European trade and projections in forest-based feed-stocks

The purpose of this study is to estimate the intra EU trade value of wood products and examine the factors affecting the trade flow. A gravity model is used to estimate the factors affecting the trade flow. The study uses a panel data set, with fixed effects, on trade in two forest products between 28 EU member countries over the period 2005–2014. The forest products are woodchips and particles (HS4401) and industrial roundwood (HS4403). For HS4401, the result suggests that the GDP of both the exporting and importing countries affect the trade flow positively (0.64 and 0.36, respectively). For HS4403, the GDP of the exporting countries affect have a negative effect (?0.69), while the GDP of the importing countries have a positive effect (0.80). In a second step, the estimated parameters are used to forecast the trade up until year 2030. The forecast suggests an increase in the trade by 47 per cent. This suggests an improved efficiency in reaching the EU climate and energy targets. That is, the trade in biofuels is expected to increase due to economic growth, which in turn works towards achieving the renewable and CO₂ emission targets in Europe.