparent timber markets and trade
in legal and sustainably produced timber* and &to reinforce
international cooperation and information sharing for
sustainable forest management, including use of forest
resources, prevention and management of forest fires and
monitoring of pests and diseases*.

Scientific consensus that SFM has a key role to play in
climate change mitigation
The G8 Declarations build on an emerging consensus view
within the scientific community that sustainable tropical
forest management can play a significant role to reduce the
risk of catastrophic human-induced climate change while
also helping to protect biodiversity and to satisfy the
immediate and pressing social and economic needs of
rural populations.

In March this year, the Subsidiary Body for Scientific and
Technological Advice (SBSTA) to the UNFCCC met with
the intent of drawing up draft text for a proposed decision
on REDD at the UNFCCC Copenhagen summit scheduled
for December 2009. An opening paragraph of the SBSTA
draft text notes &the importance of promoting sustainable
management of forests and co-benefits - including
biodiversity - that may complement the aims and
objectives of national forest programmes and relevant
international conventions and agreements*.

The SBSTA*s draft text goes on to call for development of
specific guidance for effective engagement of indigenous
peoples and local communities in REDD monitoring and
reporting and also calls on countries to establish robust
and transparent national forest monitoring systems to
determine greenhouse gas emissions by sources and
removals by sinks. SBSTA propose that these systems
should use a combination of remote sensing and groundbased
forest carbon inventories, that they should be
transparent, and that their results should be open to
independent review.

Remaining challenges for REDD
Therefore, recent developments in the policy framework
are looking very positive from the perspective of financing
for REDD projects that include sustainable tropical forest
management. However, further meetings held in Bonn
during June in preparation for the UNFCCC Summit
scheduled at the end of this year highlighted significant
political and technical obstacles to overcome if the REDD
commitments are to be translated into serious concerted
action on the ground.

The June meetings in Bonn aimed to elaborate specific
proposals for the final text of a possible new international
agreement in Copenhagen to replace the existing Kyoto
Protocol which is due to expire in 2012. In the event,
negotiators were only partly successful. While consensus
is emerging around certain specific elements of a possible
international framework to tackle climate change 每 the
REDD component being a notable example 每 other much
more fundamental issues remain unresolved. These issues
have potential to derail the whole process and may yet
prove an insurmountable obstacle to finalization of an
international agreement at Copenhagen.

For example, countries are still divided between those,
mainly developed, countries favoring a legally binding
outcome to the negotiations and those, mainly developing,
countries that prefer non-legally-binding obligations for
parties. It is still very difficult to predict what legal form
any agreement will ultimately take in Copenhagen and
beyond.

Nor is there any consensus on whether a successor
agreement to Kyoto should include specific emission
reduction targets. Most developing countries believe the
underlying idea behind the Kyoto Protocol, which set
specific emission-reduction targets for developed
countries, should be retained. In contrast, most developed
countries insist on the need to avoid the Kyoto experience
where targets were defined before rules had been
developed on issues such as accounting for carbon
changes, market mechanisms, and land use change and
forestry. Most developed countries are essentially looking
for a new protocol to get rid of binding quantified
emission limitation and reduction objectives and instead to
take on softer targets.

How to finance REDD?
An international consensus has emerged over the value of
REDD mechanisms, but the June 2009 meeting in Bonn
indicated that divisions remain over how best to finance
these mechanisms. Some countries have advocated that
forest management projects should be integrated into
global carbon markets. A strong signal that this is the
favoured approach of the US is contained in the Waxman-
Markey cap-and-trade bill which is currently being
considered for adoption by the US government. The
measure would allow US companies to offset six billion
tons of carbon dioxide emissions by investing in forest
conservation projects between now and 2025.

Other countries, notably Brazil, argue that wealthy nations
should reward developing countries for curbing
deforestation by paying into funds that the developing
countries themselves control. Their reasons have partly to
do with sovereignty concerns and partly to do with the
belief that allowing forests into carbon markets would let
developed nations off the hook when it comes to cutting
their own emissions. But some REDD advocates hold that
a fund-based system will be subject to political whims of
nations and would not generate the kind of money needed
to reduce deforestation at the scale and pace necessary to
meet emission-reduction targets.

How to measure progress to reduce deforestation?
There are also remaining technical obstacles to REDD.
The development of reliable, efficient and credible
national carbon monitoring and accounting system which
fully accommodate forest stock changes will be extremely
challenging. Reports from the SBSTA meetings in March
2009 suggest that there is not yet scientific consensus on
how best to measure a nation*s progress in curbing
deforestation. Rather than making firm recommendations
on this point, the SBSTA only went so far as to identify
and comment on the two available approaches.

One approach would consider current deforestation rates
against historical rates, which has the advantage of
simplicity but would also penalize developing countries
with low deforestation rates in the past. Another approach
would be to compare actual deforestation rates against
&expected* rates generated using computer models which
analyze factors such as changes in population growth,
GDP growth, and demand for commercial crops. Obvious
difficulties with this approach are the high quality of
socio-economic data required 每 which is often lacking -
and the numerous assumptions that have to be made.

Environmental groups against including SFM and REDD
At the same time, the environmental groups are now
campaigning vigorously against the idea of any
recognition for sustainable forest management in REDD
projects and to steer the agenda back to forest
preservation. A coalition of around 50 environmental
groups, including Greenpeace, Rainforest Action Network,
Friends of the Earth, FERN and Global Witness, issued a
statement to coincide with the June meetings in Bonn
demanding that any climate deal &immediately ends
deforestation, industrial scale logging in primary forests
and the conversion of forests to monoculture tree
plantations*. They also demanded that &any policies
intended to reduce deforestation and forest degradation
include measures to reduce consumption of forest
products, especially in the industrialized North*.

Global Witness also issued a more detailed report
attempting to undermine support for sustainable forestry
projects in the REDD framework. In this report Global
Witness claim that &a growing body of scientific literature
demonstrates that even when industrial logging follows
best practice guidelines to reduce its impact, immediate
and substantial carbon emissions are caused by removing
the largest trees and killing surrounding trees and
vegetation through collateral damage*. Global Witness
challenge studies comparing carbon emissions from
Reduce Impact Logging with a business as usual scenario
and argue that comparisons should only be made against
the carbon dynamics of the intact forest. They suggest that
&industrial logging puts the remaining forest on a path
towards further degradation from fire, drought, pests and
disease, illegal logging, poaching, and conversion to other
land uses such as industrial agriculture*.

Global Witness also suggest that &old-growth primary
forests retain a vigorous carbon sequestering capacity for
centuries and are much greater carbon stores than
previously thought*, while &claims that industrial logging
can play a role in sustainable forest management in
tropical forests appear to be based on faith and vested
interests rather than on facts or scientific evidence*.
Global Witness are critical of industry efforts to ensure
harvested wood products (HWP) are recognized as carbon
stores, claiming that &simple life cycle analysis exposes the
HWP argument as a myth, showing that the amount of
carbon stored in wood products derived from natural
tropical forests is negligible compared with the total
emissions they entail*.

The Global Witness report can be challenged on a number
of issues. It does not acknowledge the significant role of
sustainable timber production in creating rural
employment opportunities and providing other social
services. It takes no account of the considerable population
pressure on forests in many developing countries implying
that the opportunity costs of total preservation will be
extremely high. It does not consider that the imposition of
stringent restrictions on forest use in certain areas will
significantly increase the potential for leakage of
deforestation into surrounding areas. There are contrasting
scientific views on the long term potential of &old growth*
forests to absorb CO2. And while Global Witness
dismisses the value of HWPs as carbon stores, no account
is taken of the much more significant carbon mitigation
benefits of substituting wood in manufacturing and
construction for other more energy intensive products.

It is becoming clearer that REDD has real potential to
boost prospects for funding of sustainable forest
management programmes in the tropics. However recent
environmental campaigns indicate that there is no room
for complacency. Some interests are determined that the
REDD issue should be used an argument against
continued support for any form of timber extraction 每
whether or not sustainable - in tropical forests. There is a
need now to harness and build on the available scientific
research which shows that increased use of HWPs can,
through substitution of less energy-efficient products,
make a major contribution to reduced carbon emissions in
the construction sector.

Some recent environmental campaigns also reveal a
worrying level of ignorance over what the practice of SFM
actually means in the tropics. For some of them, SFM is
simply equated with conversion of natural forests over to
plantations. As REDD ups the stakes, the need for
marketing campaigns to rectify such misconceptions is
more critical than ever.


Abbreviations

LM       Loyale Merchant, a grade of log parcel  Cu.m         Cubic Metre
QS        Qualite Superieure    Koku         0.278 Cu.m or 120BF
CI          Choix Industriel                                                       FFR           French Franc
CE         Choix Economique                                                        SQ              Sawmill Quality
CS         Choix Supplimentaire      SSQ            Select Sawmill Quality
FOB      Free-on-Board     FAS            Sawnwood Grade First and
KD        Kiln Dry                               Second 
AD        Air Dry        WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through MR              Moisture Resistant
              the boards from one log are bundled                      pc         per piece      
              together                      ea                each      
BB/CC  Grade B faced and Grade C backed MBF           1000 Board Feet          
              Plywood   MDF           Medium Density Fibreboard
BF        Board Foot F.CFA         CFA Franc        
Sq.Ft     Square Foot              Price has moved up or down

Source: ITTO'  Tropical Timber Market Report

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