EUDR Crunch Time?
Image credit: Global Wood Markets Info
EUDR will be in force in a few short months. We’re in August with the implementation of the EUDR a mere five months away.
Lots of folks are out touting solutions for EUDR compliance.
From global accounting firms like Deloitte to NGOs like the Zoological Society of London (ZSL) the EUDR has spawned an entirely new crop of experts who claim to know what it will take to avoid business interruptions due to the new regulations.
It doesn’t take a particularly keen eye for business to recognize that global industries are worried about losing markets in the EU.
The EUDR gained notoriety when smallholders in global palm oil powerhouses Indonesia and Malaysia protested against the regulations. On official fronts, Indonesia led the protests which inspired US bipartisanship in rejecting EUDR according to Minister Airlangga Hartarto. Malaysia fully expects a delay in the implementation of the EUDR. This expectation is justified as EU industries joined the appeal for a delay.
Letters and calls from stakeholders, lawmakers, and EU governments to delay the EUDR implementation have been pouring into the Commission’s inbox in recent months.
On 25 July, EU retail group EuroCommerce wrote to the Commission president expressing “deep concern” and calling for an additional six-month transition period for companies after the IT tools and benchmarking are ready.
The ask for a six-month transition period may be an overestimation of supply chain capabilities to be EUDR compliant. The ask for a twenty four month delay by US wood groups sound a bit more reasonable.
While much of the arguments around the EUDR have been on consumer goods like cocoa, palm oil or beef, the overarching ambition of the EUDR wants to control derived products, such as furniture.
Derived wood products are defined in the EUDR as:
Specifically, wood products and furniture sold in Europe must be accompanied by a map of every forest the product sourced wood from, as well as a satellite analysis demonstrating those forests are deforestation-free.
Furniture aside, it will be interesting to see how the EU deals with sawn wood exports from Sweden and Germany should the French insistence on mirror clauses remain in trade negotiations.
According to World's Top Exports:
The 5 biggest exporters of sawn wood are Canada, Sweden, Russia, Germany and the United States of America. By value, those 5 major suppliers shipped more than half (52.3%) of sawn wood exports during 2023.
Forest destruction in Germany more drastic than thought, wrote Julia Dahm in Euractiv who blamed forest loss in Germany on everything except the wood industries.
However, not all of the destroyed forest areas died a natural death. Many have also been subject to large-scale emergency felling. “Oftentimes, clear-cutting is the measure of last resort to halt the spread of severe pest infestations,”
Based on Germany’s reasons for forest loss and France’s insistence on “mirror clauses” in trade negotiations the obvious question is:
- should natural incidents caused by climate change qualifies as no-deforestation under EUDR, would palm oil expansion in Indonesia on forested lands lost in the 2023 wildfires also qualify as no-deforestation?
Sweden as a major producer of sawn timber and wood products in pulp and paper and wood pellets for energy offered more creative arguments.
The likes of SCA Group, Europe’s largest private forest owner, want to continue logging to supply vast quantities of building materials, fuels, and paper products.
They say their trees sequester CO2 while they are growing, and when felled, they can be used to replace more environmentally damaging products — for example switching paper cups for plastic ones or timber beams to replace steel in construction.
This is a slippery slope for the EUDR if the New EU forest strategy for 2030 with its ambition to support the socio-economic “functions of forests for thriving rural areas and boosting forest-based bio-economy within sustainability boundaries” is accepted by the EU.
Palm oil producing countries have made similar claims way before Sweden did, that palm oil plantations sequester CO2 while they’re growing. Palm oil plantations as monoculture forests have also been credited with thriving rural areas and boosting forest-based bio-economies in producing countries.
Should the EU “butt out” of what Sweden does with its forests as the Swedish Center Party and Swedish forestry companies say?
EUDR delay a safe bet
While businesses and NGOs peddle their knowledge of the EUDR and how companies can comply with the regulations in these short five months, the safe bet is on a delay of the implementation of EUDR.
With so many unknowns about the EUDR, the EU’s trade partners are looking to make their own contributions towards EUDR and what it should mean for their industries.
Canada for example,wants to draft its own definition of forest degradation after the European Union passed the EUDR. The results of this exercise and whether the EU accepts it is not something that will happen in these short months.
Indonesia is working with the EU to reconcile forest data to find a mutually acceptable definition of forests.
The biggest developing situation is the EU-Mercosur trade deal where Mercosur countries want guarantees that the EUDR will not in effect nullify the benefits of a trade deal for its exporters.
Will the EU sacrifice the EUDR for the sake of completing a trade deal with Mercosur countries?
With Brazilian beef exports being tied to massive deforestation, how would the US meat industry respond when it has already complained that the EU should have introduced a “negligible risk classification that allows a supplying country to be written out of the regulation if it has rigorous data showing that its production of beef and other affected products is not impacted by deforestation?”
With so many factors in play, the US meat industry could do what Malaysian palm oil company, FGV, has done. Confident that its palm kernel oil from corporate estates and smallholders will meet the requirements of EUDR, FGV has produced EUDR-compliant palm oil based on what is known about the requirements of EUDR.
Published August 2024 CSPO Watch
Lots of folks are out touting solutions for EUDR compliance.
From global accounting firms like Deloitte to NGOs like the Zoological Society of London (ZSL) the EUDR has spawned an entirely new crop of experts who claim to know what it will take to avoid business interruptions due to the new regulations.
It doesn’t take a particularly keen eye for business to recognize that global industries are worried about losing markets in the EU.
The EUDR gained notoriety when smallholders in global palm oil powerhouses Indonesia and Malaysia protested against the regulations. On official fronts, Indonesia led the protests which inspired US bipartisanship in rejecting EUDR according to Minister Airlangga Hartarto. Malaysia fully expects a delay in the implementation of the EUDR. This expectation is justified as EU industries joined the appeal for a delay.
Letters and calls from stakeholders, lawmakers, and EU governments to delay the EUDR implementation have been pouring into the Commission’s inbox in recent months.
On 25 July, EU retail group EuroCommerce wrote to the Commission president expressing “deep concern” and calling for an additional six-month transition period for companies after the IT tools and benchmarking are ready.
The ask for a six-month transition period may be an overestimation of supply chain capabilities to be EUDR compliant. The ask for a twenty four month delay by US wood groups sound a bit more reasonable.
While much of the arguments around the EUDR have been on consumer goods like cocoa, palm oil or beef, the overarching ambition of the EUDR wants to control derived products, such as furniture.
Derived wood products are defined in the EUDR as:
Specifically, wood products and furniture sold in Europe must be accompanied by a map of every forest the product sourced wood from, as well as a satellite analysis demonstrating those forests are deforestation-free.
Furniture aside, it will be interesting to see how the EU deals with sawn wood exports from Sweden and Germany should the French insistence on mirror clauses remain in trade negotiations.
According to World's Top Exports:
The 5 biggest exporters of sawn wood are Canada, Sweden, Russia, Germany and the United States of America. By value, those 5 major suppliers shipped more than half (52.3%) of sawn wood exports during 2023.
Forest destruction in Germany more drastic than thought, wrote Julia Dahm in Euractiv who blamed forest loss in Germany on everything except the wood industries.
However, not all of the destroyed forest areas died a natural death. Many have also been subject to large-scale emergency felling. “Oftentimes, clear-cutting is the measure of last resort to halt the spread of severe pest infestations,”
Based on Germany’s reasons for forest loss and France’s insistence on “mirror clauses” in trade negotiations the obvious question is:
- should natural incidents caused by climate change qualifies as no-deforestation under EUDR, would palm oil expansion in Indonesia on forested lands lost in the 2023 wildfires also qualify as no-deforestation?
Sweden as a major producer of sawn timber and wood products in pulp and paper and wood pellets for energy offered more creative arguments.
The likes of SCA Group, Europe’s largest private forest owner, want to continue logging to supply vast quantities of building materials, fuels, and paper products.
They say their trees sequester CO2 while they are growing, and when felled, they can be used to replace more environmentally damaging products — for example switching paper cups for plastic ones or timber beams to replace steel in construction.
This is a slippery slope for the EUDR if the New EU forest strategy for 2030 with its ambition to support the socio-economic “functions of forests for thriving rural areas and boosting forest-based bio-economy within sustainability boundaries” is accepted by the EU.
Palm oil producing countries have made similar claims way before Sweden did, that palm oil plantations sequester CO2 while they’re growing. Palm oil plantations as monoculture forests have also been credited with thriving rural areas and boosting forest-based bio-economies in producing countries.
Should the EU “butt out” of what Sweden does with its forests as the Swedish Center Party and Swedish forestry companies say?
EUDR delay a safe bet
While businesses and NGOs peddle their knowledge of the EUDR and how companies can comply with the regulations in these short five months, the safe bet is on a delay of the implementation of EUDR.
With so many unknowns about the EUDR, the EU’s trade partners are looking to make their own contributions towards EUDR and what it should mean for their industries.
Canada for example,wants to draft its own definition of forest degradation after the European Union passed the EUDR. The results of this exercise and whether the EU accepts it is not something that will happen in these short months.
Indonesia is working with the EU to reconcile forest data to find a mutually acceptable definition of forests.
The biggest developing situation is the EU-Mercosur trade deal where Mercosur countries want guarantees that the EUDR will not in effect nullify the benefits of a trade deal for its exporters.
Will the EU sacrifice the EUDR for the sake of completing a trade deal with Mercosur countries?
With Brazilian beef exports being tied to massive deforestation, how would the US meat industry respond when it has already complained that the EU should have introduced a “negligible risk classification that allows a supplying country to be written out of the regulation if it has rigorous data showing that its production of beef and other affected products is not impacted by deforestation?”
With so many factors in play, the US meat industry could do what Malaysian palm oil company, FGV, has done. Confident that its palm kernel oil from corporate estates and smallholders will meet the requirements of EUDR, FGV has produced EUDR-compliant palm oil based on what is known about the requirements of EUDR.
Published August 2024 CSPO Watch
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