In this article, I cover issues related to forest management, compensation, carbon markets, and certifications. I’ll try to keep it general, so for those of us for whom the forest is a church (and other clichés), this is essential.
After reading this, you’ll know what the Carbon Market, compensation, emissions trading, and the PEFC certification are, and why the Sustainability Panel does not consider the latter responsible.
Emissions Trading, Carbon Market, and Compensation
Emissions trading is an arrangement implemented by the European Union where climate-polluting facilities are required to hold a specific number of emission allowances for each unit of greenhouse gases they produce. These facilities can buy and sell these allowances among themselves. The total number of emission allowances on the market determines the overall emissions of all facilities covered by emissions trading. Emission allowances are issued by the Energy Authority, which also approves emission trading verifiers. Essentially, this is politically driven.
Last year, auction revenues from emissions trading were €409 million—double from the previous year. My prediction is that prices will rise sharply soon, as the political system has started to react more seriously to the environmental crisis, while carbon sequestration has not increased—in fact, quite the opposite. I believe and hope that all possible methods will soon be used.
On the compensation side, you can currently buy “offsetting” for your emissions at a price of €35-40 per ton, plus VAT. Prices per ton vary as much as there are actors—emissions trading, compensation activities, and everything built around them are still somewhat in their infancy. What is certain is that the situation will change, and a “real” carbon market will emerge—but whether it is the solution, I do not know. It remains complicated, for now, to define emissions and compensation, buying and selling—doing things well is now more important than fiddling with definitions and selling imaginary values.
Of these schemes, emissions trading has been around the longest, and thus a market price has emerged for a metric ton of carbon dioxide equivalent. In August 2022, the price of a CO2 equivalent ton reached €100; as of the time of writing, it is €78. In August, the price of a CO2 “equivalent750kg” exceeded the price of high-quality sawlog (€73/m3 for spruce sawlog, for example). The price of cheap pulpwood has been surpassed by any measure. A cubic meter of wood binds 750 kg of carbon, which is why I came up with the term CO2 equivalent750kg instead of the commonly used ton. So theoretically, it would be profitable to leave all scrub forests standing and sell them on the emission market for sequestration purposes.
Carbon Sequestration and Compensation
The climate crisis will make our planet uninhabitable for humans (unfortunate, damn it). Because of this, all sorts of ways are being tried to solve it. But the basic problem is just simple math. Let me make a very simple statement: now we should be sequestering carbon, not releasing it. Carbon goes hand in hand with all greenhouse gases, except methane, which I consider a “trigger gas.” If the climate warms enough, the tundra will melt, releasing methane, and then we are in a downward spiral. That is why we must focus on carbon now, as it causes the most warming.
Carbon is in everything organic, including former organic matter: fossils buried in the soil. We are, however, in a situation where it doesn’t really matter whether carbon is released into the atmosphere from the existing cycle or from outside the cycle, from the soil. All emissions are currently senseless in terms of the bigger picture.
Carbon sequestration is being attempted (at least somewhere) by all possible means, and this is why compensation has become a common topic. Companies are “carbon neutral” or even sell “carbon negative” products. This is marketing talk; no product can be carbon negative—that’s a scientific impossibility. The carbon footprint of products or companies has merely been “offset.” However, offsetting is not a sustainability feature of a product or company. It is a nice gesture—just like donating to charity. I recommend engaging in it only after all means to make the product itself responsible have been exhausted. Offsetting is only akin to buying indulgences if it would make the most sense not to do something or to make drastic improvements—but instead, good conscience is bought through compensation. Of course, offsetting an already responsible product is an added plus.
In any case, in the bigger picture, fossil fuels must be plugged, and all biomass management—especially forest management—must include both the climate perspective and, if biodiversity is to be saved (I assume we want that—the same habitability challenge for the planet is behind it), the ecological perspective. Carbon is already being sequestered in soil by several grain users in the fields. I think Sweden is a leader here, and Finland is nicely following. For us, forests could be a source of joy and pride. However, Finnish forests are currently managed 95% according to commercial forestry guidelines only. This brings us to a big battle over the PEFC certification. I can already hear shouting in my ears because this, if anything, raises emotions.
Why are products made primarily of PEFC-certified wood not included on the Ostavastuullisesti.fi site?
Access to our site and the “Finland’s Most Sustainable Product” competition is decided by the Sustainability Panel, which is made up of leading experts from Finland: Professor Minna Halme (Aalto University), Professor Jyri Seppälä (SYKE), Professor Mikko Mönkkönen (University of Jyväskylä), Antti Majava (BIOS), Markus Terho (Sitra), and Anne Liimatainen (Finnish National Agency for Education). At Infine, we conduct sustainability assessments to support decision-making, and discussions are also held with companies when needed. The panel members work on a voluntary basis because they want to promote product sustainability to companies and consumers. The motivation for this is likely that academia is well aware of the crises mentioned here, and supporting companies in sustainability is a very effective way to create positive impact. Therefore, the panel decided that PEFC-certified wood cannot be considered sustainable. This decision has caused quite a stir, so I will summarize the reasons and address some myths surrounding wood certification:
- In Finland, there are two certification systems: PEFC and FSC. 95% of forests are PEFC-certified. It is still often thought that PEFC is good for coniferous forests and small forest owners, while FSC is for hardwood and large owners. Historically, this was true, but it is no longer the case. This belief still persists as propaganda. The Sustainability Panel accepts Finnish FSC wood because it specifically considers biodiversity conservation. Unfortunately, FSC-certified wood is scarcely available.
- The PEFC system is developed through collaboration—essentially, anyone can participate in the criteria-making process. The criteria are updated every five years, and the latest ones are coming into effect now for the next five years. Discussions involved SYKE and ELY Centres (environmental authorities in Finland), but both withdrew because they felt unheard. Attached is a 24-page scientific rationale on the topic. In short, the main conflict was that the PEFC standard working group assumed Finnish forestry to be ecologically sustainable. However, studies and the scientific community almost unanimously disagree. Species are disappearing at an increasing rate. Extinction waves in Finland are accelerating, while the dominant certification system claims to be ecological.
- This situation presents a massive challenge for companies tied to the forest industry. Russian wood is labeled as conflict wood, and apparently, FSC-certified wood from Russia is of considerably lower quality than Finnish wood, making sourcing responsible wood from Russia challenging even before the war. In Finland, only PEFC wood is mostly available, and its criteria are now set on an ecologically unsustainable basis for the next five years—at least if independent experts are to be believed. Wood from Germany and Sweden is not enough to meet Finland’s needs—the wood shortage was already a reality before the war spread from Crimea to the rest of Ukraine. Thus, responsible wood cannot be purchased, which is a completely absurd situation for a country like Finland. This might be an opportunity to establish a local certification, if anyone is interested.
Consumers are probably still quite unaware of this issue. It takes considerable knowledge to understand the existence and differences between PEFC and FSC. Furthermore, forests—whether Finnish or global—are crucial in tackling the climate crisis. Carbon compensation and emissions trading may soon come into play here, complicating the situation. There are already entities that buy forests, leave them untouched, and sell them as carbon compensation.
For the climate, two key aspects matter: the carbon stock and sink of the forest (including soil, often overlooked in discussions emphasizing tree growth), and what happens to the carbon in harvested biomass. Continuous cover forestry is likely better for climate as it generally maintains carbon stocks and sinks better over time and, due to a higher proportion of sawlogs, produces wood biomass more likely to serve as long-term carbon storage. Both continuous cover and clear-cut forestry have their problems regarding biodiversity, but more important is how much biomass is removed from forests in total, rather than how it is removed. If the harvest volume is kept constant, the negative impacts of continuous cover forestry on nature are generally smaller.
It’s also important to note that Finland’s climate goals require our forests to maintain a continuous and sufficiently large carbon sink. This means that the carbon stock in our forests and soil must grow significantly each year, necessitating a wise and holistic approach to logging. It’s worth noting that a carbon stock stores carbon (e.g., log houses), while a carbon sink removes carbon dioxide from the atmosphere (e.g., growing forests).
Forests will, of course, continue to be logged in the future. And not all commercial forests are “monoculture plantations” (i.e., fast-growing, single-species forests), as diverse forestry can also be practiced profitably. Variable rotation periods in even-aged management, mixed-species forests, and continuous cover forestry provide valuable diversity in commercial forests from a biodiversity perspective. Even-aged management based on clear-cutting typically yields more pulpwood, while continuous cover forestry produces more sawlogs. Continuous cover forestry may be more profitable for forest owners in some cases, as sawlogs have a higher price than pulpwood, income is steadier, and reforestation costs are avoided.
In any case, carbon trading, compensation, and forest management are all very complex issues—at least for now. They are driven by the pursuit of economic benefits while simultaneously attempting to incorporate climate and ecological dimensions. Often, these aspects must be translated into monetary terms, given how our world operates. It’s a somewhat challenging situation.
Nonetheless, CO2 accounting is here to stay. So is carbon trading, and these will have a price. Every product will eventually have a CO2 label, just like we have calorie counts now. It’ll be interesting to see how all this develops—and what happens in climate-related court cases, with the first one already underway in Finland.
Tiina Saukko
Author Tiina Saukko is the founder and CEO of Infine and has over 20 years of experience working with product responsibility, responsible marketing, and corporate responsibility.
