Europe has set ambitious goals: a stronger economy, greater security, climate neutrality and more strategic autonomy. The question now is whether these ambitions will translate into investment, manufacturing and jobs in Europe.

The European Commission’s drive to cut red tape and strengthen competitiveness is welcome. But reality must now follow the rhetoric. European industries need a competitive and predictable environment in which they can invest, innovate and produce.

For the Finnish forest industries, the direction is clear: competitiveness and the green transition must go hand in hand. By replacing fossil-based materials with renewable European alternatives, the forest-based bioeconomy can strengthen Europe’s industrial base, reduce strategic dependencies and support economic resilience.

Resilient forests for a resilient Europe

Europe is increasingly suffering from devastating wildfires and other impacts of climate change. Active and responsible forest management is essential for strengthening forest resilience, reducing wildfire risks and limiting damage when fires occur.

Resilient forests require investment, expertise and active management.

At the same time, Europe needs a more credible approach to land use and forests in its climate policy. We welcome Commissioner Hoekstra’s recognition during his recent visit to Finland that the country’s circumstances must be fairly reflected when assessing its LULUCF obligations, including the impact of the end of Russian wood imports following Russia’s invasion of Ukraine.

The Finnish forest industries strongly support Europe’s climate objectives. But ambitious climate policy must be based on a robust and realistic framework.

Forest sinks are inherently less predictable than fossil emissions. They are increasingly affected by climate change, natural disturbances and changes in measurement methodologies. The LULUCF framework needs to better recognise these uncertainties and circumstances beyond Member States’ control.

Europe should prioritise reducing fossil emissions and replacing fossil-intensive materials with renewable alternatives, while strengthening forest growth and resilience through active and sustainable forest management.

Turn the green transition into industrial growth

Europe must progressively reduce its dependence on fossil-based materials. That requires stronger markets for renewable and recyclable alternatives.

A competitive circular economy must be built on both recycled and renewable raw materials. The forthcoming Circular Economy Act should therefore recognise renewable content alongside recycled content as a core principle. When a renewable solution can replace a fossil-based one, European policy should help make that transition happen.

Public procurement can play an important role. The Commission’s new Public Procurement Act is an opportunity to create lead markets for sustainable European products by enabling ambitious requirements for renewable and bio-based content.

Housing and construction offer another major opportunity. As Europe seeks to increase the supply of sustainable and affordable housing, EU policy should promote renewable and sustainably sourced construction materials, including wood-based solutions. This can reduce dependence on fossil-intensive materials while supporting European manufacturing and investment.

But stronger demand alone is not enough. Europe also needs competitive energy and operating costs, simpler and stable regulation, and strong incentives for innovation and decarbonisation.

Finnish forest industry companies already invest billions in renewable materials, circular solutions and lower-emission production. The challenge is to ensure that the next generation of industrial investment happens in Europe.

European competitiveness requires more than innovation. It requires manufacturing, investment and industrial scale-up in Europe. Europe must remain a place where renewable materials are not only invented, but also manufactured and scaled up.

The next EU budget should support this transformation. Funding should be technology-neutral and excellence-based, helping promising technologies move from research to first industrial deployment. Greater investment in biotechnology and the bioeconomy is needed to ensure that new renewable materials and technologies are developed, scaled up and manufactured in Europe.

Reward the frontrunners

Companies investing in Europe’s green transition need a framework that allows them to compete internationally.

The reform of the EU Emissions Trading System is an important opportunity to get this right. Effective carbon-leakage protection, including benchmark-based free allocation, remains necessary for internationally competing sectors as long as producers outside Europe do not face equivalent carbon costs.

At the same time, the 95% biomass rule must be fixed. Installations relying on biomass for more than 95% of their energy are excluded from the ETS and therefore cannot receive free allowances. This risks putting some of Europe’s lowest-emission industrial installations at a disadvantage.

Europe’s climate framework should reward early decarbonisation, not penalise it. It should also create incentives for the next generation of climate solutions, including permanent biogenic carbon removals.

Open trade requires fair competition

Europe also needs to defend fair competition internationally.

The Finnish forest industry supports open, rules-based trade and does not seek protection from genuine market competition. But open trade cannot mean accepting competition distorted by large-scale state intervention and subsidies.

The EU needs targeted and effective trade instruments to address unfair competition and maintain a level playing field for European industry.

From ambition to investment

Europe’s climate, competitiveness and security ambitions should reinforce each other.

A strong forest-based bioeconomy can reduce Europe’s dependence on fossil-based materials, strengthen strategic autonomy and sustain value-added manufacturing across the continent. Forest-based industries should therefore be seen not only as part of Europe’s climate agenda, but also as a strategic part of its competitiveness, industrial and security agenda.

Ultimately, there is a simple test for European policy: does it make companies more willing to innovate, decarbonise, manufacture and invest in Europe?

For the Finnish forest industries, delivering on Europe’s ambitions means predictable regulation, fair climate and trade policies, stronger markets for renewable materials and an investment environment that rewards companies leading the transition.

Europe has set the ambition. Now it must create the conditions to deliver it.