Environmental Policies Illegal Logging Trade and the US

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 to 16% • 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 1990 s 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 1990 s: certification diversifies

Certification challenges

Distribution of certified forest

World’s Leading Hardwood Lumber Exporters: 2008 Source: Global Trade Atlas

Over 70% of US timberland is privately-owned Private 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

Labelling challenges

Certified log production 300 million m 3 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

A fence to the sun and back… • During the 1990 s, volume of wood standing in temperate and boreal forests increased by 21, 000 million m 3. • That’s enough wood to build a 1 m x 8 cm fence to the sun and back (or 7500 times round the earth)

U. S. Hardwood Growth & Removals Million M 3

US Hardwood Inventory Billion M 3

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 • Co. C labeled products must meet sourcing standards

New EU Illegal Logging Legislative Proposal • Requires “Due Diligence” – – References to Co. C 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 Ø 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 Ø US re-exports of temperate hardwoods relatively small and mostly sourced in Canada (similarly robust governance) Ø High regard for the rule of law, an effective environmental, labor and public welfare regulatory environment, and a low level of corruption Ø 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