European Union requirements have a very significant impact on both the forestry sector and other land-use sectors, as they attempt to achieve two opposing goals at once – maximising nature protection and carbon sequestration while preserving the competitiveness of the bioeconomy. On the one hand, the Green Deal and the Land Use, Land Use Change and Forestry Regulation, or LULUCF require stricter logging restrictions. On the other hand, wood is needed as a renewable resource to replace fossil resources in construction and energy. These contradictions create serious risks for the development of these sectors and significantly weaken competitiveness.
Biodiversity versus wood availability
The European Union's Biodiversity Strategy provides for the legal protection of at least 30% of land territory, introducing strict protection for primary and old-growth forests. Making forestry operations harder in old stands sharply reduces the availability of the most valuable roundwood on the market. Studies show that the integrated introduction of environmental requirements across Europe could reduce the potential for domestic roundwood harvesting by several tens of millions of cubic metres a year, creating a raw material shortage for local processors.
Carbon storage in forests versus the substitution of fossil resources, or the “cascading principle”
The LULUCF Regulation sets out member states' obligations to increase the net CO₂ removals of forests and soils. At the same time, the EU Forest Strategy encourages the use of long-lived wood products, for example in construction, to replace emission-intensive materials such as concrete and steel. Producing building materials requires harvesting the forest. If trees are left standing purely for carbon accounting, the capacity of the bioeconomy shrinks, and, moreover, due to natural processes under Latvia's climatic conditions, older forests can no longer sequester CO₂ as efficiently as young stands, creating a risk that overmature forests become a source of emissions.
Restrictions on the use of peat and organic soils
Brussels is demanding cuts to greenhouse gas (GHG) emissions from organic soils and peatlands used in agriculture and forestry. Bans on peat extraction and use directly threaten the horticulture and nursery sectors. Without quality peat substrates, it is not possible to efficiently grow new seedlings for forest regeneration, creating a dead end for raising forest productivity.
Impact on market competitiveness
Additional environmental monitoring, certification requirements and biodiversity conservation measures are driving up the cost of logging and land management. While European Union producers face strict restrictions on wood harvesting, wood products from third countries – Asia, Africa and South America, where environmental standards are lower – are flowing into the market, weakening the position of European companies. Disorganised and constantly shifting legislation creates legal uncertainty. Landowners and forest owners cannot plan long-term investments, for example in building forest roads or land drainage, because of the risk that a property could be subjected to a ban on economic activity at any moment, without fair compensation. It is clear that, because of excessive administrative and environmental pressure, Europe risks losing its sovereignty in the bioeconomy, making local producers less competitive on the global market. The European Union is already facing this today.
Economic forecasts across Europe
The decline in wood availability elsewhere in Europe and here in the Baltics has become one of the biggest economic problems in the bioeconomy. The latest scientific studies and industry forecasts for both 2030 and 2050 are already clearly outlining negative trends, driven by the European Union's strict environmental policy and changes in the regional market.
Implementation of the European Union's Biodiversity Strategy poses a direct threat to the “physical” availability of roundwood on the market. Modelling the expansion of protected areas, scientific institutes estimate that the European Union's total roundwood harvesting potential could fall by 9–48% by 2030. In the longer term, by 2050, this decline is forecast to be in the range of 11–58%, depending on how radically member states define the protection of “old-growth forests”.
This kind of decline in domestic supply creates a huge gap against rising demand, since Brussels's plans call for greater use of wood in construction to replace concrete and steel. Economists warn of a so-called “carbon and biodiversity leakage” effect. Calculations show that roughly 60–80% of the wood volume not harvested in Europe will be replaced by imports from, for example, South America and Asia, where environmental requirements are lower and forest management is different. As a result, environmental problems are not being solved but exported to other countries.
Structural change in Northern Europe
The Nordic countries, especially Finland and Sweden, which are Europe's leaders in the timber industry and pulp production, are facing an acute structural crisis. The situation has been further aggravated by the complete ban on wood imports from Russia and Belarus.
Studies show that forest resources in Northern Europe would technically be sufficient to maintain current volumes, yet economic availability is falling rapidly. New nature conservation requirements and strict logging restrictions are driving up the cost of logistics and work planning so sharply that many forest tracts are becoming economically unviable. Industry experts are already reporting sawmill closures and cuts to production capacity in Sweden and Finland, as mills are physically short of local softwood sawlogs to process at a competitive price.
Tension in the Baltic region and in Latvia
The Baltic states are the most vulnerable, since forestry and wood processing here play a strategic role in national GDP and the trade balance. Market data from recent years shows that sawlog and pulpwood prices in the Baltics have fully converged with Scandinavia; so the region's historical advantage – cheaper raw material – no longer really exists.
The volume of economically available wood in the Baltics is being significantly reduced by the creation of new nature reserves and micro-reserves. Industry leader AS “Latvijas Finieris” stresses that the shortage of wood resources has become a competitiveness issue for the whole of Europe. To keep their mills running, large Baltic companies are forced to wage a “fight for resources”, buying roundwood in parallel across all three Baltic states and Poland, as well as expanding purchases in the Nordic countries.
Additional risk comes from biological factors and the age structure of the forest. In Latvia and neighbouring countries, the net increment of productive growing stock is beginning to slow. If logging restrictions reduce timely, targeted reforestation with high-quality, improved planting stock, wood supply will see an even sharper decline after 2035, making local producers less competitive on the global market.
The pressure of European Union legislation and the Green Deal on agriculture and forestry has produced a strong backlash on the European political stage. In recent years, especially after the large-scale European farmers' protests and the strengthening of right-wing positions, a number of influential politicians and political blocs have come to prominence who are actively blocking and revising Brussels's decisions on land use.
The most prominent critics of Brussels policy on land use
The most prominent politician in this field is Manfred Weber and the European People's Party (EPP) group he leads. As leader of the largest group in the European Parliament, Weber has managed a strategic pivot, positioning the EPP as the “defender of rural communities and farmers”. Under his leadership, the EPP joined forces with right-wing conservatives to secure the rejection of the Forest Monitoring Regulation and a significant softening of the Deforestation Regulation (EUDR).
Next is the Finn Petri Sarvamaa, together with a notable group of Nordic politicians. Finnish and Swedish conservative MEPs are among the loudest critics of the EU Forest Strategy. They consistently defend national sovereignty over forests, arguing that Brussels must not dictate harvest volumes to regions whose economies rest on the timber industry.
Giorgia Meloni and the European Conservatives and Reformists (ECR) group, meanwhile, have taken a sharp stand against it, calling it an “ideological attack” on European producers and agriculture that threatens food security. Karol Nawrocki and Polish conservative politicians use sharp rhetoric against the Green Deal. Nawrocki and his allies are even promising to hold referendums against European climate policy, pointing to restrictions on forestry and agriculture that are destructive to Eastern Europe's competitiveness. Brussels's policy is criticised most sharply by the more radical right-wing forces in the “Patriots for Europe” and “Europe of Sovereign Nations” groups. France's Jordan Bardella and Germany's Alice Weidel completely reject the European Union's climate documents, calling them an “eco-dictatorship” that is destroying the traditional rural way of life and increasing energy dependence on third countries.
Characteristic features of the politicians' approach, and forecasts
The most significant feature is economic pragmatism versus “eco-ideology”. Critics stress that EU legislation is theoretical, drafted in city offices, and contains no real assessment of socio-economic impact. These politicians defend the principle of subsidiarity and firmly maintain that forests and land are a national competence, not a shared EU one. Brussels is accused of attempting to centralise control, for example through satellite monitoring and reporting obligations. The main argument in the fight against the regulations is “green bureaucracy”. Politicians point out that forest owners and farmers are being turned into clerks, forced to spend enormous resources on reporting instead of on real work. These politicians are successfully consolidating the rural vote, positioning themselves as the last line of defence against an “urban, narrow-minded, elitist approach” to nature conservation.
It is expected that the Brussels institutions will no longer push new, radical environmental restrictions on land use, instead focusing on simplifying regulations already adopted, setting exemptions and extending deadlines. The EPP's historic coalition with the social democrats and the greens on environmental issues has fractured. The EPP's growing cooperation with the right-wing conservative ECR and “Patriots for Europe” means that any attempts to expand nature reserves or tighten LULUCF targets will be blocked.
To ease discontent in rural regions, the European Union will be forced to redirect significantly more Cohesion and Common Agricultural Policy funding directly into compensation for restrictions on economic activity in forests and on organic soils.
Economic stagnation and pressure from global markets will force EU policymakers to acknowledge that sovereignty in the bioeconomy – local food, local wood, local energy – matters more than strict CO₂ removal targets “on paper”.
There has recently been a historic turning point in the development of European Union legislation – after prolonged pressure and sharp protests, the Council of the EU and the European Parliament have officially adopted substantial amendments and postponed application of the Deforestation Regulation, easing the administrative burden originally planned. A number of Latvian politicians have also been actively involved in this fight, taking positions that directly reflect the interests of the Baltic forestry and land-use sectors
The course of changes to the Deforestation Regulation
The initial version of the regulation demanded total, bureaucratically heavy-handed control at every stage of the supply chain. However, in response to enormous resistance from member states and industry organisations, the EU institutions approved substantial relief measures. The regulation's entry into force has been postponed, and large market players and companies will only have to comply with the new rules from 30 December 2026, while small companies have been given until 30 June 2027.
The biggest win is the rule that a Due Diligence Statement, or DDS, in the European Commission's TRACES system will only have to be submitted the first time a product is placed on the market or exported. Any further processing or trading of that wood or product – sawing, furniture manufacturing, resale – is fully exempt from the burden of submitting new statements. Small and micro-enterprises will not have to carry out the complex data entry and compliance certification themselves; this will instead be handled centrally by state authorities using national databases. To avoid placing an unnecessary burden on other sectors, certain printed paper products, such as books, newspapers and posters, have been excluded from the regulation entirely, in recognition of the fact that their impact on global deforestation is negligible.
The amendments oblige the European Commission to assess the need for even broader simplification of the rules
Latvia's political elite and its Members of the European Parliament, on the whole, project a fairly unified and pragmatic stance that aligns with the defence of the Baltic land-use sectors. In European debates, Latvian politicians actively argue that Latvia, thanks to the State Forest Service and Latvijas valsts meži, has had one of the strictest and most transparent forest accounting systems in the world for decades, stressing that Latvian forest managers must not be punished by global bureaucratic mechanisms that were really designed to control Brazilian rainforests or Indonesian palm-oil plantations. Latvia's Ministry of Agriculture, together with Finland, Sweden and Austria, forms the so-called “Forest Countries Coalition” in the Council of the EU. Direct, sustained political pressure has succeeded in convincing the European Commission that the TRACES IT system is not technically ready, and that implementing the regulation in its original form would paralyse wood exports.
The changes achieved mean that the Baltic and Northern European states have managed to shield the backbone of their bioeconomies from immediate administrative collapse. It is hoped that no new, radical restrictions are to be expected from Brussels in the coming years, since, given geopolitical and economic conditions worldwide, the political direction has shifted entirely towards preserving the European Union's competitiveness and security and towards reviewing existing green legislation. The Baltic and Nordic states have gained the time they need to integrate digital geolocation data into their supply chains without enormous financial losses.