How firewood became the latest economic indicator 

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: John Letzing, Digital Editor, Strategic Intelligence, World Economic Forum

• Firewood prices have spiked in Europe ahead of a likely period of energy-related economic uncertainty.

• The demand comes as interest in the use of wood pellets for fuel was already growing.

• Higher wood costs are one example of the distortions being caused by supply chain issues and geopolitical tension.

The president of a country supporting Russia’s invasion of Ukraine, and weaponization of energy no longer being supplied to Europe, recently had himself filmed chopping firewood. “Europeans won’t be left in the cold,” he said through a smirk. “Let’s help our brothers.”

My mother-in-law was way ahead of him. She’d just bought a wood-burning stove for her house in Prague, and was stockpiling logs to feed it. This wasn’t unique or as demoralizing as some people might like. Just a practical response to a difficult situation.

In some ways the spiking demand for firewood in Europe serves as a leading economic indicator. The region’s braced for energy shortages now that a key source of supply, gas piped in from Russia, has run dry amid geopolitical friction over Ukraine – and a lack of immediate alternatives points to an uncertain state of affairs to come.

In Germany, the price of “firewood, wood pellets or the like” was up 86% last month compared with the same period a year earlier. In Bulgaria, the near-doubling of firewood prices fed into a recent decision to stop exporting wood to non-EU countries.

Someone recently told a radio station in Poland that it might now be cheaper there to chop up old furniture and burn it than to buy firewood. In the Netherlands, suppliers were already running out before summer’s end. Even in Switzerland, where the inflation rate has been relatively tame, the price of firewood was up by about 26% last month.

This stockpiling of firewood comes as the region’s interest had already grown in the use of wood pellets as a cleaner fuel alternative to coal (pellet consumption hit a new high in the EU last year). Overall supply in that corner of the market was squeezed recently by an EU ban on wood pellets imported from Russia, however.

Logs for heat and pellets for fuel are not the only wood products being impacted by geopolitics. The cost of toilet paper has spiralled in many places, as prices for the energy needed to cook up the required wood pulp have increased; one toilet paper maker in Germany has started trying to use coffee grounds as a pulp alternative.

The cost of living, environmental costs

Wood provides a particularly glaring example of the ongoing cost-of-living crisis impacting much of the world, as supply chain irregularities and conflict distort the value of everything from bread to used cars (the price increase last month for used cars in Switzerland: 16%).

Unusually-high demand for wood is not just an economic issue, however; it also has environmental implications.

In Hungary, a loosening of logging regulations meant to help meet the increased need for firewood sparked protests last month that drew thousands of people – some of them literally hugging trees.

Wood pellets have also been a source of concern. While burning wood as fuel has been touted as carbon-neutral, as long as the trees being used are replanted, serious questions have been raised about how clean and sustainable the practice really is.

Research has shown that burning wood for energy emits more carbon dioxide per kilowatt-hour generated than fossil fuels, making the speedy growth of new trees to absorb those emissions imperative.

“Cutting down forests for energy use is neither sustainable, nor does it help with our energy independence,” a German member of the European Parliament was recently quoted as saying.

The thirst for firewood has other implications; the air pollution caused by burning wood can be problematic, and firewood theft has become an issue. Bigger picture, high wood prices can incentivize overharvesting and illegal logging, and any wood that’s burned can’t be used as construction timber able to store carbon for long periods.

Still, a steady supply of wood logs promises to be key for the overall effort to limit energy use this winter, and nudge the region closer to energy independence from Russia (while European businesses have already notched tangible reductions in the use of energy, household habits have proven more difficult to gauge).

In France, for example, the government has called for a 10% reduction in energy use aided by changes in behaviour; as in neighbouring countries, firewood sales are up.

Of course, the country’s been here before, and not so long ago.

In 1974, amid a different sort of energy crisis, French President Valery Giscard d’Estaing tried to set a good example by refusing to heat a frigid Elysée Palace with anything more than firewood – regardless of who was coming over for lunch.

More reading on wood, sustainability and energy needs

For more context, here are links to further reading from the World Economic Forum’s Strategic Intelligence platform:

• How “green” are wood pellets as a fuel source? Many scientists and conservation groups say burning them is as dirty as coal, according to this report, and we may not have enough time left to comfortably wait for replacement trees to grow. (Wired)

• “Wood is infinitely useful.” Houses in the US built with wood store so much carbon, according to this study, estimates of future construction are important for understanding the country’s total carbon-storage capacity. (Science Daily)

• Where heating homes with firewood isn’t a stopgap measure – this piece by a resident of a village in Tripura, India describes the practical and cultural importance of firewood for locals. (India Development Review)

• About 64% of Belgians are afraid they won’t be able to pay their energy bills at a time when the average family is looking at an annual cost ten times higher than last year’s, according to this report. (Social Europe)

• “The danger of a blackout is real.” The head of Germany’s grid agency has warned that if all of the electric fan heaters purchased in the country so far this year are switched on in the case of gas shortfalls, it could spell trouble. (Clean Energy Wire)

• Symbolic but important – the Eiffel Tower is just one of a number of monuments and municipal buildings in Paris that will now turn their lights off early in a bid to help conserve energy, according to this report. (Smithsonian Magazine)

• This survey of European economists on policy responses to the energy crisis found that nearly half agreed with the idea of a windfall tax on excess profits at oil and gas firms, and nearly half strongly disagreed with capping consumer prices. (LSE Business Review)

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