This section presents two case studies examining the role of agency in green innovations from a sectoral point of view. This includes 1) a case study on ‘Innovation dynamics in wood construction in Sweden and Finland' and 2) a case study on ‘Nordic innovation systems dynamics in the protein shift’.

Wood is undoubtedly one of the oldest building materials and a key resource historically in the Nordic countries. As Andersson (2020 p. 57) puts it: “employing renewable, locally sourced, and strong yet light material, wooden houses have dominated the single-family housing market in Sweden for centuries”. In Sweden, the oldest surviving wooden buildings date from the 13th century (Swedish Wood, access: 02/10/2022). Given this background, it may seem slightly odd to talk of innovation and ‘green innovation’, in particular, in wood in the construction sector. However, as we see from Figure 5, wood construction has followed a long and winding road, composed of many setbacks and opportunities, to arrive at its current state. As a consequence of devastating fires in cities throughout Europe in the 1700–1800s, wooden buildings started to be considered a hazard, leading to a ban on multi-storey wood buildings. Finland (then part of the Russian Empire) banned wooden buildings of more than two storeys in 1856 (Suikkari 2007) and Sweden followed suit in 1874 (Swedish Wood, access: 02/10/2022). After more than a century-long moratorium, multi-storey wood buildings are experiencing a renaissance. The previous negative association to wooden buildings as fire hazards has been replaced by a more positive outlook, where wood is seen as a means to ‘greening’ the construction sector. 

The construction and life cycle of buildings are associated with 39% of global carbon emissions, of which about a third comes from building materials production (Rasmussen et al., 2021). In addition, the industry uses significant amounts of energy and mineral and metal resources during the construction and use phases of buildings (ibid.). Reducing the carbon footprint of the sector has, therefore, garnered considerable attention from policymakers. Novel regulations are being introduced to trigger and accelerate the transition of the industry towards low-impact practices and solutions. From January 2022, new regulations in Sweden and Finland require ‘climate declarations’ for all new buildings, which is a step in the right direction for setting limit values on new construction projects’ carbon emissions. These challenges represent an opportunity for the forestry industry, as building in wood significantly cuts the carbon footprint of construction. Assuming that wood is harvested from sustainably managed forests (although this is an increasingly contested issue), wood construction appears to be the most sustainable option for the Nordic countries. The processing and production of wooden building materials use less energy-intensive industrial processes than the extraction and production processes of cement and steel. Additionally, wood can store carbon over the lifetime of the building and possibly beyond since wood elements are easily reusable and recyclable. After two decades of slowly creating a market for multi-storey wood construction (MSWC) in the Nordic Region, these advances are now expected to rapidly expand and capture a sizeable market share over the coming years. 

In 1994–95, Sweden introduced the new Building Codes (BBR), which effectively annulled any restrictions on wood construction (Smart City Sweden 2020). This legislative reform, however, was not purely motivated by the opportunities offered by wood materials in construction. Instead, it was part of a legislative harmonisation process required for EU accession (Andersson, 2020 p. 61). This sudden shift in the ‘rules of the game’ generated high expectations within the forestry and wood industries (Interview 4.1). However, it soon transpired that developments progressed at a slower pace than expected. After over a century of cement and steel prevalence in the construction industry, a wide knowledge and skills gap surrounding the construction of tall wood buildings was evidenced, as well as a need for a more profound cultural and systemic change in relation to their viability. However, the experience garnered by the wood industry and building companies over the last 25 years and by engineers, architects, planners, regulators, academia, banks and insurance companies, has allowed this ‘sub-sector’ to find a foothold in the market, gradually increasing its market share to approximately 20%, and thus creating a solid foundation for further rapid expansion over the years to come (Interviews 4.1, 4.2, 4.8). National and sub-national authorities have also played a substantial role in promoting wood building by setting ambitious targets, mobilising stakeholders and funding and, most importantly, by taking risks and leading by example in public building and apartment block construction. Moreover, several decades of sustained urbanisation processes and an increased social focus on environmental sustainability since the early 2000s have proved beneficial to the wood construction industry (Interviews 4.1, 4.2, 4.3). In line with these trends, wood strategies have increasingly focused on climate goals, capitalising on this new momentum. 

Following EU accession in 1995, key promoters of wood construction in Finland increased their advocacy for building with wood. However, restrictions on the height of MSWC and fire safety regulations were only lifted gradually. From 1986 onwards, changing governments have initiated several policy and research programmes to support increased knowledge of material science and structural engineering using wood. These national strategies also set ambitious goals for expanding wood construction, with several municipalities taking the lead by building schools and other public facilities, thus generating demand, construction experience and incentivising private sector investment. While many of these government programmes generated substantial knowledge and expectations in the forestry and wood industries, direct market creation has faced considerable resistance. Negative perceptions, regulatory barriers and the dominance of the concrete industry have, until recently, relegated MSWC to a marginal position. Compared to Sweden, construction processes have remained underdeveloped, relatively inefficient and thus expensive. The question of timing has also been less favourable to Finland than to Sweden, as urbanisation and demographic trends have stagnated over recent decades. Despite three decades of constant political support, these factors have notably hampered wood construction actors’ efforts to gain a foothold in the market. Under these difficult conditions, the role played by a small number of ‘champions’ has been key, such as the various policy mechanisms and methods wielded by larger cities to motivate and compel constructors to choose wood. Today, the MSWC market share remains at around 5% but is expected to increase over the coming years (Paavola 2019). 

Regulation, policy stimulation and technological innovation were not the only instigators behind the rise of modern high-standard wood buildings. Incorporating wood construction into the market has required the creation of a new ‘sub-industry’ and business ecosystem. These efforts have led to an overhaul of the entire system, from altering business practices, spatial planning systems and industrial processes to readjusting the organisation of the construction sector, their supply chains, business models and financial strategies, as well as promoting an overall cultural change within the industry. Co-operation between multiple public, academic and private actors from different sectors has been pivotal in shifting cultural values, setting common goals, formulating new policy incentives and building trust between all partners. This trust underlies and enables the industry to make significant yet risky investments. 

Technological innovation in modern wood construction derives from material science and structural engineering: from testing the properties of different types of materials and wood products in relation to stability, vibrations, fire safety, acoustics, energy efficiency, etc. Moreover, technical and technological innovations also include industrial processes, architecture and design tools, transport and supply chain innovations. Significant efforts have centred around developing efficient building systems and the industrialisation of construction (The Lean construction method). As a part of the ‘green agenda’, there is an increasing focus on designing new assembly-and-disassembly methods and taking the life cycle of buildings, their transformation over time and their ‘end-of-life’ into account. We will focus more specifically on building systems and industrialisation processes in the following.

There are several different construction techniques and systems that can be employed when building with wood. Important variables relate to the degree of prefabrication and the types of wooden products and material combinations used. Conventional construction generally implies that work is carried out primarily onsite, using traditional materials and with a low level of industrialisation. In many high-income economies, however, conventional construction also implies the use of industrialised or prefabricated building elements. Prefabricated (or prefab) elements, such as frames, columns and slabs, are produced in a factory and assembled onsite. To varying degrees, most buildings in industrialised economies now have portions of their structures manufactured in a factory setting. Although wood is a traditional construction material, multi-storey wood buildings are still very much an outlier in the market. Nonetheless, innovation in wood construction has propelled the industrialisation process forward, including modular systems for prefab volumes production and specific wood-engineered products for creating prefab frames and other building elements. According to Nord (2008), there are approximately three levels, or methods, of prefabrication in the production of multi-storey wood buildings: 1) onsite construction using pre-cut components, 2) assembly onsite using prefab timber elements and 3) assembly onsite using prefab and pre-assembled timber volumes. 

In Sweden, about 97% of all wooden frame multi-storey buildings were partially or completely prefabricated by 2020 (Swedish Forest Agency 2020). In modular systems, most components are prefabricated offsite and assembled onsite to produce building volumes resembling human-sized LEGO. Prefab modular construction can manufacture complete ready-made rooms or sections of apartments, including electrical installations, heating, plumbing and air-conditioning systems, in a factory setting (Manninen 2014). Other systems use prefab frames and building elements similar to conventional construction but replace concrete-steel elements with structural wood-engineered products or mass timber such as glue-laminated timber (Glulam), cross-laminated timber (CLT) and laminated veneer lumber (LVL). (See Info Box 2 for definitions).

Each different building system and wood product has its own application, advantages and disadvantages. Wood is a light, structural material with a low or almost negative carbon footprint and is widely available in the Nordic countries. Modular wood construction relocates most of the construction phase offsite to a factory setting. Systematising the work in a factory has numerous advantages. It provides a dry and predictable working environment while minimising possible climate or site accessibility problems and reduces public disruption around the construction site. It also allows for a targeted strategy and improved co-ordination of the work, involving fewer sub-contractors, as more workers are employed directly at the factory instead of providing services onsite. Finally, it radically reduces the duration of work onsite, making it possible to assemble a high-rise building in the span of a few months. All of these benefits combined result in lower production/construction costs. Given these indisputable advantages, the growth of the modular wood construction industry is now comparable to the advance of electric cars, growing from a EUR 20 million industry to almost EUR 100 million in the space of a few years (Interview 4.2). A more commonly recognised disadvantage is that deploying prefab modules limits the flexibility of architectural design (Interviews 4.1, 4.6; Brege et al., 2013). However, this may be less related to the technical possibilities afforded by modular systems and more to inherent transport restrictions (as lorries are restricted in the shape and size of units they can carry) or to decisions made at the design stage before fully considering the modular systems’ option, rendering it too late in the process (as modules can potentially be built in any shape). In any case, modular construction is a prime alternative when speed and cost efficiency are prioritised over architectural expression, e.g. to rapidly increase hospitals, care homes, schools, or affordable homes provision in municipal or regional settings. Modular construction has proven extremely effective in delivering high volumes efficiently in a competitive and cost-efficient environment (Interview 4.2).

The introduction of engineered wood products has added versatility to the use of timber in construction, enabling larger structures that are light, structurally sound and energy efficient. One expert view is that CLT represents a radical innovation in the sense that it enables the construction of large wooden buildings while facilitating designs similar to conventional ones, requiring no major deviations in the design process (Interviews 4.1, 4.11) and thus making the innovation decisively less disruptive. 

As the market expands, focus is shifting from exclusively building with wood-base systems to also incorporating hybrid construction systems and materials: mixed wood products, wood with steel, concrete, recycled materials, or new innovative materials. For example, non-bearing walls can be made from lighter, material and space-efficient alternatives instead of structural materials such as CLT. Combining building systems is also a possibility, as in the case of the SARA Cultural Centre in Skellefteå, which was built using a glulam frame combined with CLT modules for the hotel units.

Finally, several experts interviewed agree that aside from the development of novel construction systems, the industrialisation of wood construction represents a major breakthrough, allowing building to scale, higher production volumes and a move from a niche market segment to direct competition with the conventional construction industry. By applying the principles of ‘lean construction’ and ‘lean manufacturing’, industries have optimised the workflow in production facilities, enabling them to cut costs and produce in higher volumes. Lean manufacturing or ‘lean production’ is a methodology or practice first applied in post-war Japan by automobile company Toyota, aimed at increasing productivity via continuous production system improvements. It maximises value by minimising ‘waste’, both in terms of material resources and superfluous processes, activities, work and time in the production system. Lean construction employs these principles to ensure greater efficiency in the building process, thus saving valuable time. Lean construction centres on limiting or reducing all work phases that do not produce added value for the customer, e.g., by decreasing waiting times at the construction site (Rakennuslehti 2016). 

Prior to 1994: the emergence of prefab modular houses

The technological innovation process that has facilitated multi-storey building construction in wood is not a linear train of events. It did not originate with legislative change or the adoption of a national strategy. The solid legacy of woodworking and the industrialisation of the wood industry, particularly in Northern Europe, has resulted in the amassing of a vast amount of knowledge and skills, generating further advanced technologies in terms of machinery, building systems, products and applications. The century-long moratorium on multi-storey wood buildings in Sweden, Finland and most other countries did not prevent companies from building single-family houses and larger structures, such as barns or event halls, in wood. Indeed, by the early 2000s, 80 % of all single-family houses in the Nordic countries were made of wood (Manninen 2014), with 90% in Sweden (Näringsdepartementet, 2004). Engineered wood products or mass timber was also utilised in construction, although on a lesser scale. However, the degree of industrialisation and technological development varied significantly between countries and companies, as well as the type of technologies, materials and building systems used. In addition, experience of building MSWC was mostly non-existent. 

In Sweden, modular construction in wood can be traced back to the 1920s, when a handful of companies started producing modules, mostly as temporary structures (Interview 4.2). In the 1940s, modular construction received a sudden boost as a result of World War II, as the military sought a quick solution to accommodating the large number of soldiers mobilised to guard the national borders. Companies with experience in modular construction were requested to urgently mass-produce modules for barracks. This enabled them to generate the skills and industrial capacity necessary for high-volume production, which in turn facilitated the rollout of prefab construction to the market as part of the rapid post-war urbanisation in the 1950s. A second, even more defining moment for modular construction was the introduction of the Million Homes Programme (Miljonprogrammet), where the Swedish government set a goal of building one million homes within the space of ten years (1965–1975). Although this programme is, for the most part, associated with high-rise concrete apartment blocks, around one-third of its houses were, in fact, single-family homes. Another third consisted of low-rise buildings, many built in wood from prefab modules or ‘flatpacks’ (Interview 4.2). The then-ongoing urbanisation and increased demand for holiday homes ensured continuous development of modular construction in the following decades. The scale of this demand enabled companies to increase capacity and industrialise modular construction. These proved key preconditions for the later development of multi-storey modular buildings when regulatory barriers were abolished in 1994. 

In pre-war Finland, prefabricated building was mainly limited to sporadic experimentation and the industrialisation of construction took place later than the industrialisation of other sectors. An urgent need to build more homes arose as part of the reconstruction and urbanisation following the war. This, combined with rapidly increased industrialisation (in part due to the demands placed on Finland in the form of war reparations to the Soviet Union), led to a surge in prefabricated building from the 1950s onwards. The first experiments in scaling up prefab techniques addressed industrial production facilities, followed by office buildings from the 1970s onwards. However, with regard to apartment buildings, the construction sector has proven much more reluctant to costly experiments and development has been slower. A change in zoning laws in 1959 represented a major breakthrough in prefabricated apartment building by allowing the planning of whole residential areas instead of singular blocks and creating more favourable conditions for mass production. The 1970s saw a record number of residential homes constructed in Finland as urbanisation accelerated. From the 1950s onwards, the traditional construction industry also re-organised internally, created common standards and reinforced its strong hold on the market. (SBK säätiö 2009)

By the time Sweden, Finland and other EU member countries altered their building codes, allowing for MSWC, engineered wood products were already in industrial production, albeit on a relatively small scale. After a few arguably unsuccessful attempts to introduce engineered wood products in the construction market, a renewed interest took shape in the 1990s, first in Germany and Austria and later in Sweden, Norway and Finland. The renaissance of mass timber use began in Germany and Austria, focusing primarily on single-family homes, while the main target in the Nordic Countries became apartment buildings. According to one expert, the initial failed attempt to introduce engineered wood products in the 1980s may be connected back to a business model which targeted flagship projects, such as large event venues and stadiums, instead of ordinary housing (Interview 4.2). Swedish company Martinsons is an exception, as they had consistently supplied mass timber to the housing market, which may go some way to explaining why they survived, while many other companies ceased mass timber production (Interview 4.2). 

Post 1994 onwards: A new market for Multi-Storey Wood Construction (MSWC) 

The wood industry’s long heritage in Sweden and Finland provided a strong basis for the development of MSWC. However, due to the aforementioned moratorium on wood construction, direct experience of large multi-storey building in wood was almost non-existent. Prior to the legislative reforms of 1994, there was little or no available research on using wood as framing material in larger buildings (Nord 2008). This dearth of experience plagued all aspects of construction, from structural engineering and building systems to fire safety standards and regulations, ventilation, acoustics and energy efficiency in MSWC. There was limited knowledge and a lack of skilled labour across relevant sectors. With no built stock as reference points for new buildings, banks and insurance companies struggled to assess risks. Despite these challenges, the lifting of the ban on MSWC, combined with policy initiatives to develop wood construction and the decisive steps taken within the wood industry, all led to a rapid process of experimentation, knowledge creation and technological innovation, followed by a process of systematisation and industrialisation. 

As wood re-emerged as a feasible material for large-scale constructions, a handful of pioneering companies began an intensive process of experimentation, piloting and testing building systems, both modular and traditional systems featuring structural wood-engineered products or mass timber, i.e. Glulam, CLT and LVL. During this first phase of development, those involved were mostly large companies with a pre-existing industrial capacity and the financial resources for R&D. In Sweden, Moelven and Lindbäcks, among other companies producing prefab modular houses in wood, invested in knowledge and capacities to develop building systems for tall buildings (Interview 4.2). These companies’ experience in producing modules for single-family homes on an industrial scale proved a considerable asset in developing modules for multi-storey buildings. Although 90% of prefabricated homes were built of wood in the 1990s, the majority were ‘flat pack houses’ rather than modular and were constructed from pre-cut components, transported onsite disassembled and excluded paint, plumbing and fittings. Building multi-storey homes from modules coupled with extremely efficient assembly processes was, therefore, a true game changer: the market for modular MSWC grew a hundredfold, from EUR 2.5 million in 1994 to approximately EUR 125 million today (Interview 4.2). However, various companies have followed their own distinct development paths. While Moelven has targeted private customers, offering a wide variety of choices, other companies, such as Boklok, the Skanska-IKEA joint venture, apply a more rigidly defined model, comparable to IKEA furniture, with only a narrow selection of options available (Interview 4.2). Martinsons’, on the other hand, invested in building systems development, using mass timber frames in multi-storey buildings. This process introduced a first wave of skilled labour into the wood industry, sourced primarily from the construction industry. One of our interviewees is an example of this trend: he was recruited by Moelven directly from the construction sector to help develop their building systems (Interview 4.2). 

Prior to 1994, Swedish universities and institutes had little relevant infrastructure or research programmes dedicated to wood construction (Nord 2008). Based on dialogue with the forestry industry, academia and policymakers, significant R&D was initiated within a ‘triple-helix’ framework. A major research programme was launched in 1996, aimed at increasing the basic knowledge of timber utilisation in larger structures (ibid.) A project stemming from this was the Cross-Laminated-Timber Consortium (Massivträkonsortiet), which brought together representatives from the wood industry, building contractors, consultants, and universities. Massivträkonsortiet contributed to generate knowledge of product properties, the development of timber frame systems, fire-safety solutions, noise reduction and moisture issues. The programme also resulted in several prototype buildings and handbooks for using timber in larger structures. As one of the participants in this consortium, Martinsons “learnt more about process flow and production management for structural elements” (Nord 2008). 

In 2006, the Lean Wood Engineering programme (2006–2009) was launched, aimed at developing industrialised timber frame construction and industrial wood components and systems. With a budget of SEK 36m, co-funded in equal parts by Vinnova, Sweden’s Innovation Agency, industry partners and three universities (Linköping University, Luleå University of Technology and Lund University), the programme endeavoured to increase academia-industry cooperation with academic, industry-related and financial goals. The programme also included several PhD candidates who formulated their research around pertinent issues: the calculation and testing of structurally sound frame design and examining fire safety, acoustics and sound insulation and moisture issues. The programme envisaged an expansion in related research and education, increased co-operation between companies and improved R&D financing. The ‘research’ component of the programme centred on developing businesses and processes, with less focus on products, whereas the ‘development’ element of the programme explored industrial wood construction and manufacturing (Kunskapsförmedlingen 2022; Stehn 2022). Subsequently, similar smaller-scale projects have involved many of the same companies and aimed at increased co-operation between academia and industry, e.g., the programme launched in 2014 by Luleå Technical University examining the productivity and industrial development of wood construction in Sweden (Träbyggnadskansliet 2014). 

In the wake of the pioneer companies’ success in developing construction systems for multi-storey buildings, a second wave of development commenced. Industries began actively focusing on the industrialisation of wood construction by applying lean manufacturing principles to systematise the workflow. In the process, companies invested in the infrastructure and equipment necessary for scaling up production. A second wave of skilled labour made its way into the sector, this time sourced from the automotive industry (Interview 4.2). Experience in automotive production lines was particularly useful, argues one expert, as there are many similarities in the way trucks and building modules are assembled. 

According to several experts, the industrialisation of wood construction is perhaps the most important innovation in the industry, enabling the emerging ‘sub-sector’ to move from piloting-phase and niche market placement to mass-production and sizable inroads in the overall construction market. Industrialisation also entails relocating parts of the construction process offsite to the factory. Offsite construction offers many benefits. As one interviewee puts it: “offsite construction can lower the construction time and costs, but also change the habits and processes that were less efficient” (Interview 4.1). According to one expert:

“while the technical innovations were developed over a hundred years ago, streamlining the production, the workflow and lean production, to get the volumes needed for a full building offsite, has changed the game” (Interview 4.2). 

However, the degree of construction industrialisation varies depending on the choice of building systems. For instance, mass timber frames (beams, columns, slabs) mimic conventional concrete and steel building frames and thus rarely require any major changes to the architectural design. Modular construction, on the other hand, requires changing the entire process, from architecture and design to building and assembling and entails transferring a major part of the work offsite (Interview 4.1). 

Despite the many benefits of relocating offsite and systematising the construction process to factory procedures, progress has been slow, as the learning process and the design of new systems and protocols have required much time, effort and investment (Interview 4.1). The transition also necessitates new players entering ‘the game’ and thus challenges older established practices and business relations built up over time. Moving offsite radically changes the organisation of work in construction projects, which has led to re-adjustments for the actors involved and in their contractual conditions, as well as opening up new networks, partnerships, and trust relations (Interview 4.1).

Despite the initial hype generated by legislative change and national and regional level strategies, the market for MSWC did not immediately experience the desired boom. The goals of reaching 30% of all multi-level construction to be built in wood frames in a decade’s-time in Sweden (2005 strategy) (Lindblad 2020) and 10% in Finland by 2015 (2011 programme) (Laapotti 2020) proved overly optimistic while severely underestimating the weight of structural inertia within the industry. Today, 15–20% of new multi-storey buildings are built in wood in Sweden (Interviews 4.2, 4.3). In Finland the figure is less than 5% (although 40% of public buildings are now constructed in wood) (Paavola 2019; Laapotti 2020). The slower-than-expected market growth indicates the strength of an already firmly established construction sector based on concrete and steel, which has significantly invested in production infrastructure while accumulating skills, experience and networks that operate within well-defined parameters. The status quo is also reinforced by clients’ familiarity with concrete construction, e.g., municipalities and other public actors responsible for regulating and implementing standards for new developments. Moreover, some unrealistic expectations may also stem from a simplified understanding of the nature of industrial transformation, where change takes time and requires systemic thinking.

Industrial MSWC has slowly begun to overcome the structural inertia in the construction sector, but market penetration has also required new forms of financing, risk-taking and novel business models. In the earlier stages, pioneering companies circumvented traditional actors, including contractors and banks, rather than challenging them directly. Lindbäcks, with its origins in the construction sector, was the first company to build multistorey residential wood buildings using volumes (modular construction) in 1994 (Nord 2008). As Lindbäcks has also a real estate company, they were in a position to create demand for themselves (interview 4.2). 

Moelven, on the other hand, has nearly a century of modular single-family home-building experience. They developed their own capacities and production system to build multi-story buildings in wood, first in Norway, then in Sweden, similarly circumventing construction companies reluctant to take on the risk of new solutions. Similarly, Swedish Derome AB, founded in 1946, is active in the timber value chain and has developed a lightweight framing system (A-hus) and modular construction. The company has realised many projects through its own development and real estate company (Nord 2008).

Martinsons was established in 1939 as a sawmill and later began producing glulam. Despite a dormant period in the mass timber market (prior to the aforementioned legislative changes), Martinsons expanded, becoming both a supplier of building elements and a wood housing company (Nord 2008). Following the 1995 regulation changes, Martinsons entered the building industry and created its own construction company, Martinsons Byggsystem AB, effectively taking over the entire building process. They provided everything needed on the construction site, from consulting to plumbing (Interview 4.2). More recently, Martinsons has been acquired by Holm, a forestry company, further consolidating elements of the supply chain under a single roof. Holm now controls the source material, its processing, mass-timber products, building elements fabrication and, on many projects, the overall design and construction of new buildings (Interview 4.9). 

In addition, several companies with origins in the forestry industry, such as Stora Enso, Setra, Södra, amongst others, also began the production of timber products and created their own building systems, thus moving prefabrication of building elements further down the supply chain (replacing intermediaries). For example, Södra Building System developed a truss system that is offered directly to contractors (Bengtsson, 2003 in Nord 2008). 

As the market share for wood construction continues to expand, circumventing established contractors is becoming less necessary, as many of them now have the requisite experience in wood building. Instead, the wood industry is working closer with construction companies (Interview 4.2). On the contrary, the many conservative construction companies that have resisted change are now feeling the pressure and see the need to build their own capacities to build in wood. This trend is likely to accelerate as new regulations are on their way to set limit values on emissions of new buildings, making wood a favourable choice (Interview 4.5). Going forward, construction companies will inevitably become part of a larger transformative process by which changes in parts of the system will impact several other parts, including relations with other companies and subcontractors (Interview 4.1).

The post-war period in Sweden saw a number of companies setting glulam into production, of which three still exist today: Martinsons, Setra and Glulam of Sweden AB (Suomen liimapuuyhdistys ry and Puuinfo Oy 2014). The market for glulam and mass timber products experienced a period of decline and stagnation during the 1980s and 1990s. However, by the early 2000s, the market for mass timber products had recovered, first in Austria and Central Europe, then in the UK and France and to a lesser degree in Canada and Australia (Manninen 2014). Within a decade, the demand for glulam had almost doubled to approximately three million cubic metres in Europe (and to roughly 5 million cubic metres globally), most of which was produced in Germany, Austria and Finland (Manninen 2014). Production of CLT began in the early 2000s (Manninen 2014). Swedish-Finnish company Stora Enso established their CLT factories in Austria, whereas Martinsons built the first CLT factory in Sweden in 2003. Shortly after, Södra and Setra followed suit and established their own CLT factories in Sweden. Despite the 2008 economic crisis and uncertain housing markets, CLT production continued unabated. As demand continued to increase, new factories were established in several countries, e.g. Monnet Seve in France (2013) and Cross Lam Kuhmo Ltd in Finland (2014), among others. The production of LVL in Finland began in 1981 but took decades to scale up, with MSWC targeted investments only made after 2016. The material properties of LVL make it a competitive option for mid-height apartment and office buildings (Lazarevic et al., 2020). Today, there are also several factories in the Baltic countries producing mass timber and modular houses targeting the Nordic market.

The efficiency of the industrialisation processes has succeeded in creating a viable market in Sweden, to the point that building a multi-storey apartment building from wood today is approximately 15–20% less expensive than using concrete and steel (Laapotti 2020). In Finland, where the market is not yet self-sustaining, the situation is often the opposite (ibid.). To enable the processes in Finland to achieve the same level of efficiency as their Swedish counterparts and reduce the cost of wood construction, demand would have to be considerably stronger. Unfortunately, due to the lack of expert knowledge and wood construction process management know-how, the price remains high and demand low. In essence, this is the vicious cycle plaguing the sector in Finland, stemming from the concrete industry’s century-long competitive domination and its close ties to construction companies (Interview 4.1, Laapotti 2020). The rigidity of the existing system also means that the process flow in every project must remain broadly similar, even if the end product is different. Consequently, the customer must decide to build with wood at a very early stage so that the process can be adapted to incorporate it. If the decision is taken during the initial stages, the process is efficient. However, if the plans are sufficiently well-advanced, the industry may find it difficult to provide a viable offer.

Broader market conditions have likewise impacted the growing market, especially in Finland during the 2000s. In particular, the 2008 economic crisis and subsequent prolonged economic downturn cooled the Finnish housing market and glulam export markets (Manninen 2014). Although CLT continued to increase its market share despite the crisis, production was still on a smaller scale than glulam (Manninen 2014). Sweden’s housing market was not significantly affected during the financial crisis in 2008. On the contrary, the housing deficit inherited from previous decades, coupled with a growing population, meant that demand continued to increase. In Finland, a combination of a slowing construction pace and declining populations across many regions has also played a role in the sluggish development of wood construction. 

The emergence of multi-story wood construction is not merely reliant on companies challenging the status quo, taking risks and circumventing traditional industries. There are other important drivers of change, notably the national government, first in its position as regulatory authority and second as an enabling entity: defining strategies and assigning funding to support the development of the sector. Moreover, municipalities have also played a major role in pushing the adoption of wood as a possible building material alternative in the market by spearheading development and assuming the inherent risks through the construction of public buildings and publicly-financed housing developments. The following chapter focuses on the role of the state, sub-national authorities, and institutional innovation. 

The first and crucial institutional innovations enabling MSWC were the legislative changes previously prohibiting the use of wood products in buildings taller than two storeys. In 1989, the EU implemented a Construction Products Directive (CPD) aimed at removing any technical barriers to trade in construction products between member states, in line with the EU common market (Railio 2014; Elspecta AB). The rationale was to move from material-based to function-based standards, which eliminated barriers to wood construction despite not specifically supporting it. Regardless of the material used in construction, the new legislation decreed that buildings have to meet standards for fire safety, energy efficiency, acoustics, accessibility and other ‘functions’. The original directive, which has since been replaced with a more harmonised regulatory framework, left much room for interpretation and freedom of implementation for individual member states. Nevertheless, it has served as an important milestone for other regulatory changes implemented at national level over the following years. (Interviews 4.1, 4.3, 4.6)

With Sweden’s accession to the EU in 1994, the Swedish National Board of Housing, Building and Planning (Boverket) evaluated the Swedish rules and regulations and decided to harmonise them with the EU CPD. The new regulations came into effect with the first issue of the Building Codes of Boverket (BBR), in which detailed technical requirements were substituted with requirements based on the function of the end product. The regulation would set “the minimum function or property required but not in detail how to accomplish the function” (Nord 2008). The consequence was that the use of wood was no longer forbidden in larger structures as long as the ‘functions’ were met. For instance, no matter the material used, buildings are required to be capable of withstanding fire for 90–120 minutes before collapse (Interview 4.1, Andersson, 2020 p61). In practice, this represented a total lifting of the ban on MSWC in Sweden. 

In Finland, legislative changes were more gradual. Following the first legislative ban against two-storey wooden houses with fireplaces in the mid-1800s, fire regulations continued to restrain wood construction in apartment buildings, even after Finnish EU accession. However, increased global competition persuaded policymakers to revise established regulations in favour of new approaches (Tolppanen et al., 2013). A hybrid model gradually emerged as new function-based regulation did not fully replace material-based restrictions. The fire safety regulation was reformed over the years, eventually allowing a wider selection of building materials in increasingly higher multi-storey buildings. From 2011, five-to-eight-storey tall buildings were allowed under the regulation (Paavola 2019). In 2018, further simplifications to the regulations were enacted, allowing unprotected wood in interior and exterior surfaces of residential buildings of up to 16 storeys (using automatic fire extinguishers) (Lazarevic et al. 2020). 

If we fast forward to the current situation, a new policy push is underway to reduce the environmental footprint of the construction sector, which indirectly favours wood construction. From January 2022, all new construction projects of over 100 m2 in Sweden must issue a climate declaration (with a number of notable exceptions). The Swedish National Board of Housing (Boverket) defines: 

“A climate declaration describes the building’s climate impact, as calculated based on the greenhouse gas emissions from the construction stage. The construction stage comprises the extraction of raw materials, manufacture of construction products, work at the construction site and transport”. (Boverket Website: Accessed 31-10-2022)

The Swedish government tasked Boverket with developing and managing a climate regulation database and registry to assist the climate goals in construction. These two elements target climate impact at the construction stage, i.e. relating to building permits for new buildings. During the first phase, Boverket’s tasks included developing an open database to calculate the climate impact of buildings and a registry of this data (both launched in January 2022). As part of this assignment, they also focused on information campaigns and developing a more holistic plan of action to reduce the climate impact of buildings overall, which would not be limited to the construction phase but consider the whole life cycle of buildings. The next steps include setting limit values for emissions in new buildings, to be in place by the latest in 2027 (although possibly already by 2025) and gradually enforcing stricter values by 2035 and 2043 (Boverket Website: Access 31-10-2022; OneClick 2022). In addition to the climate declaration, there are several other voluntary certification schemes currently in use (OneClick 2022). 

The realisation that optimising energy efficiency in new buildings will soon reach its maximum level of efficiency and minimal level of emissions led regulators in Finland to shift their focus to reviewing emissions during the building’s whole life-cycle, starting with public procurement. Finland followed the European Commission’s decision to publish voluntary recommendations regarding green procurement in office buildings construction in 2016 (The Ministry of Environment 2022). In 2017, the Ministry of the Environment began the process of measuring the climate impact of buildings and preparing the ground for setting future emissions limit values. The national low-carbon construction roadmap from 2019 suggested the introduction of a climate declaration for multi-storey buildings from 2020, followed by setting limit values for multi-storey buildings from 2023 and for all buildings from 2025 (Bionova 2017). The final version of the roadmap covering the period up to 2030 will be published with the new Zoning and Building Act in 2024. Voluntary measures currently in place include a policy for assessing public buildings (acknowledging life-cycle emissions), some of the current regional cities’ and municipalities’ agendas and international and national sustainability certification for buildings. All of these elements contribute to Finland’s goal of reaching carbon neutrality by 2035, with some cities, such as Helsinki, hoping to achieve this aim as early as 2030 (OneClick 2022; The Ministry of Environment 2022). 

Even before the climate declaration regulations imposing limit values are fully in place in Sweden and Finland, a building’s carbon footprint may become a marketing tool for real estate companies, predicts one expert (Interview 4.1). The expert notes that this happened when the requirement for energy declarations in new buildings introduced in the early 2000s in Sweden. Real estate companies soon began adding the energy consumption profile of new apartments to their marketing strategies. As national actors develop procurement criteria for low-carbon buildings and introduce low-carbon roadmaps, these initiatives are also likely to benefit wood construction, as wood is considered a low-carbon building material (Lazarevic 2020). In addition, climate declarations are, in turn, likely to encourage broader regulatory pressure in relation to the climate impact of buildings, with the EU expressing interest in implementing the Nordic climate declaration model across Europe (Interview 4.14).

An area of contention surrounding the upcoming limit values for carbon emissions regulations in new buildings is the methodology and criteria used for calculating these emissions and whether these should be limited to the construction phase or the whole life cycle of the building. For the moment, the argument appears to lean towards taking the entire life cycle of a building into account, including the production of building materials and elements, construction stages, use duration, end-of-life stages and possibly further potential uses for building elements beyond their designated end-of-life cut-off point. Life Cycle Assessments (LCA) represent new opportunities for wood construction, as wood requires significantly less energy-intensive industrial processes, is a carbon-capturing material and, being notably lighter, takes significantly lower energy to transport than heavy materials, e.g. cement and steel, and is easily recyclable. (Rasmussen et al., 2021). Another issue under scrutiny is whether pre-existing structures should be included in LCAs. Avoiding demolition and repurposing older buildings normally results in significantly lower emissions compared to new ‘sustainable’ buildings. However, companies tend to prefer demolition, although more for financial than technical reasons. (Interview 4.11).

Sweden’s first effort to introduce a policy directly promoting wood construction began with the 2002 decision to appoint a national coordinator to carry the groundwork for formulating a national strategy. This resulted in the ‘More Wood in Construction’ (Mer trä i byggandet) strategy, adopted in 2005 (Näringsdepartementet, 2004). This strategy set a target that within the following 10–15 years, 30% of all new buildings would be constructed with wood-frames (Lindblad 2020). Although it has proved difficult to reach this target, it nonetheless represents an important step in generating broader debate and mobilising public and private actors. The strategy was based on analyses of the current state, trends and emerging needs of the forestry and construction sectors (Interview 4.1). Discussions were held between industry, ministries and municipalities, revealing important structural transformations already underway in construction and highlighting some of the existing systemic barriers facing the introduction of more wood products into the sector. This groundwork also led to the selection of Skellefteå (in Västerbotten), Växjö (in Småland) and Falun (in Dalarna) as pioneering municipalities, spearheading the implementation of the strategy (Interview 4.1). Together with local authorities, a list of short-term and long-term objectives and activities were formulated, including research and pilot projects in collaboration with the industry to increase knowledge production and better inform the sector. The Ministry of Industry also appointed a co-ordinator to assist in implementing the listed activities. (Interview 4.1). 

The first 2005 strategy was framed from a regional development perspective based on the industrial legacy and growth potential across several Swedish regions (Interview 4.1). The strategy also introduced the concept of wood construction as a political climate strategy (Andersson 2020). However, the original link to environmental sustainability was initially inadequate, only gaining prominence in later versions. In 2011, the strategy was replaced with a broader national strategy titled: ‘The Forest Kingdom – with values for the world’, launched by the Minister for Rural Affairs. “The ‘Forest Kingdom’ strategy aimed at increasing the economic development potential of rural areas while also seeking new export markets for the timber industry" (Andersson, 2020, p. 61). The 2018 strategy has also boosted wood construction, although its main focus is bioeconomy and developing forests as a national resource (Interview 4.8). Updates to the national strategy have added the political commitments of the Paris Agreement and UN Agenda 2030 to frame it more directly as a climate strategy (Interview 4.1). On a more general level, forest sector representatives experience a shift in Swedish forest and wood policies away from the needs of industries to an emphasis on climate issues (Interview 4.6). More recent policy discussions have also centred on social sustainability (Interview 4.1). This coincides with the introduction of the ‘Just Green Transition’ concept in the EU Green Deal, which brings to the fore discussions of social justice or ‘fairness’ in industrial transformations. The shifting foci in the different iterations of the strategy also reflect the political landscapes under which they were formulated and the areas of priority for the government in power at that time. The 2011 strategy, which concentrated heavily on industrial development, was formulated by a right-leaning government coalition of four parties, whereas the 2018 strategy, which emphasised nature conservation, was formulated by a Social Democrat and Environmental Party coalition (Interview 4.8).

The efforts that began with the implementation of the strategy were followed in 2008 by a national four-year programme called ‘Trästad 2012’ (Wood City 2012), which has since continued in cycles with slightly different emphases (Interview 4.8). Trästad 2012 involved seventeen municipalities and was aimed at fostering large-scale production of MSWC. Under the programme, participating municipalities developed their own projects and activities focusing on themes relevant to their own specific contexts. Municipalities in North Sweden focused on CO2 calculations and climatic stress in the construction phase; municipalities in mid-Sweden focused on cost-efficiency via standardisation; municipalities in the Southeast focused on environmental targets and municipalities in the Southwest focused on ways to increase the use of wood in public construction, particularly in improving public procurement competences (NTT WoodNet 2012). The experience gaps that were uncovered between municipalities and the programme’s diverse focus proved to be particularly useful for knowledge transfer between all involved partners. 

Building on the Trästad 2012 programme, Trästad Sverige (Wood City Sweden) has since continued as a platform and a meeting hub for several projects, bringing together over 60 members from municipalities, relevant ministries, architects, and construction companies. In 2016, the association received state funding and a professional director was recruited to lead the organisation (instead of relying on municipal politicians leadership). The main objective of the networking activities is to support regions and municipalities in compiling a wood-building strategy by assisting them in implementing related regulations and legislation via the digital platform Wood First. In addition to promoting knowledge of wood construction, the platform facilitates open dialogue on wood building, involving various stakeholders and enabling them to have direct contact, e.g. with the Ministry of Housing (currently within the Ministry of Industry) and between industry actors and municipalities (Interviews 4.6, 4.8).

Disclaimer: this case study was written during early 2023 and does not consider changes to the budget and mandate to Trästad Sverige made by the current government.

In addition, Wood City Sweden, has developed a roadmap for Swedish politicians and municipal planners who want to better support wood construction and who may need both strategic and practical guidance in relation to tasks such as planning or public procurement. The project also aims to support wood construction by connecting it to other areas or urgent societal needs: for example, utilising wood for social housing is an effective way to produce comfortable homes at scale and speed or add more living space on top of, or to, existing buildings (Interview 4.6). 

Coinciding with the establishment of Trästad in 2013, the County Administrative Board of Västerbotten was given a government mandate to work with other interested municipalities to develop wood construction in a cost-effective way, increase knowledge and encourage other municipalities to realise the national climate goals. Västerbotten’s County Governor is the acting chair of Trästad (Trästad Sverige web).

The Swedish government has also supported wood construction in more indirect ways by enabling construction firms to develop skills and increase modular construction capacity. State intervention, such as the order for mass-produced barracks during the Second World War and the housing stock increase generated by the Million Homes Programme between 1965–1975 were major catalysts paving the way for MSWC development (Interview 4.2). Today, the central government insists on impartiality, so publicly procured buildings remain ‘material-neutral’ in line with function-based regulations. However, state authorities have continued to support the development of the forestry and wood sectors, not least by financing Trästad Sverige, as well as investing in R&D. The influence of climate policies is more indirect but nonetheless significant, particularly the new legislation aiming at cutting carbon emissions within the construction sector. Wood construction advocates are also critical of the state’s perceived impartiality given that the Swedish government is a shareholder in Cementa, the main cement industry in Sweden, LLKB, an iron-ore mining company and SSAB, a steel company, as well as supporting the forest industry, which also represents a large economic sector (Interview 4.6). Furthermore, as MSWC was banned for over a century, state intervention is now required in the form of policy support, stakeholder engagement and funding to rebuild the construction market ‘from scratch’. 

Since the mid-1980s, Finland has encouraged wood construction in the form of government strategies and support programmes (Saarnivaara 1998). The first set of state-funded initiatives focused on various areas, from technological innovation to architecture and urban planning and aimed at solving issues that would render wood a less risky building material (Siikanen 2008; Metsä Group 2013; Tolppanen 2017). As a part of a series of programmes proposed by the government to alleviate the effects of the early 1990s recession, the state, the forest industry and the Finnish Funding Agency for Technology and Innovation (now Business Finland) initiated financial support packages in the fields of science, technology and innovation. Although these did produce practical knowledge and led to regulatory reforms, these R&D programmes were not in themselves enough to establish a wider market base for wood construction. 

In the 2000s, other official housing strategies also encouraged the use of wood. In response to EU-wide trends, Finnish national strategies have begun to emphasise the qualitative properties of housing rather than a mere quantity increase (Purdy 2010). Global competition in the paper and pulp markets compelled the forestry industry to find new product outlets, which in turn led to increased state support for wood construction development and represented an opportunity for the forestry sector. Strategic programmes drafted in the 2000s have noted MSWC’s increased market share and set a provisional target of 10% use in new housing stock by 2015 (compared to just 1% in 2011). However, the initial policy goals in Finland, as in Sweden, have proved overly ambitious, with little notable increase in activity in the industry between 2011 and 2014. Despite this, government programmes did contribute to an expansion of the theoretical knowledge available and led to regulatory reform (including the appointment of an official wood construction advocate at the Ministry of the Environment), as well as the implementation of several pilot projects, which have resulted in a small market share increase (Lazarevic et al. 2020; Saarnivaara 2022). According to one interviewee, the research programme’s focus on material properties neglected relevant broader areas such as wood construction processes and solutions (Interview 4.13). Nonetheless, these programmes have proven impactful in terms of shifting attitudes, adjusting building regulations and affecting municipal planning processes. Despite the modest results, ambitions remain high: the most recent wood building strategy aims at capturing a 20% market share by 2025 and a 50% share in all publicly procured buildings (Paavola 2019). 

The strategic and R&D elements of these state programmes have paved the way for wood construction by creating more favourable conditions for knowledge exchange and improved regulatory frameworks. However, this in itself is not enough to address some of the deeper structural barriers, including resistance from strong lobby groups of established actors with their close ties to the construction sector. As long as sectoral development relies on pilot projects, wood construction will continue to bear the brunt of high costs due to inefficiency and insufficient skills. Finland’s first wooden high-rise apartment building in Lahti, 1998, remained the only one of its type for several years, as the high construction costs incurred discouraged construction company Skanska from continuing with other wood construction projects (Mölsä 2021). In short, policy-making alone is not enough to overcome some of these barriers.

The groundwork undertaken in the Swedish national wood construction strategy encouraged regional and municipal authorities to draft their own responses (Interview 4.1). ‘More Wood in Construction 2005 and Växjö’ was the first published municipal strategy (Interview 4.1). The updated strategy (2013) has set an ongoing target for the municipality and the city’s municipally owned companies that 25% of all new buildings must be constructed with wood frame, rising to 50% by 2020 (Växjö Municipality 2013). Similar regional strategies were proposed to support local industry in key forestry regions such as Småland, Västerbotten and Dalarna. In addition to wood construction strategies, several municipalities now have individual climate strategies setting goals for carbon neutrality or are affiliates of the network of Swedish Climate Municipalities (Interview 4.7). 

In Småland, the Växjö municipal strategy was aligned with the broader strategic regional goals (2012), whereby the county worked towards assuming leader status among Europe’s wood regions by 2020 (ibid.). The coupling of regional and municipal strategies with the national strategy generated a domino effect involving the participation of cluster organisations, interest groups and private actors. (Interview 4.1). Given the clearly defined political stance, “construction companies in Växjö realised that in order to win project competitions and gain a competitive advantage, they needed to learn how to construct from wood” (Interview 4.1). As a result, the wood construction industry has broadened its competences, competition has increased, and new innovations are underway (Interviews 4.1, 4.2). This, in turn, has led to private and public actors jointly “apply[ing] for money from European regional funds and research organisations to support their activities” (Interview 4.1). 

It should be noted that the practical and policy undertakings leading to a published strategy and official platforms often begin at a much earlier stage. Before the first national wood construction strategy was adopted in Sweden, wood building was already expanding in Växjö, coinciding with the lifting of the MSWC ban. In 1994, Värendshus built a three-story house using wood frames, and shortly after, in 1995, Sweden’s first modern five-storey wood-frame building was built as a model case study in Växjö (Wälludden). The municipality also set in place related academic research before adopting its timber-building strategy. (Lindblad 2020; Tina Wik Arkitekter 2023).

In Skellefteå, the municipal strategy was first adopted in 2014, but intense work aimed at fostering wood construction had started as early as the introduction of the new national building codes. After a period of economic stagnation in the 1990s, which also affected the forestry industry, the changes in legislation were seen as a golden opportunity by the chair of the municipal council at the time, Lorentz Andersson (Interview 4.7). Despite the lack of a formal strategy, the municipality took the audacious decision to build wooden apartment buildings in 1995 and the longest wooden structure bridge (at the time) in 2011, which was later surpassed by an even longer one in 2022 (Interview 4.7; LTU 2011; Byggvärlden 2022). Local actors’ willingness and ability to co-operate facilitated numerous partnerships, and the forest industry and local authorities aligned their visions to incentivise industrial development. At the time, the focus was primarily on adding value to the forestry industry to generate economic activity, support local businesses and create new jobs. From the early 2ooos onwards, the municipality began placing orders for wooden buildings, as well as establishing a strategic co-operation with research and academia, i.e. RISE, Luleå University of Technology and Umeå University, including investing in a university campus for education and research in Skellefteå (Interview 4.7). The county-level strategy continued these initiatives by supporting proactive individuals and creating close links between public authorities and local businesses. The county of Västerbotten has been at the forefront of supporting wood construction since the 2000s when Lorentz Andersson was appointed governor of the County Administrative Board and was given a special mandate by the national government to act as chairman of the National Timber Construction Strategy. Emphasising the importance of individuals in developing the market, Andersson was awarded the King’s Medal for “his outstanding contribution to society” in 2008. Skellefteå’s wood construction strategy was eventually published in 2014, setting out a systematic and clear path for future development. This coincided with the broader societal focus on climate and sustainability goals, which became a central pillar of the wood industry’s agenda (Interviews 4.7, 4.8; Skogsindustrierna 2008).

Many of the municipalities originally involved in Trästad 2012 began planning for wood-based construction projects as early as 2006. Today, around 180 municipalities in Sweden have constructed tall wooden buildings, and the number is increasing, including several large-scale projects. A prime example is Frostaliden in Skövde, where blocks containing 150 wooden apartments, several of which are six storeys high, are currently underway. Another example is Välle Broar in Växjö, which represents Sweden’s largest ongoing wood construction project, where an entire district has been built in wood (Ekholm 2011). Skanska erected the first school built entirely from wood in Northern Sweden in Järfalla in 2015 (Woodnet 2014). 

Beyond strategic level engagement, municipalities also deploy more practical instruments such as spatial planning, zoning, building permits and public procurement to steer development. These contain significant potential to support wood construction (Interview 4.12). In the Swedish context, municipal planning is, for the most part, grounded in political decisions, housing development programmes or more general building plans, occasionally also taking developers’ suggestions onboard (Lindblad 2020). The decisions reached are then set in train by the municipalities through ‘procurement processes’ or ‘land allocation processes’. These procedures are used to identify and select (via competition) suitable developers to engage in development projects (Lindblad 2020). Municipal plans, however, can be rigid and slow to adapt to changing circumstances. Nonetheless, they pose significant potential for lifting barriers to innovation in wood construction. Building height restrictions stipulated in zoning regulations are a common obstacle, often favouring height in metres over the number of storeys. This would appear to disadvantage certain types of wood construction as wood beams and slabs are thicker than their concrete equivalent, thus increasing the overall height in relation to the same number of storeys. In many cases, this means that choosing wood as the main construction material implies a one-storey reduction to the building. As developers will generally try to maximise the gross constructed area, wood-based alternatives are often ruled out due to financial cost-benefit considerations. Updating and revising municipal planning and zoning regulations can, therefore, generate considerable new market opportunities (Interview 4.2).

Finally, another instrument often used by municipalities is ‘land development agreements’. The legislation allows municipalities a certain leeway in defining the specific conditions and requirements for more detailed planning based on existing internal policy documents and targets (Lindblad 2020), e.g. setting carbon emissions limit values based on climate targets (Interview 4.6). Via land allocation agreements, municipalities can favour wood construction in upcoming project proposals. For example, when formulating its 2005 strategy, Växjö municipality explicitly stated that it would actively use land allocation and land development agreements as a method to increase and define new areas for wood construction, e.g., Torparängen. This also formed the basis for discussions between developers and contractors willing to work with wood (Lindblad 2020). In Skellefteå, the city stipulates that housing areas should be ‘attractive’ and ‘sustainable’, which can be greatly assisted by the widespread use of wood (Interview 4.7). These slightly more vague aspirations are often used by municipalities, as the Building and Planning Act restricts directly favouring wood construction and limits the insertion of specific technical requirements such as material specifications in land development projects (Lindblad 2020). Thus, sub-national agreements are possible in municipal land development, as it is the owner (the municipality) who sets the terms and conditions for the land-use outcome. 

In Finland, municipal planning has thus far been the most influential tool in supporting multi-storey wood construction, particularly in scaling up production volumes and processes, leading to increased knowledge sharing and experience across the board. This has generated useful knowledge of best practices and solutions and has enabled the wood construction sector to access market sectors formerly dominated by the concrete and steel industries. For example, Jyväskylä has initiated wood construction zones, and this practice has been replicated by Turku, Vantaa and, more recently, Helsinki (Interview 4.12). Zoning can prove to be an effective measure for cities and municipalities to impact climate emissions. This can take the form of mandatory carbon footprint assessments of city-owned projects or making Life Cycle Assessments compulsory in land sale competitions, as is the case in Helsinki (OneClick 2022). Most importantly, the new 2016 Procurement Act allowed Finnish municipalities and cities to use public procurement processes to support wood construction, as the use of wood can be one of the stipulated criteria when calling for proposals. Other methods include insisting on a building’s carbon footprint specifications as part of the public procurement process, which may favour wood as a material (especially if the municipality already has a carbon neutrality strategy), allocating and reserving prime building sites for wood construction projects, or invoking emission-reduction goals when granting building permits (Mölsä 2021; Ympäristöministeriö 2022b).

‘Green procurement’ is perhaps an even more powerful tool for steering development to include broader municipal interests. The term green procurement simply refers to the use of public procurement to advance the green agenda and environmental sustainability. Public procurement includes all contracts entered into by public authorities for the provision of buildings, hospitals, care homes, meals in schools and other services. Again, while unable to set technical requirements directly, municipalities can impose regulatory standards that include climate impact assessments or weight stipulations to avoid wood construction being outcompeted during the bidding phase. This has been a crucial instrument in boosting timber construction development, where municipalities have favoured its use in schools, sports and event venues and municipally-owned housing projects. For instance, Skellefteå in Sweden finances a significant share of all ‘green financed’ developments (Interview 4.6). Since 2016, Finnish municipalities have been able to make ‘green investments’ in environmentally friendly projects in the form of affordable loans or leases. The majority of these projects have been schools or day-care centres constructed in wood (Puu-lehti 2017). By investing in timber construction, municipalities have helped expand the market sector by encouraging the industry to experiment, to learn and broaden experience while stimulating supply-chain expansion and, most importantly, by assuming and sharing some of the risks involved. 

Aside from administrating public policy tools, municipalities also play an important role in the day-to-day co-ordination of industry, research, civil society and different actors to encourage and facilitate the implementation of new ideas, projects and knowledge of different issues. Normally, the contractor shoulders the financial risks in any given construction project. Unsurprisingly, most companies, therefore, adopt a cautious approach, choosing to remain within their area of expertise, where they can most accurately calculate costs, time spent and assess all involved risks. However, innovative projects, such as wood building, imply uncharted territory and greater risk taking. Establishing common ground and trust among key stakeholders is a prerequisite for tackling these new ventures. Careful management and sharing of risk ‘ownership’ has been a key success factor in enabling more ground-breaking projects, such as the Sara Cultural Centre in Skellefteå (Interview 4.4). 

Lindblad (2020) suggests that there is evidence of even bolder changes in municipal governance. The author notes that in Växjö, private companies, research institutions and other actors have become more directly involved in the building and planning processes surrounding proposed wood-building solutions. One specific example is the formal partnership established between Växjö municipality, developers and university partners around land allocation agreements (ibid.). These forms of partnerships have also been created in the Vallen, Pelarsalen and Torparängen districts, with the intention of supporting research of these processes (ibid.). Skellefteå municipality provides another example, where it is responsible for co-ordinating the Wood Innovation Cluster. Established in 2017, it brings together regional representatives and wood-building experts from industry, research and the municipality. It aims to co-ordinate strategic efforts for the industry within the region and to conduct research, education and experimental activities (Interview 4.7; Skellefteå.se 2023). One important development has been the T2 College, established in 2016 as a joint venture between industry, municipalities and upper secondary schools with the aim of developing and creating conditions for industrial skills and training in the region. 

Finally, municipal marketing and branding have also proved effective in overcoming regulatory barriers. For instance, Malmö and Växjö have supported wood construction in more subtle ways, such as using images featuring wood construction and its benefits in development site presentations, thus influencing architects’ proposals (Interview 4.6). Similarly, the increased focus on green cities has generated a desire to create positive examples among Swedish planners, architects and engineers (Andersson 2020). Municipalities such as Skellefteå and Växjö have, from an early stage, initiated study tours under the umbrella concept ‘wood house safaris’ (Andersson 2020). These are intended to generate knowledge and experience for a broad range of participants, such as real estate developers, engineers, building contractors, architects, planners, politicians and researchers (Ibid). Another subtle way of nudging contractors to choose wood, one practised by Skellefteå, is requesting a justification for the choice of materials in new projects. The municipality then invites contractors to a workshop with researchers to identify solutions to possible problems that might arise through wood construction (Interview 4.7).

On the flip side, there are a number of critical issues pertaining to the sometimes ambiguous role played by public institutions. Authorities and industry partners can struggle with conflicting legislation and policy goals, e.g. free competition and material-neutrality versus carbon-neutrality goals and wood strategies. The principle of material neutrality may have affected the willingness of some Finnish and Swedish municipalities to act in ways that favour wood or any other alternative with a lower carbon footprint. At the same time, some believe that the approach of not picking ‘winners’ (e.g. wood) triggers other innovations that utilise different types of products and hybrid materials. Furthermore, the lack of technical specifications, i.e., wood, in bidding processes, which directly contradicts the municipalities’ stated policy goals of increasing wood construction, can generate confusion among developers regarding the expectations and criteria used in the selection of winning projects. For example, in an evaluation of the land allocation process used by Växjö municipality in the Torparängen area, which had been designated for wood construction, both developers and private citizens were critical of possible elements of subjectivity within the procurement process (Lindblad 2020). Despite the evaluation process set in place, developers struggled to interpret the municipality’s expectations (ibid.). There also seemed to be some misunderstanding of who the client was exactly, as the municipality saw itself as a “seller of land”, whereas the developers saw it as “a buyer of a building solution”. In other words, municipalities may lack experience in designing processes and setting clear criteria for evaluating proposals in a structured and objective way. This can be observed in the somewhat ad-hoc approaches and bases for decisions that municipalities resort to when selecting winning bids. 

According to one expert: “in the construction industry, we have product and process innovations but also systemic innovations” (Interview 4.11). Systemic innovations “include organisational and ‘actor-role’ innovations”, which, according to the expert, describes the essence of systems integration where separate systems and sub-systems become interconnected in new ways (Figure 6). Technologies transcend and cross-fertilise sectors towards new ends, and novel actors emerge, as well as new ties between actors and supply chains. Meanwhile, established players can change roles, adapting to new conditions and exploring new opportunities (ibid.). 

Barriers to wood construction discussed in previous chapters point towards structural inertia, which cannot be disrupted without systemic changes to overall construction, forestry and other related sectors: from legislation and policy to market conditions, funding structures, governance and co-operation and finally a profound behavioural and cultural change. For over a century, building systems based on concrete and steel have maintained an unchallenged dominance, where established actors and lobby groups have had little or no competition in the marketplace (Interviews 4.1, 4.11). Over time, material suppliers, construction companies, real estate companies and other players along the supply chain have welded together a strong, mutually dependent relationship, making it difficult for even powerful industries such as forestry to pry open these links. The unchallenged status quo was reinforced by large investments, well-established supply chains, successful business models, funding mechanisms designed for a specific type of construction, a long tradition of established practices and vast accumulated knowledge. Therefore, the well-functioning status quo offers no specific incentive to established actors to enter a new playing field: one which entails risks, new knowledge, new investments, new business models and a re-organisation of the construction process and partnerships. For some, introducing wood as a construction option represented a leap into the unknown. Added to that, the infant wood construction industry, still taking baby steps but nonetheless experimenting and solving all types of challenges, be they technical, regulatory, financial, or cultural, appeared far too utopian or unrealistic to capture and expand a niche market. At a systemic level, the effects of structural inertia are visible in very tangible forms: for example, the reluctance and sluggishness of actors such as banks and insurance companies to offer more flexible financing options that take different building processes into consideration. Although this is now changing, the emergence of multi-storey wood building has only become possible through the involvement of a handful of pioneering companies and municipalities that bypassed the established actors and processes, built the first pilot schemes and gradually created competing business ecosystems. Investing in technological innovation and knowledge-building, facilitating co-operation across sectors, academia, policymakers and public authorities is thus an enabler of systemic change. In what follows, we will discuss some of the issues that facilitate or hamper systemic change. 

Co-ordinated knowledge building efforts are vital because the lack of information about wood as a construction material is one of the major barriers hindering the development of the sector. As seen in Ch.4, there have been several efforts at national level in both Sweden and Finland, including several research programmes, since the beginning of the 1990s, and state funding has allowed a more detailed examination of practical problems such as acoustics and fire safety and facilitated the testing of different construction systems (Interview 4.1). However, most advances in engineered wood products or solving the associated technical problems have been made either by the pioneering companies themselves or through their own funding. In addition to these examples of technical research, changing the current education system through which many civil engineers, planners, architects and constructors gain their expertise remains an important but complicated task. Unless otherwise well-informed, these actors still expect wood to behave similarly to steel, which can lead to unfavourable experiences that reinforce negative stereotypes about wood as a material (Interview 4.3). The notoriously expensive publicly procured wooden music hall in Lahti has long served as an example of the perils of wood construction (Mölsä 2021).

In addition to technical research, the wood industry collectively has played an important role in generating awareness, for example, by creating open standards. In the future, construction coompanies could continue to make it easier for customers to arrive at cost estimations by setting prices more clearly to reflect the real costs of building in wood (Interview 4.13). Resource banks featuring exemplary solutions or templates for alternative co-operation agreements based on life-cycle thinking could be another way of using knowledge and experience to direct public resources more efficiently (Paavola 2019). Efforts to synchronise business practices have been complicated by the fact that all the Nordic countries (not to mention the other EU members) continue to have and follow their own construction standards and regulations (Interview 4.3).

Since wood is still considered a novel material and a more widespread knowledge of it is sorely lacking, anything that goes wrong with wooden buildings can quickly become newsworthy, reinforcing possible negative stereotypes. Therefore, some experts favour safer projects such as multi-storey apartment blocks (compared to tall, experimental buildings) as the best strategic approach to increasing market share (Interview 4.11). As an example of negative perceptions, Finland’s key breakthrough in wood construction experiments gave mixed results. In 1995, the fire laboratory of the Technical Research Centre of Finland (VTT) succeeded in exposing wooden frames to fire for over an hour, which led to the green-lighting of a three-storey apartment building in Helsinki. However, the final costs of this pilot project escalated far beyond the initial estimates, leading to the sacking of the construction company’s CEO and a more general scepticism towards wood as a material (Rakennuslehti 2016). Behavioural factors influencing stakeholder ecosystems have considerable influence and come in many shapes and sizes. In addition to common fears associating wood with fire hazards, mould and moisture, public opposition may also be swayed by fears of deforestation or unsustainable forest management. This is especially true outside the Nordic countries, where deforestation of primary forests remains common (Interview 4.11). However, standard forest management practices in the Nordic countries are also increasingly alleged to be unsustainable. To combat some of the negative associations common to wood construction and the industry, advocates posit a wide spectrum of factors that should be taken into consideration, including broader societal values, perceptions and attitudes towards the material (both real or imaginary), planning systems and public procurement, general rules and legislation, certification schemes, timber industry supply options (material-wise) and their search for new markets and the attention of architects. ’Wood house safaris’ is one such initiative in Växjö and Skellefteå municipalities, intending to challenge the inertia posed by negative perceptions and fears. Beyond simply increasing awareness, these safaris are an effective way of selling the idea of ‘success’, which can hopefully form a self-reinforcing cycle in which new projects and investments are attracted to examples of previous success stories and narratives.

Overcoming structural inertia and wood’s successes in gaining a foothold in the construction market over decades is closely tied to building and relying on both formal and informal networks and actors. Many failures can often be traced back to a lack of support systems. One of the most concentrated efforts to build networks and increase cross-sectoral co-operation in Sweden has been the platform established by Trästad Sverige, discussed in Ch. 4. During periods where no state funding has been available, active members have themselves kept the momentum going. Again, this underscores the importance of the role of active regional players. Regional and local representatives were closely involved in Trästad Sverige from the beginning, including the governor of the county administrative board of Västerbotten, who also chaired the board of Trästad Sverige. 

Driving industrial transformations on a national level is often too great an undertaking to fully succeed. Local, place-based initiatives can prove more effective in mobilising local businesses and other actors and creating common ground. Geography generally determines regions’ industrial legacy, the resources available, the knowledge and skills present, the established networks at hand and the ‘tacit knowledge’ or more implicit societal norms or ‘ways-to-do-things’. This local level represents a more ‘human scale’ where people know each other and have built relationships based on trust. Skellefteå and the broader Västerbotten region serve as a good example, with many pointing to the short distance (metaphorically) between people in the industry, local authorities and the university as being a crucial element in bringing them together to focus on common goals and define practical paths to achieve them. For instance, this was the municipality that commissioned the first wooden multi-storey building as early as 1995, the same year the new building codes entered into force. At the same time, Martinsons, the local wood company revived the production of Mass Timber products, began pilot projects and made long-term investments. Moreover, place-based developments are often the result of the capacity of individuals to mobilise change. In Skellefteå, one visionary politician was a significant figure in pushing for change. Skellefteå’s ability to tap into its specific strengths, resources and historical roots has been a decisive factor in its success in promoting wood construction. As owner of Skellefteå Kraft, a large energy company, Skebo, the municipal housing company and co-owner of Kommuninvest, a bank that offers ‘green loans’ with low interest rates, the municipality is centrally placed to effect change on numerous levels. In addition, as is common across Sweden, much of the land is also municipally owned. Skellefteå municipality is, therefore, in a position to lead by example and has constructed many of the city’s buildings, including public schools, event venues and parking lots, as well as apartment buildings in wood. By working with the county’s strong industrial forestry legacy, the city has been able to provide a less interventionist and more organic approach to wood construction policies (Interview 4.7). 

Development can also be driven at an industrial far remove, as is the case in Finland, where urban areas have become forerunners, again highlighting the role that zoning and local sustainability goals can take in supporting wood construction (Interview 4.12; WoodJoensuu 2022). Place is also relevant when assessing the environmental footprint of construction, as material proximity determines related transport emissions. In addition to reviewing the sustainability of material itself, it is essential to assess, e.g. which materials are available locally and if these are durable under local conditions. For example, the sustainability of wood construction in Iceland, where most construction materials are imported, should be evaluated differently than in the forest regions of Sweden and Finland (Palmadottir at a panel debate during the Icelandic Democracy Festival, Fundur fólksins,2022). 

On the other hand, global perspectives and national and international level networks also play a key role as they allow actors to transcend the limits of geography. Since joining the EU, Region Västerbotten has found it easier to gain allies in Brussels than in Stockholm. As one local civil servant explained, actors and networks in the region have benefitted hugely from expanding co-operation and connecting value chains across international borders (Interview 4.10). 

As a nascent industry or sub-sector, wood construction is (or was in the case of Sweden) a formerly market outlier, which in turn affected the possibility of accessing necessary funding. In addition, the lack of building experience, at least in the early phases, was deemed too risky for insurance companies and thus incurred higher fees for wood-based projects. The common financial structure used by banks can also be problematic for wood construction projects because the work phases are structured and organised differently. Normally, banks make payments to constructors at different stages of the building process, e.g. foundations, framing and completion of the interiors and exteriors, as each concluded phase can be used as a value guarantee for finished work. Wooden building on the other hand, especially modular building systems, takes place for the most part offsite in a factory and is then rapidly assembled onsite. Standard loan structures can effectively restrain small and medium-sized companies lacking the necessary cash flow to invest in the entire building process from A to Z. In Sweden, municipalities have been able to circumvent these funding problems by applying for ‘green loans’ from Svenska Kommuninvest, which is a collectively owned investment bank by the municipalities and supports their interests. Municipally led projects that classify as ‘Environmental Buildings’ in accordance with the ‘Miljöbyggnad’ certification scheme can be drawn down at notably lower interest rates (Interview 4.7). In general, however, the wider banking sector has been slow to adapt. And although many companies have found ways around these financial obstacles, increases in wood building construction call for a more systematic change in banks’ funding structures in relation to the sector (Interview 4.2).

In the early days of wood construction, insufficient networks and lack of experience rendered it less cost-effective than traditional construction methods. This is a situation facing many emerging industries, where contractors will continue to favour cost-effectiveness over sustainability (Interview 4.11). The differences in market conditions between Sweden and Finland can be partially traced back to the lack of systemic efforts to invest in research, development and innovation in Finland. In the 1960s, Sweden set aside a portion of all salaries, earmarked the money specifically for research and used these funds to establish Bygforskningsrådet, which today finances research for hundreds of millions of SEK annually. A similar initiative in Finland was rejected (Rakennuslehti 2016). Finnish construction companies have struggled to develop efficient construction processes and, therefore, face higher costs to a much greater extent than their Swedish peers. As the timeline for building and erecting prefabricated buildings is predictable, increased experience and know-how should lessen the burden of perceived risks of wood construction over time. Another important factor to consider would be the collation of risk analysis data, which forms the basis for many financial and insurance decisions (Interview 4.6). 

One expert compared operating in the construction market to training an army (Interview 4.2). Both processes are carried out in a highly similar way, so that any new or additional components must be carefully assessed and aligned with existing parts of the system. Since most new endeavours imply a risk of not meeting the pre-fixed and calculated price for the customers, companies tend to avoid new solutions, even if these might prove more efficient in the long run. However, there are signs of change on the horizon. Some construction companies are becoming more involved in wood construction because they identify a clearly growing market demand. This new involvement entails establishing more domestic factories for mass timber products and modular units but also allowing new players and start-ups to fill existing market gaps with innovative products and solutions, leading to a further rapid increase in volumes. As the market grows, all involved processes become more cost-effective. As the same expert puts it, “you just need to shake the ketchup bottle a bit and it all comes out at once” (Interview 4.2). But who is actually responsible for shaking the bottle? In this scenario, municipalities play a key role in co-ordinating action and establishing ties between key players. However, the municipal governance and planning systems can function both as barriers and useful instruments for achieving change. Planning systems and zoning regulations have, for the most part, been based on conventional construction systems, which represents a problem for certain wood construction alternatives. To enable wood construction to compete on a levelling footing with conventional construction, planning systems have had to be adapted. Indeed, in some of the successful cases outlined above, municipalities have used public procurement and planning systems strategically to favour wood construction and circumvent systemic barriers. 

This case study shows that the development of the wood construction sector is complex and causality cannot be attributed to single actors or decisions but to the sum of many and varied efforts. Change originates at the intersection of key players, where co-operation functions as a catalyst and trust forms the glue that binds them. The fact that there is no “golden ticket”, no singular innovation, event, or driver that explains the longer gestation of multi-storey wood construction implies that the nature of innovation differs from other types of ground-breaking innovations. For instance, the smartphone had an immediate global effect, rapidly replacing and rendering obsolete previous technologies and products, profoundly transforming the industry, the way we communicate and society at large. However, there is no rush to adopt timber as a construction alternative or to render established building systems obsolete, nor should we expect a societal impact of the same magnitude as with the smartphone. However, albeit at a slower pace, wood construction does appear to have the potential to profoundly transform the construction industry in certain parts of the world, including the Nordic countries (Interview 4.11). This will not mean a complete divergence from existing building systems and actors but will disrupt current business ecosystems and business models and add diversity to existing market options. In short, this is a case of systems innovation rather than a product or technological innovation alone.

In this study, we have identified a number of key moments or events in history that have triggered major developments in the form of technological innovation or in building capacity and knowledge. From the contracts issued by the Swedish military in the 1940s, the Million Home Programme in the 1960s–70s, the rapid post-war urbanisation processes (and reconstruction in the case of Finland), to more recent changes in legislation, first enabling multi-storey building in wood and the more recent climate declarations and limit-values set on emissions. The state, both in Sweden and Finland, has enabled technological development by funding and supporting R&D programmes and setting strategies for development. All these events, past and present, highlight the strong influence of state policy and legislation in boosting the wood construction market. This despite the fact that the state originally halted development for a century via the prohibition on MSWC imposed in the late 1800s. 

Accession to the EU and the associated legislative harmonisation has also triggered important changes on many fronts, even if unintentionally. The EU has played a significant role in setting environmental goals, as well as underpinning more soft approaches, such as the voluntary recommendations for green procurement in office construction.

However, once the rules of the game have changed, the role of the national and supra-national level becomes less prominent, whereas sub-national authorities play a more practical role in supporting development in several ways. Selected municipalities reacted quickly to the legislative changes and expanded local industrial and economic competitive advantages. Their closer proximity to business networks and other community actors allowed them, often informally, to create momentum and a common vision around these new opportunities. Establishing trust relations with businesses was key: taking risks, investing in new infrastructure and working towards securing a place in the new market niche. By participating in knowledge creation projects (e.g. Trästad 2012) and commissioning the first pilot buildings, municipalities have also assumed a more entrepreneurial role. And by providing ‘green finance’, municipalities have stimulated market creation and supported companies in their efforts to expand capacity and experience.

The private sector plays a more direct role in industrial development: from exploring and investing in product development, designing new building systems and piloting them, to finally producing materials, building elements and erecting finished buildings. However, the private sector is heterogeneous and includes many actors along the supply chains. Only a handful of these can be considered risk-taking pioneers, whereas the majority, at least in the early development stages, are part of the establishment and can be resistant to change or are more comfortable with the status quo. These include contractors, real estate companies, banks and insurance companies. With regard to the pioneering companies, some have come from outside the established business ecosystem (wood industry), while others have emerged from inside the construction sector itself. However, no matter their starting point, all the companies have had to circumvent existing actors, supply chains and business and finance institutions in order to improve and broaden their market access. 

R&D has been an essential mechanism for progress, whether within academia, the industry or in partnership. The public sector and academia were quick to recognise the importance of funding large-scale R&D programmes for knowledge development and the value of creating triple helix partnerships to solve technical and systemic challenges. Academic and education programmes have also been successful in generating awareness of the benefits of wood construction.

Banks and insurance companies have acted more as a deterrent, being slow to adapt and unwilling to offer novel solutions to the nascent industry, which, requires substantial risk capital and support given its outlier status within the market. Finally, changing values within society have increased pressure on policymakers and the industry to deliver the sustainability goals and the green agenda. These values have also had a positive effect on the perceptions of modern wood buildings, being seen as both status symbol and emblematic of urban renewal. 

When examining the role of different actors, it is important to recognise their evolution over time. For example, authorities have moved beyond their normal administrative tasks to become drivers of development and entrepreneurial processes. Municipalities have learnt to navigate legislation and favour wood construction despite material neutrality demands. When entering new market segments or engaging in new parts of the supply chains, private companies have also proved that they can evolve. For instance, to overcome the well-established actors’ resistance or financiers’ reluctance to support their ventures, pioneer companies have transformed themselves from being solely wood industry players to becoming construction companies, or vice versa, or have simply established parallel companies to deliver supplementary services, e.g. design and consulting. This has proven an invaluable process for building new capacities and facilitating the movement and exchange of knowledge and professionals across industries. As a result of these multitudes of changes, business ecosystems have been vitally transformed. 

In short, the systemic nature of industrial transformation means that no single interest group, no matter how powerful, nor one single factor can be said to bear responsibility for driving change. Systems barriers are embedded within the interlinkages between actors, nodes in the supply chains and the overall industry’s organisation. Structural inertia stems from long traditions and practices, network gaps, insufficient knowledge, experience and skills and the inherent risks involved in developing a new industry. In such a situation, even major legislative and policy shifts may not automatically lead to an upsurge in demand, as wood companies quickly realised after their initial optimistic reception to the 1994 regulative reforms. Instead of waiting for transition to occur by itself, actors were forced to directly support the fledgling industry by establishing new partnerships and finding creative ways to increase market access. One method has been to support wood construction ‘champions’, thus creating a new customer base with the help of successful pilot projects, which in turn creates more demand. All in all, change emerges precisely at the intersection of key players where co-operation is paramount to boosting systems innovation.