The energy sector is stockpiling wood at sky-high prices.

The Surge of Demand for Energy Wood in Finland: Opportunities and Challenges

The demand for energy wood in Finland is on the rise, as district heating companies turn to wood as a replacement for peat and coal. In the first quarter of 2023, 1.2 million cubic meters of energy wood were purchased, the highest amount since 2014. Boilers are now burning not just small-diameter energy wood and sawdust, but also fiber wood and log wood, leading to a decrease in carbon sinks in forests.

The increasing demand for wood from energy companies is having a significant impact on the forest industry. Competition for pulpwood purchases is intensifying, as forest owners look to capitalize on the high prices obtained from energy wood. The average price per cube meter of energy wood across the country is currently 43 euros, leading to significant growth in cash receipts for forest owners.

Income from forest products has risen steadily over the past year, with estimates suggesting it will continue to do so in the coming years. From around 1.8 billion euros in 2020 to almost 2.5 billion euros last year, and projected figures of over 2.6 billion euros this year and over 2.9 billion euros next year indicate a positive outlook for the forest industry in Finland.

However, there are challenges ahead for the energy industry’s reliance on wood as a fuel source. Small nuclear power plants are being considered as an alternative solution, but their development is still ongoing with solutions expected in the 2030s. Energy companies are also investing in electric boilers to ensure heat production despite challenges in availability and cost of electricity.

The government is taking steps to address the increasing use of wood by energy companies and its impact on the Finnish national economy by considering expanding biomass taxation. This move will help ensure that forest owners benefit from this trend while also promoting sustainable forest management practices.

In conclusion, while there may be challenges ahead for both the forest industry and energy sector, there are clear opportunities for growth and development through increased use of energy wood as a fuel source in Finland’s rapidly expanding heating market.

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