Thu. Jan 27th, 2022

An Amazon Prime documentary called Intelligent Trees contains the startling news that trees have the ability to defend themselves from predators in the same way that animals do.

This is not science fiction. Researchers investigating the deaths of hundreds of kudu antelopes in South Africa in the 1990s found that antelopes were killed by acacias that are part of their regular diet: trees flooded their leaves with amounts lethal poisonous tannins. Acacias even released ethylene gas into the air to warn nearby trees of imminent danger.

The experience of antelopes offers important lessons for humanity. If we mismanage the world’s forests, could we suffer the same fate as the unfortunate antelope?

Show the trees more love

According to the Food and Agriculture Organization of the United Nations, industrialized agriculture and urbanization have reduced the world’s forests by 129 million hectares over the past 25 years, an area equivalent to the size of South Africa.

As a result, the amount of carbon stored by the world’s forests has fallen by almost 11 gigatons, equivalent to about a third of the amount generated by human activities. This has led to a sharp increase in the concentration of carbon dioxide in the atmosphere.

With the world struggling to limit global warming to just 1.5 ° C from pre-industrial levels and reduce CO2 emissions by 45% by 2030, our failure in smart wood use is back increasingly dangerous. Trees can be our greatest ally in stopping global warming and environmental degradation. Wood provides a cost-effective means of reducing carbon emissions and also restores biodiversity while improving soil quality.

And hopefully, governments are starting to take note. In May, the UK government will announce the largest tree planting initiative in 50 years: in four years, the UK aims to double its forest planting to almost 75,000 hectares a year, or about 80 million trees, aiming for 143m trees by 2035.

The carbon storage properties of wood can be harnessed for use in a variety of sectors, including construction, textile manufacturing, food packaging, and food preparation. And demand will continue to grow because the combination of changing consumer tastes and stricter regulation is forcing manufacturers to cut the use of plastics and switch to sustainable alternatives.

This increases the demand for sustainable wood products, creating attractive opportunities in wood-related investments.

The history of decarbonization

In recent years, the carbon capture qualities of trees have been overshadowed by newer and more complex solutions, such as large-scale carbon capture and storage technology. It involves building a large-scale engineering facility to trap carbon waste from industrial plants and store it underground.

Not surprisingly, it requires a significant setup cost and can also lose up to 75% carbon per leak. According to several academic studies, reforestation is one of the most economical methods of carbon capture.

Trees are cheaper to plant and have 400 million years of experience in carbon capture. Carbon does not come out unless trees are burned. Research shows that during the first five years of growth, a young willow catches 140 kg of CO2, which offsets the emission of a car of more than 1,000 km.

When used in construction, wood helps save energy over the life of a building, as its thermal insulation properties are 15 times better than concrete and 400 times better than steel. Each cubic meter of wood used as a substitute for steel or aluminum reduces carbon emissions into the atmosphere by an average of 0.9 tons, even when the cost of processing is taken into account. and transport of wood, its carbon footprint is negative throughout its life cycle.

A study carried out in Germany found that the energy from fossil fuels needed to process and transport wood only accounts for 15% of the total amount of energy that is blocked. It is obvious.

Take a look at this space

The new technology, already versatile and renewable, makes wood even stronger, more durable and as fire resistant as steel. This is enhancing their credentials as a sustainable alternative to a wide variety of materials, with important implications for investors.

Technology has turned wood into a dynamic and fast-growing industry that includes not only cardboard, paper and pulp, but also clothing, packaging, personal care products and real estate.

The growth of some wood-related industries is remarkable. One of the fastest growing woodworking products is Cross Laminated Wood (CLT), a building panel made of sawn, glued and layered wood. The CLT market is expected to expand to $ 2.3 billion (£ 1.6 billion) globally by 2025, from the current $ 70 million, an annual increase of approximately 15%.

Some companies manufacture innovative textile fibers from refined wood pulp or dissolved wood pulp to produce viscose, tencel, and other materials that can be used in everything from gym suits to fire-resistant clothing.

Growing demand from emerging economies fuels a sustained expansion of the wood-based fiber market, which is expected to grow by 5-6% annually by next year.

Every day new uses of wood appear. Xylitol is a good example. The increasingly popular artificial sweetener, made from refined wood fiber, will become a $ 1 billion market by 2023, compared to just $ 115 million five years ago.

The opportunity marked

Wood offers an attractive and diverse set of investment opportunities. It may be a matter of time before it becomes ubiquitous: present in clothing, mid-afternoon snack ingredients, milk packaging, or buildings where you live and work.

And investment options in this space are growing. Passive investors can use the iShares S&P Timber and Forestry ETF, which provides exposure to about 30 companies operating in the space.

For those looking for a more active solution, the Pictet Timber Fund has been in existence since 2008 and offers a more diverse portfolio of wood value chain names. Other specialists include Gresham House, which has a wealth of forest and timber backgrounds.

Trees play a crucial role in maintaining the delicate natural balance. They are key to maintaining the health and longevity of the planet. And they are the antidote to some of the biggest environmental challenges our planet faces, such as the use of plastic and carbon offsetting. In our opinion, then, the more trees, the better



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