I agree that my estimate could be too big, but I do think there is a potential to increase the forestation in the north. Because of the warmer climate, Iceland can grow aspen. The government is planning to grow tree in a large part of the island, but the have a problem with free roaming sheeps. The land the can only sustain shrubs and moss could grow trees now.
Some countries are increasing the forestation as well https://www.citylab.com/environment/2018/01/northern-forest-...
If you want to convert not-woodland into woodland, then that limits you to farmland or pastures - because there's no such thing as "unused natural potential woodland", any potential woodland that's not used and left alone becomes actual woodland; any potential woodland that's not woodland only became that way when we cut down the trees and cleared the land because we wanted to use it otherwise.