Timber construction enters the mortgage market thanks to carbon removal credits

Capital is available but not yet tapped

According to Fedrizzi, new financial products are needed so that investors can put money into the timber construction chain safely and profitably. Around CHF 1 billion of investment would be needed to turn an additional 1.5 million cubic metres of standing Swiss timber into installed timber every year. The feasibility study “Holzbauhypothek” by ZHAW and Timber Finance puts the market potential at CHF 1.5 billion and evaluates a survey of Swiss financial institutions. So far, green mortgages mainly assess a building's energy use and hardly its materials.

The timber construction mortgage is a new instrument for banks on the path to net zero.

An interest discount in exchange for carbon removal credits

The concept: the bank grants the developer a cheaper mortgage and in return receives the developer's carbon removal credits, which it can use for its own net zero commitment. Timber construction companies gain an additional sales argument. Fedrizzi describes it as a situation in which all three parties benefit. At the time, Timber Finance expected compensation of CHF 80 to 100 per cubic metre of installed timber and invited builders and developers to submit projects.

How Timber Carbon sees it

The article shows how early the link between timber construction, finance and carbon markets was envisaged. Timber Carbon, launched in 2026 as a spin-off of Timber Finance, quantifies, certifies and monetises the carbon removed in mass timber buildings as carbon removal credits on the voluntary carbon market. Thomas Fedrizzi and Thomas Richter discuss the timber mortgage further in their TEC21 interview.