The drive to net zero could lead to a fourfold surge in the global demand for timber by 2050, according to the World Bank, triggering a big increase in illegal logging in the developing world due to supply constraints.  

Timber is sometimes described as the ‘climate commodity’. Wood could be used to build houses, to power heat and electricity grids, to clothe people, to package deliveries and to replace plastics in the future. The use of wood in the energy, construction and manufacturing sectors is already increasing and it will play a significant role in the energy transition. At the same time, forests are being degraded and lost at alarming rates. A big question mark hangs over where all the wood for the energy transition will come from. Already it is estimated that between 15% and 30% of the world’s timber is sourced illegally. 

Industrial roundwood (in other words, unprocessed logs) is the raw material for the manufacture of commercial wood products, including sawnwood (construction products, fencing and furniture), pulp (papers, tissue and packaging), and wood-based panels and wood pellets. Industrial roundwood can be broadly split between two categories: hardwood and softwood.  

Timber uses can be split into three broad categories: construction, biomass/energy and the paper and packaging industry. Lumber refers to wood that is prepared for use in building.  

In 2020, global roundwood removals amounted to 3.9 billion cubic metres under bark, according to the UN’s Food and Agriculture Organisation. The figure has jumped by almost 60% during the past six decades (from 2.5 billion cubic metres under bark in 1961). About half of the wood removed from forests globally is used for energy (cooking and heating), while the other half is used for industrial purposes (turned, for example, into pulp, sawnwood, wood composites, and chemicals for manufacturing wood-based products and direct use in construction).  

The World Bank forecasts that global timber demand will quadruple by 2050, driven by economic and population growth. Gresham House, the London-based specialist alternative asset manager, has a lower estimate but is still forecasting that global timber consumption will surge by 170% over the next 30 years, driven by urbanisation, decarbonisation and housing demand. It forecasts timber consumption will increase by 3.1% a year over the next 30 years up to 2050, up from 1.1% a year during the past 20 years.  

Most of the global commercial timber supply is sourced from temperate forests in the northern hemisphere (Canada, the US, northern Europe and Russia) and plantations in Oceania (New Zealand and Australia). These climates are conducive to the growing of softwood timber. However, the increase in urban dwellers is concentrated in regions with insufficient resources of mature timber. Consumers from China, India, Indonesia, Asia and Africa are driving increased demand from the traditional sources of supply.  

The developing world’s consumption of timber jumped by 30% between 2005 and 2015 and it now consumes more industrial roundwood than the developed world. The growth was largely driven by China, whose consumption surged by 69% between 2005 and 2015. It is now the second-largest timber-consuming country after the US.  

The size of the global timber and wood product market was estimated at $591bn in 2021 and $626bn in 2022, according to researchandmarkets.com, a market intelligence company. It is projected to grow at a compound annual growth rate of 6.11% to reach $844bn by 2027.  

“The additional future demand for timber can be broken down into three core drivers,” says Olly Hughes, managing director of forestry at Gresham House. “Firstly, there is population growth, but it is really the urbanisation of that population. We are seeing a significant increase in the urbanisation of the population globally and there is a direct correlation between urbanisation and timber consumption. 

In 2022, international sanctions imposed on Russia over its invasion of Ukraine hampered timber supplies from the country, the world’s largest exporter of softwood timber. 

Timber prices were already high in the wake of the pandemic and the Ukraine crisis has also had a big impact on timber prices in 2022. 

Big concerns exist about how the giant surge in timber demand will be met in the long term. Where will all the wood come from? Unlike fossil fuels, no new reserves of timber can be found. Traditional reserves take from 30 to 100 years to replace. For timber production to be sustainable, new supplies should only really be created through establishing new plantations, but the availability of land suitable for plantations is dwindling. There is also increasing competition from alternative land uses. 

Plantations make up around 3% of the global forested area, according to the WWF. Their size has jumped by almost 40% over the past two decades.  

Within the past decade, almost 12% of the world’s forest cover has been certified with sustainable standards such as certification from the FSC and the Programme for the Endorsement of Forest Certification (PEFC). The PEFC is an international, non-profit, non-governmental organisation that promotes sustainable forest management through independent third-party certification.  

Timber consumption is expected to overtake realistic sustainable supply during the next couple of decades. The move into more inaccessible, harder to reach timber supplies will drive up the cost of timber extraction and support increased global timber prices.  

The greatest concern is the surging demand for timber – partly because of the drive to net zero – will lead to a lot more illegal logging in jurisdictions that do not conserve forests properly or regulate deforestation. The timber value chain is a complicated one and it is hard to ensure wood only comes from forests certified with sustainable standards. Furthermore, there just is not enough of this kind of timber around. The biggest risk is to the forests of the Congo basin. By African standards, the sums of money involved are massive and there is a real danger that huge swathes of the forest will be lost.  

One of the priorities must be where and how plantations are established and managed. Excessive and wasteful consumption of wood in the Western world must also be lowered to reduce pressure on the world’s forests. Nonetheless, the future potential for sustainable timber supply appears modest compared with future expectations about timber demand. 

Currently, humanity is asking too much from the world’s forests. They cannot supply a lot of the materials for the energy transition and undertake carbon sequestering at the same time. The paradox is that – in moving to climate neutrality – mankind may end up destroying a lot of the world’s forests and carbon sinks.