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UN says wood, paper industries struggling
Updated: 2009-08-04 20:09

GENEVA: Wood and paper consumption fell by 8.5 percent last year in Europe, North America and the former republics of the Soviet Union as a sharp decline in US housing construction took its toll on the industry, a UN body said Tuesday.

The UN Economic Commission for Europe, which also monitors the United States, Canada and Russia, said real prices in building materials have fallen to their lowest levels since the 1940s amid a sharp fall in demand. It said government-driven demand for renewable energy from wood is offsetting some of the pain.

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Production tumbled 17 percent last year in Europe and North America, and the outlook for the global industry has yet to brighten. The 56 nations covered by the UN body contain 42 percent of the world's forests, and produce 60 percent of global wood and paper products.

"The Canadian industry has been devastated because 90 percent of its lumber goes to the United States," said Ed Pepke, a UNECE specialist on the subject.

He said Europe also has been hurt, in part because of Russian export taxes on raw materials that have led the industry to limit production and close mills. Housing construction also fell by nearly 14 percent in Europe in 2008, and a similar decline is expected this year.

The situation in the ex-Soviet republics of Eastern Europe and Asia has been better, but Russia still has a negative trade balance because its imports of high-quality paper are far more expensive than exports of low-value products such as newsprint.

UNECE said the wood energy sector is doing better and "seems to have been immune to the global economic crisis." This is largely due to demand for renewable energy sources such as wood biomass that has been increased as a result of government subsidies and incentives.

Wood fuel pellet markets jumped by 20 percent last year and should double by 2012, the agency said, noting that production capacity is outpacing consumption growth amid anticipation that demand will expand in the coming years.

Pepke said wood fuel projects need startup help from governments but are a "sustainable source of renewable energy" in the long term.