With news about the invasion of the Ukraine by Russia, I thought it may be interesting to see what sanctions might be possible on the Russian forest industry.
As described in France 24, Russia is home to one-fifth of the world’s forest and further exploiting this resource could help the country cut down its economic reliance on oil and gas.
Hydrocarbons account for half of Russian exports by volume while wood and its derived materials represent about three percent. Increasing export of forest products could help Russia improve its environmental image as wood is a much greener construction material than concrete, which releases lots of carbon into the atmosphere during its production. Trees can be replaced, though environmental groups are skeptical about Russia’s record on that front.
According to an article in Fastmarkets “Russia has 20 per cent of the world’s trees and is harvesting only 30 per cent of its designated “production forests,” and there’s potential through genetic engineering for its sustainable harvest volumes to grow by a factor of 10.”
“This would put Russia’s productivity on a par with Finland’s with its much smaller land base. Russia produces the highest quality softwood (especially Angara pine and spruce) and birch hardwood in the world.”
“The Russian government is predicting increases in exports by 2030 of: 70 per cent in lumber, 60 per cent in plywood, more than 130 per cent in particleboard, more than 300 per cent in MDF, more than a massive 3,000 per cent in OSB and more than 500 per cent in pulp.
If they achieve even modest parts of these increases, then Russian wood products will be turning up on the shores of every existing customer of all American and European wood manufacturers in the next five to 10 years, or earlier.”
Russia (and foreign companies) have already spent billions on modern sawmills and new plywood and composite panel plants (PB, MDF and OSB) – with many more “world’s biggest and highest-tech” mills under construction or on the drawing boards.”
A good example is a new factory launched by Segezha which has launched the first factory in Russia to manufacture cross-laminated timber (CLT) panels, which thanks to the layers of wood being glued at right angles, are rigid enough to build multi-storey buildings.
The use of CLT for buildings is increasingly popular in Europe but still niche in Russia, where firms hope it will be approved by regulators in the coming months. In the meantime, Segezha hopes to increase exports to Germany, Austria, Italy and Japan.
As is the case in B.C., Russia is concerned about loss of local jobs because of massive log exports and green lumber especially to China.
A focus report just released titled Russia Log Export Ban in 2022 notes that Russia exported 15 million cubic metres of logs in 2020, which accounted for almost 12 per cent of globally traded round wood.
“Much of this trade may come to a halt next year when a new law proposed by Russia’s president will ban the exportation of softwood logs and high-value hardwood logs as of Jan. 1, 2022. The Russian government is also considering new regulations aimed at reducing the exportation of green softwood lumber.”
“This regulation is loosely planned to also commence in 2022 and is intended to improve investments in dry-kilns to produced dried lumber for exports. Reducing log and green lumber exports will likely stimulate further value-added processing within Russia and better control illegal logging.”
With enough countries limiting forest investments and exports to and from Russia it could have a major impact in the aggressors’ economy which may convince its citizens that a leadership change is needed.