ForestryBrief Professional #29 🌳💰🦋

Part two of two. Part one ran on 21 August.

Hello,

Part one promised you part two the following Friday. That was a couple of weeks ago.

I owe you an explanation. I spent those weeks finishing Book 3 of the Playbook, The Organization. It went out 9 days ago.

Thank you for your patience. Here is part two.

Those few weeks ago I showed you a gap. Europe uses its forests for defence. No law says so. Nothing is written down.

This week is the opposite problem.

Something was written down. Then amended. Then amended again, package after package. Twenty of them by April 2026. And a great deal of wood kept moving anyway.

That is not a story about failure. Stay to the end and you will see why. It is a story about what a rule can do and what it cannot. Most people in this sector believe they know what the sanctions did. Very few have read what they say.

I read them. Here is what is actually in there.

Start with Belarus. Almost everyone gets this one wrong.

Regulation (EU) 2022/355 arrived on 2 March 2022. It added wood to Annex X.

Now read the verbs. It bans import. It bans purchase. It also bans transport. That third verb does more work than the other two. It reaches wood moving from Belarus to a third country. Not only wood coming into Europe. Operators had until 4 June 2022 to wind down existing contracts. Russia came five weeks later.

Regulation (EU) 2022/576 was adopted on 8 April 2022. It entered force on 9 April. It created Article 3i and Annex XXI. Annex XXI covered the whole of CN Chapter 44. That is wood and articles of wood, top to bottom. Logs, sawn timber, panels, veneer, joinery.

The wind-down ran to 10 July 2022. Pulp and paper followed. Regulation (EU) 2022/1904 came on 6 October 2022. It added those codes to Part B of Annex XXI. It entered force the next day. Contracts signed before 7 October 2022 could run until 8 January 2023.

Three instruments. Ten months. The product list was close to complete. Hold that thought. Because the product list was not the thing that mattered.

Here is the part that changes how you read all of it.

Sanctions bite on where the finished product was made. Wood cut in Russia, sawn in Russia, sold from Russia. That is caught. Wood cut in Russia, moved across a border, processed somewhere else, sold from there. That is a different product with a different origin. The investigative organisation Earthsight has made this legal point repeatedly. I am attributing it to them, not asserting it as my own finding.

But the underlying principle is not controversial. It is how origin rules work everywhere, in every trade regime, for every product.

Read that again, because the framing matters. This is not a loophole somebody forgot to close. It is not sloppy drafting.

Origin has always been about substantial transformation. A sanctions list covers products from country A. It cannot reach a product manufactured in country B. Which means adding more product codes was never going to fix it. You can list every code in Chapter 44. You did. It does not change where a factory sits.

Now the trade data. Handle this section slowly.

Earthsight has published estimates of Russian birch plywood entering the EU after the bans. It counts more than 500,000 cubic metres between July 2022 and October 2024. It puts the retail value above €1.5 billion. That report came out on 29 January 2025. A follow-up in July 2025 added €273 million over six months. That covers November 2024 to April 2025. Those are Earthsight's figures. They are not mine and I have not reproduced their method.

Note what the headline number measures. It is a retail value, not an import value. Treat these as a serious NGO estimate, which is what they are.

Here is the stronger evidence. It comes from the European Commission itself.

The Commission opened an anti-circumvention investigation on 21 August 2023. It closed the case on 13 May 2024, by Implementing Regulation (EU) 2024/1287. That extended birch plywood anti-dumping duties to goods consigned from Türkiye and Kazakhstan.

That finding came under anti-dumping law, not sanctions law. The logic is the same. Wood routed through a third country is still the same wood. The Commission then issued a sanctions alert on plywood on 14 March 2025. That is an official finding, from the enforcing authority, in its own words.

You do not need the NGO numbers to make the argument. The EU has already made it.

Now the pivot.

By April 2026, the EU had adopted twenty sanctions packages against Russia. Twenty. That is not three waves of sanctions. That is a continuous process of redrafting. And the most useful tool for this story is not a product code. It is one short article.

Article 12 has been in the regulation since 2014. It bans taking part, knowingly and intentionally, in circumvention.

Regulation (EU) 2024/1745, on 24 June 2024, rewrote Article 12. Now it also covers people who see the risk and go ahead anyway. The Council gave its reason. It wanted the text to match a ruling of the EU Court of Justice.

The Council also spelled out a second point. You cannot claim you did not know if you skipped basic due diligence. Information that is public or easy to find counts.

Read what that does. It stops asking only what the product is. It also asks what you knew, and what you should have checked. That is a completely different kind of rule. A product list is checked at a border. A knowledge test is checked in your files.

Under a product list, your defence is the code on the invoice. Under a knowledge test, your defence is your documentation. What you asked. Who you asked. What answer you got. What you did when the answer looked thin. The product list follows the goods. The knowledge test follows the buyer.

The compliance burden moved. It moved from the customs desk to the purchasing office.

Worth noting what the newest package did not do. The twentieth package was adopted on 23 April 2026. Its new import bans cover metals, chemicals and minerals. Its new export bans run from rubber to tractors. It added no wood.

It did something else instead. For the first time, the EU used its anti-circumvention tool against a third country. The target was Kyrgyzstan. The Commission said it failed to stop EU machine tools reaching Russia. Telecom equipment too. That fits everything above. The list is no longer where the action is.

It would be easy to read all of this as a regime that did nothing. That reading is wrong. ForestryBrief's own reporting is where I would point.

In EFP #77 and #78 we covered the position of Russian producers. That was after the European market closed. Two things stood out.

Transport cost rose sharply. Shipping sawn timber averaged roughly 30 dollars per cubic metre in 2025. It then reached around 70 dollars. Wood Central reported those figures in April 2026. That is not a rounding error. It is a structural change in the economics of every shipment.

The buyer mix changed too. China became the main remaining outlet for Russian sawn timber. That door is narrowing as well. Wood Central reports Russia's share of China's softwood imports fell 5.7 points in a year.

In EFP #68 we covered a separate pressure. Russian producers faced retroactive forest rent bills.

Put those together and the picture gets clearer. The sanctions did not stop Russian wood existing. They made it travel further, sell into fewer markets, and earn less. That is what a trade restriction actually does. It rarely eliminates a flow. It reprices one. Anyone who expected the wood to vanish misread the instrument. Anyone who says the sanctions achieved nothing has not looked at the freight bill.

Ukraine sits in this story twice, and the two roles pull against each other.

In part one I gave you the damage figures. Forest Europe counted more than 2.5 million hectares of forest affected. Roughly half a million hectares hold mines.

Other measures run higher or lower. It depends on what gets counted, and when.That is the damaged party.

Now the guardian.

Ukraine has restricted raw timber exports since 2015, under Law 325-VIII. The ban ran for ten years. Now read the species split, because most coverage misses it.

The ten-year clock started in November 2015 for every species except pine. Pine got a later start date, 1 January 2017. So the non-pine moratorium expired on 1 November 2025. The pine ban runs on past it. Most coverage stopped at that expiry and reported a liberalisation.

Look at what replaced it. On 31 October 2025 the government announced export licensing with a zero quota. It applied from 1 November. The day the moratorium ended. Prime Minister Yulia Svyrydenko put it plainly. The decision "provides for the licensing of exports — a zero quota until the end of the year." The Cabinet met again on the last day of 2025. It extended that regime through the end of 2026. A zero quota is a ban wearing different clothes. The instrument changed shape. The effect continued without interruption.

This is worth understanding properly, because it is a pattern you will meet again. A restriction can expire on paper and persist in practice. Anyone tracking European wood supply by watching statute end-dates will get this wrong.

Then there is the reconstruction question. Here I have to tell you what is missing. Ukraine's total assessed recovery needs stand at 587.7 billion dollars over ten years. That comes from the RDNA5 assessment, published on 23 February 2026. Rebuilding on that scale consumes enormous volumes of timber. Roof structures. Formwork. Joinery. Flooring. No published estimate of that timber volume could be found. Not a contested estimate. Not a range. Nothing. Europe's largest reconstruction need has no public wood demand figure attached.

One more thread from part one, now finished.

When Russian gas supply to Europe was cut back, wood absorbed part of the shock. Households burned more. Heat plants burned more. Wood was the backstop.

Now recall what Finland's own government publishes. Its Government Report on Security of Supply is explicit. There is no statutory obligation to stockpile wood fuels.

Finland's state emergency reserves hold crude oil, petroleum products, coal and natural gas. They hold grain, seeds and medical supplies. Fuel peat has been stockpiled as an emergency heating measure. Wood chips and firewood are not held.

Finland runs one of Europe's most developed preparedness systems. Its National Emergency Supply Agency has a forest pool. The pool secures the mills. Nobody stockpiles the fuel. There is a reason for that, and it is honest. Wood chips degrade. They lose energy content and they can self-heat in storage. Wood is genuinely harder to stockpile than coal.

But notice what that argument concedes. It explains why there is no reserve. It does not make the reserve exist.

Europe leaned on a fuel it does not hold in reserve. That worked, and the winters passed. It worked because the forests were there and the supply chains held. That is resilience by good fortune and good forestry. It is not resilience by design.

Briefly, because there is less here than you might expect.

The EU's Foreign Direct Investment Screening Regulation was revised. The new version is Regulation (EU) 2026/1386. The Council adopted it on 8 June 2026. It entered into force on 16 July 2026. It applies from 17 January 2028.

Forest assets are long-duration and strategically located. That is exactly what screening regimes exist for.

No forest-specific screening decision could be found in the public record. That may mean nothing has been blocked. It may mean decisions are not published in a form that names sectors. I could not distinguish between those two, and I am not going to guess. Flag it as an open question rather than a finding.

The Butterfly Effect series started with one argument.

Society asks forests to do everything at once. Store carbon. Hold biodiversity. Deliver returns. Replace fossil materials. Survive a changing climate. The gap between what is expected and what reality allows is where the risk sits.

Geopolitics adds a line to that list, and it is a demanding one. Be a strategic reserve. Be a defensive barrier. Be an energy backstop. Be a sanctions compliance surface. Be a reconstruction supply chain. All at once. All from the same hectares.

And here is what these two issues together actually show. Europe's forests did all of that. Through the gas shock. Through a fortification programme. Through twenty rounds of sanctions. Nobody planned it. Nobody budgeted it. Nobody wrote it down.

It held anyway.

I promised you a reason to stay to the end. Here it is. A knowledge test sounds frightening. It is actually the best thing that could have happened to a well-run operator.

Think about what Article 12 asks. Where did this wood come from. What did you ask your supplier. What documents did you get. What did you do when something did not add up.

Now think about what EUDR asks, before 30 December 2026. Where did this wood come from. What is your due diligence statement. What is your risk assessment. What did you do about it.

It is the same infrastructure. And note who that catches.

EUDR gives most micro and small operators until 30 June 2027. That extension does not cover products the old EU Timber Regulation covered. For those wood products, 30 December 2026 applies whatever your size. So the convergence lands on the whole wood sector at once. Not only the large operators.

Every operator placing wood on the EU market is building a chain of custody. Documented, geolocated, supplier-verified. A deforestation regulation requires it. That system answers an Article 12 question almost as a by-product.

Two regulations. Two entirely different policy purposes. One filing cabinet. The sector has spent three years describing EUDR as pure cost. For the operators who build it properly, it is also the strongest sanctions defence available.

That is not a consolation prize. Documentation is the only asset that answers both questions.

It cannot tell you whether your supply chain carries a third-country origin question. It cannot tell you whether your due diligence file would survive an Article 12 enquiry. It cannot tell you what your buyer will ask you for in 2027.

Those answers depend on three things. What you buy. Where you buy it. Who you sell to.

An operator importing panels faces one question. A forest owner selling logs domestically faces another. A fund holding processing assets across four jurisdictions faces a third.

The general picture is free, because everyone needs it. The specific picture is a service, because it only applies to you. Want to know what this means for your own supply chain? Write to [email protected].

Part one — the legal vacuum

Part two — sanctions and resources

Prior ForestryBrief coverage referenced: European Forestry Pulse #68, #77 and #78; ForestryBrief Professional #28.

🦋 Butterfly Effect #5 — Climate

Geopolitics moves fast. A sanctions package lands in a day. A border programme starts in a spring.

Climate does not. It moves on rotation time.

Next in the series. What happens when the species you planted stops matching its ground.

Sooner or later a customer asks where your wood came from.

You get one answer. It happens in a corridor, or on a call, with no notice. "We comply with all regulations" is true and it convinces nobody. There is a better answer. It is short, and you can build it in advance.

Part 1 covers the questions you will be asked without warning.

Origin is a valuation input, not a paperwork detail.

Two mills with identical output can carry different risk. The difference is where the fibre came from and how well that is documented.

Change nothing about the trees. Change the strength of the origin file. The asset is worth something different.

I wrote the Forest-Investment Dictionary with Danish forest economist Anders Tærø Nielsen. It has 151 pages, 11 chapters, 14 printable tools, and 3 calculators. Investors learn to read a forest. Foresters learn to read a term sheet.

When the market turns, the people who can read the numbers make the better calls. The price is €99. Get yours below.

This issue is late because I was finishing this book.

A filing cabinet is not a personal skill. It is an organisational one. Somebody has to own it. Somebody has to approve what goes out. Somebody has to answer when a buyer asks. Most forestry organisations have never named those people.

I wrote The Organization, Part 3 of the Playbook trilogy. It has 165 pages, 10 chapters, 10 printable tools, and a survey. It shows what it takes to be heard, and who does the work.

Almost nobody in European forestry publishes what communication costs. The survey inside starts the count. The price is €149. Get yours below.

European forestry needs better communication and smarter capital. We deliver both.

Intelligence: EUDR compliance, timber market analysis, carbon market monitoring, forest investment due diligence.

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Until Tuesday!

Wish you all the best: Peter

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