Wood-based construction

Concrete alternatives

Sustainable products in construction

Three things are indisputable in Europe's transforming construction sector: construction is becoming more digital, more integrated and it will use greener materials.

Nordic and Central European countries have traditionally been strong in wood construction compared to the continent’s average. On the other hand, countries such as Great Britain, France and Germany undergo demographic changes and suffer from increasing constructions costs.

In September 2020, when EU President Ursula von der Leyen addressed the construction sector for its potential to turn “from a carbon source into a carbon sink” using biogenic building materials, the expectations for a “wood-based post-Covid recovery” were set high. Now, a year later, has the construction market met the expectations?

The post-Covid recovery

The Central European construction industry is in a good position. It is one of the sectors of economy that suffered least from the pandemic. Following the national management policies, new housing construction in the UK fell by more than 25% in 2020, while the drop was only 12% in France. The German construction sector only fell by less than 1%. In 2021, a corresponding recovery has been observed in all three countries.

New housing construction development in the UK, France and Germany
New housing construction development in the UK, France and Germany

The use of sustainable products in the construction sector is no longer a niche, but has become a serious alternative to concrete, steel, and petrochemical polymers.

Wood-based construction accounts for 5% globally (11% in the EU), and it shows positive trends towards substituting conventional materials. The wood construction quota has constantly been increasing in the three major European economies mentioned above, independent of crises and raw material availability.

The use of wood and wood products in construction differs due to the national industry structures, building codes and culture. While in France, the wood construction share of new residential construction has sharply risen to 10%, continuing its path, the German quota has been growing in small but steady steps, reaching 21% lately. The front-runner is the UK, where over 50% of all newly built houses are wood-based, driven by the popularity of timber framing.

Increasing demand for sustainable products

The total demand for wood products in the European construction sector accounted for more than 115 million m³ in 2019, of which 65% were used in Western Europe. The champions in volume are innovative sawn wood-based products, such as solid structural timber and cross laminated timber.

The demand outlook is not only positive for sawn wood: more than 80% of oriented strand boards (OSB) and 50% of plywood is used in construction in the UK. In France, some plywood goes to other end-uses, while OSB is mainly used in construction. German construction use accounts for around 70% of the OSB and plywood demand.

Although engineered wood and wood-based panels still represent small market shares, they make up ground on their way to substitute concrete and steel. Development of incentives in building codes offer upside potential for multi-storey and modular building methods, in which high material volumes are consumed.

Wood-based outperforms rivals for climate

The construction industry already accounts for 35% of global CO₂ emissions, and demographic trends underline the urgency to reduce its contribution to climate change. Following the urban population growth, 75% of the building infrastructure needed by 2050 must still be built.

Traditional building materials carry fossil emissions as an outcome of their raw material base and production processes, yet they store only negligible amounts of carbon. In contrast, every cubic meter of wood used as a substitute for another building material reduces emissions into the atmosphere through four mechanisms:

1. The longevity of wood increases and transfers the carbon sink from forests to the built environment.

2. The potential to substitute conventional building materials reduces emissions from fossil sources in steel and cement production.

3. Wood processing generates residues usable in other bio-based production processes or in biomass-based energy generation. Additionally, end-of-life waste wood may be utilised for energy generation, replacing fossil-based energy. The calorific value of spruce is half of that of fuel oil.

4. In the long run, transferring wood to long-lasting products fosters the carbon sequestration in managed softwood forests.

Building materials' carbon emission and storage capacity
Building materials' carbon emission and storage capacity (t carbon/t)

Trends accelerate

The cost structure of the wood processing industry differs notably from that of cement and steel producers. While only 3% of overall costs come from energy in wood industries, energy accounts up to 13% of cement and 20% of steel production costs. In the past, concrete and steel construction resulted in approx. 6% lower costs than a comparable wood construction.

With the planned expansion of the 4th phase of the EU Emissions Trading System (EU ETS) from 2021-2030 and the introduction of the national Emssions Trading System (nEHS) in Germany, an impact on construction costs per square meter is expected. In Germany, the cost increase due to rising certificate prices is compensated by a relief of the “EEG Umlage”, resulting in an expected slight net cost reduction, while energy intense industries will carry a net burden ten times higher than before. Home owners, architects and contractors have become aware of climate-friendly methods and they are likely to choose wood in the future, even purely from a cost perspective.

Climate change may not be stopped only by building with wood. However, alongside climate-smart solutions in energy, mobility and industry, sustainable wood products in construction are a significant part of the equation, and they will be in even greater demand in the future.

Stacked wood panels

AFRY Long-term Outlook: Wood-based panels and surfacing materials to 2025

Our latest AFRY Long Term Outlook publication, Wood-based panels and decorative surfacing materials to 2025, provides an overview of the market drivers, production and demand development, end-use applications, manufacturing costs and gross margins, and the industry structure/leading players globally.

Goran Schmidt - Consultant

Goran Schmidt

Consultant

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Frank Goecke - Director, AFRY Management Consulting

Frank Goecke

Director, AFRY Management Consulting

Contact Frank Goecke

AFRY is committed to protecting your privacy and keeping your personal data secure. We process personal data in accordance with the applicable laws, regulations and our privacy policy.