Deep Thaw Below Arctic Circle Risks $30 Billion Nordic Industry
Deep Thaw Below Arctic Circle Risks $30 Billion Nordic Industry
(Bloomberg) -- The forest floors below the Arctic Circle are usually frozen solid this time of year, hard enough to support the giant timber machines needed to harvest their wood.
But that’s changing, according to the foresters who work the land in Finland and Sweden. Unusually mild winters are turning once icy grounds into thick layers of mud capable of swallowing up the 25-ton vehicles used to gather the materials that go into pulp, paper and packaging.
“We will see more and more of these difficult conditions,” Uno Brinnen, head of forestry at Sweden’s BillerudKorsnas AB, said in an interview. “It will always shift between warm and cold winters, but the long-term trend seems clear.”
Temperatures across large swathes of Sweden were as much as 3 degrees Celsius (5.4 degrees Fahrenheit) higher than normal in December and January, according to the Swedish Meteorological and Hydrological Institute. That warming forms part of a trend that’s likely to persist, according to SMHI, whose scientists expect temperatures to continue rising over the next six decades because of climate change.
The travails increasingly experienced by Nordic foresters underscore the economic impacts of climate change. Even as warming temperatures in and around the Arctic Circle frees waterways and reveals new paths to exploit natural resources, countries and companies in the region are being forced to adopt new ways of conducting traditional business.
For Swedish and Finnish companies like BillerudKorsnas, Holmen AB, Stora Enso Oyj and UPM-Kymmene Oyj, the changing climate poses major challenges because if the ground doesn’t freeze enough to support the heavy vehicles used for harvesting, companies can’t get to the raw materials they need to do business year round.
“The high water levels after the wet and mild autumn and winter creates a tough situation for the wood supply,” Sweden’s largest forest-owner association, Sodra AB, said in January, when it opted to harvest closer to major public roads in order to minimize the risk of driving over mushy woodlands.
The economic stakes are high. Forest industry products have for centuries been a pillar of the Swedish and Finnish economies. Exports of such goods accounted for 10 percent of Sweden’s total exports last year and 22 percent of Finland’s in 2016. The combined value of the forestry to the two Nordic countries is about 24 billion euros ($29.7 billion), according to Bloomberg calculations.
“The root cause of the shortage of pulp wood is the unusually wet and mild start of the winter,” said Swedish packaging giant BillerudKorsnas in January. The company, which gets some 75 percent of its raw material from Swedish forests, warned mild temperatures led to shortages in late 2017 and early 2018, resulting in an estimated negative impact of as much as 100 million kronor ($12.1 million) on first quarter earnings.
Later Winters
BillerudKorsnas has started to scan its forests with lasers to map out more sensitive areas and to try to find stable routes through woodlands, even when they’re wet. It has also started using bigger wheels and rubber tracks on some machines to reduce the damage they cause to the ground and forest growth, another problem stemming from the milder weather.
“Winters have started later in large parts of our world and it’s a lot of wood we want to get hold of when the grounds are frozen,” Stora Enso Chief Executive Officer Karl-Henrik Sundstrom said in an interview in Stockholm last month. "It’s something I think we have to get used to, work with and even adjust our harvest cycles.”
--With assistance from Raine Tiessalo
To contact the reporter on this story: Jesper Starn in Stockholm at jstarn@bloomberg.net.
To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Jonathan Tirone, Niklas Magnusson
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