Representatives of the wood products industry yesterday told the government there is no need to reduce formaldehyde emissions from their materials below the levels now attainable and warned that product costs would escalate if tougher standards were imposed.

In a three-hour meeting with the Consumer Product Safety Commission, representatives of the nation's largest manufacturers of particleboard and plywood said they had reduced emissions of formaldehyde sharply over the past three years--from one part formaldehyde per million parts air to the present level of 0.3 parts formaldehyde per million parts air.

Formaldehyde, a widely used binder in wood products, has been shown to cause cancer in animals and to have adverse health effects on humans, such as nausea, headaches and dizziness, when it is released in gaseous form from the products accidentally.

The cost of these wood products -- commonly found in mobile homes -- has gone up about 20 percent as a result of the extra processing needed to achieve the lower emission, according to T. Marshall Hahn, president of Georgia-Pacific Corp; John Ball, executive vice president of Champion International, and John Davidson, president of Pacific Plywood.

The officials recommended that the government standard -- if one is adopted -- be set no lower than the prevailing 0.3 parts formaldehyde per million parts air. Less than that could lead to sharply higher prices and tighter supplies, they said.

"A 0.2 standard would mean a new product, higher cost, and we couldn't be there for two or three years," Hahn said. "So there would be a shortage."

But Dr. Peter W. Preuss, the commission's associate executive director for health sciences, said the industry proposal may not be adequate to satisfy public health needs.

"The product emission of 0.3 parts formaldehyde at the factory really translates into 0.4 or 0.5 parts formaldehyde in the mobile home. And, yes, I think at that level there are people who are likely to exhibit both irritation and sensitization effects," Preuss said.

Preuss added that scientists are still trying to determine whether formaldehyde could increase the risk of cancer in humans. The concern is "based on animal experiments," Preuss said. "As yet, we don't have concrete evidence that formaldehyde causes cancer in humans."

On Feb. 22, the CPSC voted to ban formaldehyde foam insulation because it presents an unreasonable health risk. Studies of other products containing formaldehyde, such as plywood and particleboard, have continued.