The impact of the new EUDR regulation on the European forestry industry

ProPopulus team

The European Union’s recent Regulation on Deforestation and Forest Degradation (EUDR) has triggered a series of significant changes in the forestry industry, with the aim of promoting the sustainability and conservation of natural resources. In this article, we analyse how these regulations affect companies in the sector and what steps they need to take to comply with the new requirements.

Following on from the EU Timber Regulation, which prohibited the placing on the EU market of illegally harvested timber since 2013, one of the main changes introduced by the EUDR is the extension of the list of products concerned to soy, beef, palm oil, rubber, cocoa and coffee. (Click here to consult the detailed list)

This means that timber and timber products imported or sold on the EU market must demonstrate that their production has not contributed to deforestation or forest degradation. In addition, these products must have been produced legally, including with regard to social aspects, in their country of origin.

Operators and traders subject to proof of due diligence

Unlike the EUTR, which only applied to the first company to place timber and timber products on the EU market, the EUDR applies to the entire value chain and stipulates that those operators and traders, i.e. all companies that place timber and timber products on the EU market, must trace their supplies and demonstrate that they have performed due diligence. This involves carrying out a risk analysis to ensure that their supplies have not contributed to deforestation or forest degradation and, if necessary, taking all necessary measures to reduce this risk before placing the products on the market.

In addition, the requirements linked to Due Diligence have been extended to include the collection of information on the geolocation of the plots where the wood was harvested, as well as the date or period of production and the scientific name of the wood species.

Also new, operators will have to submit a due diligence declaration via an information system set up by the European Commission to obtain authorisation to place their products on the EU market or export them to third countries.

The EUDR will enter into force on January 1st 2025 with a 3 year transition period for wood harvested before EUDR enters into force during which the EUTR will continue to apply.

Impact on the forestry industry

For companies in the forestry sector, compliance with these regulations presents both challenges and opportunities. The due diligence process will require significant investment in terms of human and technological resources to collect and verify the necessary information. But compliance with the EUDR can enhance companies’ reputations by demonstrating their commitment to sustainability and environmental and social responsibility.

The EUDR will also have an impact on international trade. Companies exporting wood products to the EU will have to comply with the must comply with the regulation’s requirements.

Even companies operating solely with domestically sourced wood within the EU must comply with the EUDR if they are introducing relevant products to the market. This underscores the universality of the regulation and its impact on the entire wood product supply chain.

As the forestry sector seeks alternatives to be best aligned with the requirements in EUDR, the promotion of European poplar plantations emerges as a strategic move. Poplar, renowned for its rapid growth and versatility, presents a viable alternative to traditional timber sources from higher risk origins.

Poplar as a sound alternative

Amidst a regulatory overhaul, investing in the renewal of poplar forests and plantations emerges as a strategic move for the European forestry industry. With approximately 450,000 hectares of poplar forests in the EU, primarily concentrated in Mediterranean countries, poplar cultivation offers a locally sourced, sustainable raw material that aligns with the urgent need for sustainable timber sources.

Investing in poplar cultivation not only addresses market demands but also fosters sustainability and economic growth. Sustainable poplar forests generate employment and support rural development, aligning with broader sustainability objectives. Furthermore, poplar’s renewability and recyclability reduce dependence on finite resources, offering a long-term solution to meet market demands while mitigating environmental impacts.

Challenges and opportunities

A common concern is whether national or individual company IT systems will be interoperable with the system set up by the European Commission.

Based on the latest information available from the Commission Expert Group on EUTR and EUDR there will be an API for which the technical specifications should be published by May and testing should begin by the month of July.

Source: European Commission

There are also many other challenges in the application of the regulation as there is a great level of complexity both in forest products as well as in the other commodities supply chains as well as during the transformation of these products. The European Commission is trying to address some of these questions through the publication of Frequently Asked Questions.

In summary, the new regulation represents a significant step forward in promoting sustainable practices in the forestry industry. Although it still raises major questions, it also offers opportunities to improve transparency, traceability and responsibility in the wood products supply chain.

By complying with these requirements, companies can not only comply with regulations, but also strengthen their position on the global market as players committed to environmental conservation and long-term sustainability.

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