Engineered Wood: Pioneering Sustainable Architecture for the Future

January 14, 2025
Engineered Wood: Pioneering Sustainable Architecture for the Future

As the dawn of the Neolithic Revolution marked humanity’s shift from hunter-gatherer lifestyles to permanent settlements, wood became a foundational building material. This change, combined with the rise of agriculture, laid the groundwork for modern civilization. For millennia, timber served as the primary construction material until the Industrial Revolution admired the emergence of concrete and steel, which combined the strength and durability of stone with the versatility of wood. This shift dramatically changed the landscape of construction materials, with concrete’s share soaring from 19.8% in 1900 to 76.3% by 2015 and steel consumption escalating from 74 million to 444 million tons over the same period. Consequently, timber’s role in construction dwindled from 19.8% to a mere 2.8%.

Timber’s Renaissance: Innovations in Sustainable Construction

Environmental Impact of Traditional Materials

The broad adoption of concrete and steel transformed global architecture, allowing the development of safer, more durable homes, as well as previously unfeasible structures like skyscrapers and vast transport hubs. However, this progress came with a significant environmental cost. The buildings and construction sector is the leading source of greenhouse gases, contributing an estimated 37% of global emissions. Given the urgent climate crisis, both policymakers and companies targeting net-zero emissions are increasingly focusing on embodied emissions from construction materials. Beyond using more recycled materials and reducing overall material usage, a powerful solution lies in substituting concrete and steel with sustainable alternatives like wood. Together, steel and concrete account for over 10% of global carbon emissions.

Benefits of Wood as a Sustainable Alternative

Wood, on the other hand, is renewable, can be sustainably grown, and provides unique carbon benefits. A single cubic meter of engineered wood products (EWPs) can store 1 ton of CO2 and avoid over 2 tons of emissions compared to concrete. Unlike steel and concrete, which are net emitters of CO2, wood can be carbon-negative, sequestering CO2 long-term and offering superior recyclability and reuse potential. Recent innovations in EWPs are revolutionizing modern construction by enabling the creation of timber skyscrapers through industrial prefabrication techniques, which involve manufacturing wood components in factories and assembling them on-site. This process reduces waste, enhances safety, and accelerates construction timelines. Timber’s inherent lightweight, elastic, and flexible qualities make it particularly suitable for earthquake-prone regions, offering resilience and sustainability.

The Emergence of Engineered Wood Products (EWPs)

Evolution and Types of EWPs

Wood has evolved significantly since the Industrial Revolution. In recent decades, a new category of construction-ready wood, engineered wood products (EWPs), has emerged to spearhead timber’s resurgence. Examples include laminated veneer lumber (LVL), glued laminated timber (glulam), and cross-laminated timber (CLT), which are revolutionizing the utilization of timber in construction. These materials boast enhanced strength, durability, and resistance to warping and decay compared to traditional wood, enabling their use as replacements for concrete and steel in structural elements. This makes them suitable for beams, rafters, floors, walls, and roofs in both residential and high-rise buildings.

Advantages and Applications of EWPs

Utilizing a wood-based structural frame could reduce overall material consumption in construction by up to 50% and decrease the structural frame’s weight by up to 70%. EWPs present additional benefits, including sound absorption, insulation, and a biophilic aesthetic, positioning them as a sustainable and efficient alternative to conventional building materials. Recent advancements have shown that EWPs can be effectively employed in high-rise buildings, challenging the traditional dominance of steel and concrete. Furthermore, the flexibility and ease of design customization with EWPs provide architects and builders with a versatile material that can meet diverse construction needs while adhering to stringent sustainability standards.

Regulatory Incentives and Market Trends

Impact of Economic Factors on Timber Demand

The demand for timber closely follows construction and renovation rates, which have recently been impacted by high interest rates and inflation affecting house-building projects. However, construction rates are projected to rebound by 2025 due to reduced borrowing costs, improved credit conditions, and increased investments in large infrastructure projects supported by industrial policymaking. For example, in Europe, approximately 20% of the 2020 building stock is forecast to be renovated by 2030. Additionally, the demand for mass timber – EWPs designed for structural use such as CLT, glulam, and LVL – is expected to rise by 49% by 2050.

Influence of Environmental Regulations

The potential imposition of carbon taxes may further propel EWP adoption by making high-emission materials like concrete and steel pricier. New and upcoming environmental regulations also indicate promising future growth for EWPs. For instance, the European Union’s Energy Performance of Buildings Directive (EPBD), set to become mandatory later this decade, will introduce standardized sustainability measurement and certification schemes for buildings, incorporating life cycle emissions reduction targets. These regulations will likely encourage a widespread shift towards low-emission, high-performance building materials such as EWPs, driving innovation and market expansion in the construction sector.

National and Regional Policy Developments

Examples of National Policies

Many countries are also establishing domestic regulations to drive timber demand. France, for example, has introduced a cap on a building’s emissions, covering both the embodied emissions during construction and process-related emissions calculated over a 50-year lifecycle. Other nations, including Denmark, Finland, Sweden, and the US, are adopting timber-friendly policies involving emissions limits, minimum bio-material mandates, and changes to building codes to permit the use of EWPs in taller structures, leveraging their superior strength and structural properties. These regulatory frameworks are designed to not only reduce carbon footprints but also stimulate the growth of sustainable construction practices.

US Initiatives and Investments

Additionally, the United States has allocated USD 5 billion for low-carbon infrastructure procurement under the 2022 Inflation Reduction Act. Several states, including California, Colorado, and New York, have enacted procurement policies aimed at reducing embodied emissions, incentivizing the adoption of low-carbon materials like EWPs in both public and private construction projects. These policy developments signal steady growth in EWP demand, with national and regional initiatives playing a critical role in shaping the future of sustainable architecture. Moreover, investing in the timber supply chain, including implementing low-emission transportation methods for timber, can indirectly enhance sustainable supply, ensuring long-term provision for the ever-increasing demand.

Sustainable Timber Supply: Challenges and Opportunities

Addressing the Balance Between Supply and Demand

While EWPs offer potential for carbon storage in buildings, forests play a crucial role in sequestering CO2 from the atmosphere. To maintain this balance, it is essential that EWP demand aligns with a sustainable wood supply that preserves forests’ carbon sequestering abilities. Currently, sustainable timber production in the EU supports around 522 million m³ of wood products annually, sufficient to construct over 1,200 Empire State Buildings or 71,500 Eiffel Towers. Some countries are enhancing this supply through investments in forest regeneration, upgraded mills, and advanced processing facilities, alongside EWP innovations to maximize the sustainable use of wood. However, sustainable wood supply growth is projected to increase by just 5% in the near term, while timber demand across various industries exceeds this limited supply and continues to rise.

Solutions for Sustainable Timber Production

In the EU, only 10% of the wood supply is used in construction, while the majority is allocated to paper and packaging (40%), fuel (25%), and other sectors like furniture and exports (25%). This imbalance between sustainable supply and demand poses significant challenges, including deforestation, prolonged transportation times, increased emissions, and environmental impacts from illegal logging. Nevertheless, incentives to use timber in construction are prompting governments and businesses to address supply and demand issues. The solutions are straightforward: better forest management practices can ensure sustainable supply and reduce biodiversity loss, while enhanced tracking systems can help combat illegal logging and deforestation. Additional measures, such as more recycling, waste reduction, and reduced demand from other sectors, can also alleviate pressure on forests.

Investment Opportunities and Future Projections

The Growth Potential of Timber Investments

The momentum behind EWPs is generating valuable investment opportunities as sustainable supply challenges are addressed. With policy changes, carbon pricing, and consumer pressure driving the demand for greener materials, timber, particularly EWPs, is expected to grow by 3–4% annually, expanding its global market from 111 billion tons today to 163 billion tons by 2030. This reflects timber’s rising prominence as a sustainable alternative to traditional materials like concrete and steel. Timber’s growth will be driven by increasing regulations and demand for resource efficiency. Large, vertically integrated companies are well-positioned to capitalize on these shifts as the construction sector moves towards low-emission, high-carbon-storage materials like EWPs, which are set to rival traditional materials in both performance and sustainability, making them attractive targets for investment.

Investors’ Perspective on Sustainable Timber

From an investor’s perspective, Lombard Odier’s outlook for timber is largely influenced by decarbonization policy and regulation, specifically Target Net Zero commitments, which are expected to magnify the demand for timber products like EWPs as effective substitutes for fossil fuel-based materials like steel and concrete. New EWPs, such as CLT and other laminated lumbers, offer improved sturdiness and durability compared to traditional lumber products, making timber a more viable construction option and presenting a compelling opportunity for investors aligned with sustainability trends. The potential for timber investments is enhanced by the growing public awareness and commitment to environmental stewardship, ensuring that sustainable architecture will remain a priority for future developments.

Conclusion

Wood has seen significant advancements since the Industrial Revolution, particularly in the last few decades with the advent of engineered wood products (EWPs). These innovative materials, such as laminated veneer lumber (LVL), glued laminated timber (glulam), and cross-laminated timber (CLT), are leading the way in modern timber construction. Engineered wood products are crafted to offer superior strength, durability, and resistance to warping and decay, making them a viable alternative to traditional construction materials like concrete and steel.

These advancements in engineered wood have expanded its application in various building elements, including beams, rafters, floors, walls, and roofs. This versatility has led to their use in both residential and high-rise buildings, showcasing timber’s renewed importance in contemporary architecture. In residential constructions, engineered wood products provide excellent structural support and aesthetic appeal, while in high-rise buildings, they offer a sustainable and strong alternative to metal and concrete.

The resurgence of wood as a primary construction material signifies a shift towards more sustainable building practices. The ability of EWPs to combine the natural aesthetics of wood with enhanced performance characteristics positions them as a critical component in the future of construction. Timber’s return, bolstered by these advanced materials, represents not just a nod to traditional craftsmanship but a leap forward in building technology.

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