Karita Kinnunen-Raudaskoski
Every year in Finland, the equivalent of 362,000 full trailer combination trucks – each weighing 60 tonnes – worth of wood is burned, releasing vast amounts of smoke and greenhouse gases into the atmosphere. Forests are the cornerstone of our national wealth and a vital part of our identity. Yet far too often, this valuable resource ends up in the furnace.
The above estimate is based on data from the Natural Resources Institute Finland (Luke), which shows that in 2023, 21.7 million tonnes — or 61% — of all dry wood used in Finland was burned for energy. Most of this came from the forest industry’s side streams and was incinerated to produce heat and power. The situation is similar across the EU: around half of all harvested wood is used for energy production, even though much of it could be used as raw material.
What, then, is driving such vast energy consumption in our societies? In the EU, over a quarter (26%) of total energy consumption comes from households, and two-thirds (64%) of that is used for heating. At the same time, three-quarters of the EU’s building stock remains energy-inefficient. Under the revised Energy Performance of Buildings Directive (EPBD), Member States are now required to work towards a zero-emission building stock by 2050. Achieving this goal will clearly demand new, energy-efficient insulation solutions. At the same time, two key objectives must be emphasised: raising environmental standards to strengthen sustainability and competitiveness, and fostering innovation to develop increasingly advanced, efficient, and durable insulation materials.
However, promoting natural fibre-based insulation may require tailored policy measures and incentives to address their challenges and improve market competitiveness. This will ensure that the transition towards a low-emission building stock supports both technological progress and the responsible use of natural resources.
Raising the Value of Wood to a Sustainable Level
Wood fibre-based insulation materials improve building energy efficiency, store carbon within structures, and reduce the emissions associated with burning wood. As a climate measure, they are highly effective — while also increasing the value of wood as a material.
A study published in early 2025 (Schulte & Jonsson, SLU) compared two uses of wood: for insulation and for pellet-based heating. The results are striking. After just four years, less raw wood had been consumed for insulation than for ongoing pellet combustion. Over a 35-year period, burning wood pellets produces 21 times more carbon dioxide and fine particle emissions than using wood fibre for insulation.
We must also generate greater value from the forests we harvest — both in euros and in overall wellbeing. The decline in paper exports and the rise in pulp exports have shifted Finland’s forest sector towards lower value-added products. This persistent low value has long been one of the key structural challenges facing Finnish exports.
Today, the average value of forest industry products is less than one euro per kilogram — significantly below the national average of €1.80 per kilogram for Finnish goods and services exports. For comparison: at its peak, Nokia’s mobile phones had an export value of around €500 per kilogram, while Denmark’s leading export products — insulin and weight-loss drugs — are valued at approximately €100,000 per kilogram.
If the value of wood-based products could be raised to just €2–3 per kilogram, Finland’s forest export revenues could double or even triple — without increasing harvesting volumes. A product worth less than one euro per kilo can hardly be considered a national treasure.
Innovation is Emerging – Now We Need Resources
Promising solutions are already on the horizon, as dozens of start-ups and industrial initiatives are introducing wood-fibre innovations into entirely new sectors. Wood fibre can be used to produce insulation boards and textile fibres, while its components — hemicellulose and lignin — can be refined into adhesives, coatings, and raw materials for the pharmaceutical, food, and cosmetics industries. Processed lignin can even serve as a carbon material in battery cells. Some of these innovations are already progressing from laboratory research to pilot projects and commercial-scale production.
Start-ups play a crucial role in developing and commercialising new wood-based innovations. Alongside them, Finnish companies currently invest around €5.4 billion in research and development, which is less than 1% of their combined annual turnover of €550 billion. To reach Finland’s target of raising total R&D investment to 4% of GDP by 2030, a significant increase in private-sector contributions will be needed — both from established corporations and from the start-ups already on a growth trajectory.
Research, industrial development, and global trends all point in the same direction: wood should primarily be directed towards high-value material uses — not burned for energy. This way, we can create more value from the same timber with fewer harvests and lower emissions. The forest industry’s role as a cornerstone of Finland’s welfare state needs to be reimagined — to generate greater prosperity with fewer resources.
There are more than 600,000 private forest owners in Finland, together holding around 60% of the country’s forest land. They have both the right — and the responsibility — to seek a more sustainable and valuable return on their assets. As the owner of a small, inherited forest plot myself, I hope that none of my trees will go up in smoke, but instead become part of new, sustainable products that help build a better future for both Finland and the world.
Karita Kinnunen-Raudaskoski is Fiberwood’s CTO
References:
Schulte, M., & Jonsson, R. (2025). The heat is on: A study comparing the use of wood for insulation and fuel. Swedish University of Agricultural Sciences (SLU), Department of Energy and Technology.
Pavel, C.C., Blagoeva, D.T. (Revised edition 2018): Competitive landscape of the EU’s insulation materials industry for energy-efficient buildings, Joint Research Centre, the European Commission’s science and knowledge service, JRC Technical Reports
Peltola, A. (2025). An increasing share of wood’s dry matter ends up as energy. Natural Resources Institute Finland (Luke).
Original title in Finnish: Yhä suurempi osa puun kuiva-aineesta päätyy energiaksi.
Palmén, J. (2024). Denmark’s pharmaceutical miracle exceeds expectations – Novo Nordisk sold €5.9 billion worth of weight-loss drugs. Kauppalehti.
Original title in Finnish: Tanskan lääkeihmeen tulos oli odotuksia parempi – Novo Nordisk myi laihdutuslääkkeitä 5,9 miljardilla eurolla.
