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Environmental Policies, Illegal Logging, Trade and the US Hardwood Industry Michael S Snow Executive Director American Hardwood Export Council www.ahec.org www.sustainablehardwoods.info Presentation Structure • What is driving the “green procurement” movement for wood products around the globe – Environmental concerns about wood: – Tropical deforestation – Illegal logging • Policy responses: – Forest certification – Green building policies – Procurement policies • Towards a comprehensive solution – The need for risk assessment and science-based policies Growing Importance of US Hardwood Exports: Exports as a % of US Production Source: Hardwood Review, Drivers of Environmental Policies: The European Perspective www.ahec.org www.sustainablehardwoods.info Population growth Illegal Logging • Illegal material depresses world prices for wood by up to16% • Severely undermines markets for legal operators • Undermines reputation of the wood industry Driving force 1: international political processes •EU Forest Law Enforcement and Trade Action Plan •Voluntary bilateral agreements with producing countries, mainly in the tropics •Legality licensing procedures for log, lumber, plywood, veneer imports •Recommendation that EU governments adopt timber procurement policies •Support for private sector initiatives Driving Force 2: ENGOs •Greenpeace targeting use of wood from “illegal sources” in high profile public sector construction projects •European Commission Offices, UK Government Cabinet Offices, Buckingham Palace. •WWF working with green party and other political allies in European and National Parliaments to agitate for more rapid change Driving force 3: EU domestic supply • Over 60% of EU commercial forest area certified to either FSC or PEFC • 9000 chain of custody certificates issued in Europe. • Rising at rate > 1000/year over last 3 years • European hardwoods now readily available FSC or PEFC certified with no need to pay a premium • Availability of certified, or at least legally verified, tropical hardwoods improving – MTCC certified meranti can be obtained for 2-3% premium – Leading Ghanaian shippers committed to FSC – Major European-owned operations in Congo Basin developing legality verification procedures and committed longer term to FSC – Gabon national certification scheme aligned with PEFC – Indonesian producers shifting to FSC, with support from USAID – World Bank support for certification in developing & transition countries Driving force 4: Retail/Post Secondary Consumption • • • • Easiest solution to environmental problems Reduce risks of association with illegal wood Return on investment in chain of custody High costs of mixing certified & uncertified stock mean there is a big incentive to shift over 100% certified material as supplies improve • Trade association procurement policies – Risk assessment of suppliers’ environmental credentials – Favour wood from “low risk” suppliers – Support certification as the “best tool” to demonstrate legality and sustainability – UK, Spain, France, Netherlands, Belgium Policy Options: •Boycott Wood? •Certification? • Public/Private Procurement Policies? •Green Building Initiatives? www.ahec.org www.sustainablehardwoods.info There is no “one size fits all solution” Forests not managed for timber Certification: A Partial Solution, but not “the” Solution www.ahec.org www.sustainablehardwoods.info Forest Stewardship Council • Initial development led by environmental campaigning groups, notably WWF • In the 1990s used as a political tool to promote forestry activities oriented more towards forest protection and social welfare than economic viability • More recently, acquired more support from sections of the commercial forest sector • Now more business oriented approach Late 1990s: certification diversifies Certification challenges Distribution of certified forest 200 180 160 140 120 100 80 60 40 20 0 MTCC PEFC ATFS CSA SFI FSC N. Europe America Russia S. America Asia Africa World’s Leading Hardwood Lumber Exporters: 2008 $1,500 United States Malaysia $1,200 $Million Canada $900 Brazil Hong Kong $600 EU-15 Romania $300 China Thailand $0 Croatia 9 00 01 02 03 04 05 06 07 08 9 19 20 20 20 20 20 20 20 20 20 Source: Global Trade Atlas Over 70% of US timberland is privately-owned 10% 19% Private National Forests Other Public Private 71% Total Area = 204 Million Hectares Private lands supply 90% of the timber produced in the US National Forests 4% Other Public 6% Private 90% Source: Seneca Creek Estimates Labelling challenges Certified Forest Certified company Certified Forest Certified Forest Labelling challenges Certified log production 300 million m3 Barrier of traceability Limited delivery of certified products Green Building Schemes: Another Partial Solution www.ahec.org www.sustainablehardwoods.info Green Building Rating Systems: LEED: Challenges for Wood • Recyclability given more credit than renewability • Definition of renewable too confining • Only gives credit for “Rapidly Renewable” = less than 10 year rotation (i.e. bamboo, straw, agri-fiber) • Encourages conversion of forests to agriculture • Fails to recognize all credible forest certification systems • FSC is mandatory, greatly reducing sourcing options • Easier to chase points by using other, less environmentally friendly materials Wood: energy efficient Material Embodied energy, Mj/kg AD sawn hardwood 0.5 KD sawn hardwood 2.0 Concrete 4.0 Mild steel 34.0 Plastics 90.0 Aluminium 170.0 Life Cycle Assessment BREEAM: Good for Wood • Heavy emphasis on energy efficiency of buildings plays to wood’s strengths as a superior insulator • Favours “use of materials that have less impact on the environment taking account of the full life cycle”. • Wood is recognised for its properties of renewability, carbon sequestration, low embodied energy, durability, ease of disposal • Timber certification is not mandatory, but bonus credits are offered where it is available • Credits offered for all credible forest certification systems (FSC, PEFC, CSA, SFI) based on objective assessment of merits of each system undertaken by UK government Green Procurement Policies: www.ahec.org www.sustainablehardwoods.info Timber procurement policies: • Central and Local Government procurement policies coming online in several European and Asian countries • Various European trade associations implementing Codes of Conduct • Require wood to be verified legal and preferably from sustainable sources Procurement Policy Limitations • Only small percentage of illegally felled timber enters international trade • Markets can easily shift and divert wood to less restrictive buyers • Does NOT address root causes of deforestation • Risk of widening gap between illegal and legitimate production Is there a better way? YES: Risk Based Assessment www.ahec.org www.sustainablehardwoods.info Perception that wood is scarce Non-tropical forests are the main source of timber and are increasing in size Proportion of internationally traded industrial roundwood by forest type Tropical Nontropical A fence to the sun and back… • During the 1990s, volume of wood standing in temperate and boreal forests increased by 21,000 million m3. • That’s enough wood to build a 1m x 8cm fence to the sun and back (or 7500 times round the earth) U.S. Hardwood Growth & Removals Million M3 350 300 250 200 150 100 50 0 1952 1962 1970 1976 Net Growth 1986 Removals 1996 2006 US Hardwood Inventory Billion M3 12 10 8 6 4 2 0 1953 1977 Private 1987 Nat Forests 1997 State & Local 2007 Risk Assessment: A Sensible Approach • Requirements established for legality verification and certification should be based on an objective assessment of the risk of illegal and unsustainable forestry practices in timber supplying regions – To prevent imposition of unnecessary controls on suppliers where there is little risk of poor practice – To ensure resources are focused on problem regions – To ensure the response is proportionate to the scale of the problem – To help prevent technical barriers to trade for timber from small relatively low intensity managed forests Goal: Reduce the Cost Spread Legitimate Material Cost GOAL Illegal Material + RISK Source: Seneca Creek Associates, LLC Sourcing of Non-Certified Wood • SFI, PEFC and FSC have developed standards for using non-certified wood: – FSC Controlled Wood Standard – SFI Procurement Standard – PEFC Controversial Sourcing Standard • CoC labeled products must meet sourcing standards New EU Illegal Logging Legislative Proposal • Requires “Due Diligence” – – – – References to CoC removed from final proposal Encourages risk assessment and due diligence Only pertains to operators who “first place wood in the market” Proportionate to the scale of the problem • Must be passed by EU Parliament/Member States – ENGOs will vigorously oppose implementation US Combat Illegal Logging Act 2008 • It is an offence within the U.S. to trade in a wood product that has been “taken, possessed, transported, or sold” in violation of any foreign law. • An amendment to the U.S. Lacey Act which currently regulates trade in fish, wildlife and limited subset of plants. • Burden of proof with the prosecution who would have to demonstrate that wood derived from an illegal source • Only likely to be applied to the worst offenders importers with actual knowledge and intent to import illegal shipments • Does not establish detailed requirements for legality verification • Actively encourages importers’ risk assessment and greater diligence and action in regions of high risk AHEC/Seneca Creek Risk Assessment Findings – Low Risk While timber theft occurs and is of concern to private landowners, it is not believed or perceived to be a systemic problem, especially with regards to US hardwood exports US re-exports of temperate hardwoods relatively small and mostly sourced in Canada (similarly robust governance) High regard for the rule of law, an effective environmental, labor and public welfare regulatory environment, and a low level of corruption Rights of timber ownership are well-established and respected. U.S. Hardwoods and AHEC RPP Satisfy “Due Diligence” Requirements: • “Lacey Act” in US • Japanese “Green Procurement” Policy • EU Illegal Logging Legislation For More Information: www.sustainablehardwoods.info