The study "The heat is on", conducted by researchers from the Swedish University of Agricultural Sciences (SLU), is using Germany as an example to compare the impacts of using wood for insulation versus burning it as pellets for heating. The findings are clear: using wood for insulation leads to dramatically lower greenhouse gas emissions, better air quality, and a more efficient use of resources. Over a period of 35 years, using wood for insulation rather than fuel (wood pellets) offers comparable heat benefits while using nine times less wood, and releasing 21 times less greenhouse gases. The health benefits are also massive. Incredibly, due to current pricing conditions, installing this wood as insulation is still 16% more expensive than burning it, even after 70 years of use.

Michael Betz, COO North-East Europe of the Sonae Arauco Group, said: 'The study reinforces that not only in Germany, but all over Europe, it’s paramount to rethink how we use wood, that should firstly be used in far more sustainable and lower-emission functions in its life cycle, such as insulation and construction, before being used for combustion as the very last step. Wood fibre insulation materials, such as those we produce under the Agepan brand, come from sustainably managed forests. Unlike wood used for energy, which releases its stored carbon upon combustion, our wood-based solutions store in carbon throughout their entire lifecycle. As a result, the products we produced in 2024 for the construction, furniture and interior design industries will store around three million tons of CO₂ over their lifecycle. In addition, at Sonae Arauco, a relevant part of our products’ portfolio can be recycled and returned to the manufacturing process at the end of their lives.

Starting with the most efficient, sustainable use

The cascading use of the valuable raw material wood follows the European Union's RED III legislation, which requires member states to ensure that woody biomass should be used according to its highest economic and environmental added value in the following order of priorities: wood-based products, extending the service life of wood-based products, re-use, recycling, bioenergy and disposal.

Adding to the importance of using wood hierarchically, thus ensuring that we enhance this raw material’s environmental benefits, the study also shows that bio-based insulation, such as wood, reduces greenhouse gases when used instead of fossil or mineral insulation. And as the insulation material does not release airborne particles, it also improves air quality, benefiting residents' health.

Insulation of buildings across the EU varies significantly between Member States. While some countries, such as Germany, have high standards of energy efficiency and insulation, others have yet to catch up. “This disparity leads to higher energy consumption and missed opportunities to reduce emissions from wood use”, says Michael Betz. To address this, the EU has implemented the Energy Performance of Buildings Directive (EPBD), which sets regulations to improve energy efficiency in buildings. The ultimate goal is to achieve a zero-emission building stock by 2050.

Subsidising wood fibre insulation would reduce CO2 emissions

Based on their analysis, the study's authors, Maximilian Schulte and Ragnar Jonsson from the Swedish University of Agricultural Sciences, suggest reallocating bioenergy subsidies to help EU citizens insulate their homes, which could significantly reduce both air pollution and greenhouse gas emissions.

The Fern study was published February 2025 and is available here. For the calculations, the scientists focused on the German market because it plays a central role in the European Union in terms of both energy consumption and the use of wood resources. Germany is one of the largest consumers of wood pellets in Europe and has a significant biomass industry. Germany is also a pioneer in the energy transition, making it an ideal case study for analysing the environmental and economic impact of wood use.