Researchers have developed a blockchain-based system that could help close one of the European Union’s most persistent loopholes: the steady flow of illegal timber entering the bloc from Russia and Belarus.
The project, led by Kaunas University of Technology and Vytautas Magnus University, and published in the Journal of Industrial Information Integration, assigns each log a unique identifier and records every step of its journey—from permits to transport and sale—on blockchain. In simulation tests, it processed up to 550 transactions per second, while participants with higher sustainability scores achieved up to 95 per cent successful trades.
“We want to be certain that the wood we use does not originate from a hostile country, that trees are not cut unnecessarily, that environmental damage is properly compensated, and that the logs are processed using clean energy,” said Professor Rytis Maskeliūnas, the leader of the project. “To guarantee all this, we need a tracking chain that cannot be altered at any stage—and blockchain technology makes that possible.”
Smart contracts embedded in the system automatically validate each action, blocking attempts to cut without a permit or add fictitious suppliers. “A smart contract is essentially code running on the blockchain that automatically enforces specific rules,” Maskeliūnas explained. And unlike traditional monitoring tools, the system integrates sustainability into the trading process itself. Orders are matched not only on price but also on environmental criteria, giving harvested timber a competitive edge in a responsible way.
“Our model integrates sustainability directly into the trading process—it encourages market participants to act responsibly, because sustainably harvested or processed timber becomes more competitive.”
The timing is critical.
Since Russia invaded Ukraine, studies suggest that more than €1.5 billion worth of “illegal wood” has now infiltrated European supply chains, often through “friendly countries”, leading a coalition of Europe’s timber bodies to warn that unsuspecting traders could face criminal prosecution over the illegal trade in birch plywood.
Earlier this year, Wood Central reported that nearly half of the tested samples failed to match their declared country of origin, raising doubts about the credibility of sanctions and sustainability systems. Whilst FSC, the world’s “gold standard” for forest certification, earlier this month revealed “historic plans” to introduce digital traceability to combat fraudulent claims.
Last month, scientists working in the Congo Basin combined genetic markers, chemical fingerprints and isotopes to pinpoint the origin of tropical hardwood with striking accuracy. Analysing nearly 250 trees across Cameroon, Gabon and the Republic of the Congo, they placed 94 per cent of samples within 100 kilometres of their true origin. “This legislation requires that the exact origin of wood be reported when it enters the European market. But because of frequent fraud, authorities must also be able to independently verify the origin,” said Laura Boeschoten, a lead author of the study. “Our research shows that this verification can be highly accurate when different wood properties are combined.”
The push for greater traceability and transparency comes as European policymakers look to introduce the world’s most ambitious deforestation regulation – now expected to be delayed for another year – that will, for the first time, require traders to prove that imports are legal and not sourced from recently deforested land. As it stands, illegal timber remains one of the world’s most profitable environmental crimes, with INTERPOL warning that up to 30 per cent of global trade could be unlawful.
