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Bioeconomy and circular economy – ecological sustainability and financial benefits

Bioeconomy and circular economy – ecological sustainability and financial benefits

Wood forms the foundation of the Finnish bioeconomy. It is a renewable raw material that is easy to process in many ways. More than a hundred million cubic metres of wood grows in Finland’s forests every year. In the 2020s, wood and processed wood products can, in more diverse ways than before, replace products and fuels that speed up climate change. Demand for and the use of wood, as well as deforestation resulting from expanding agriculture, are increasing globally1, which is why there is an intense debate in Finland and internationally regarding the sustainable use of forests to protect carbon sinks and stocks that are vital for people.

Considering the environment, it is sensible to maximise the use of side streams and minimise wastewater and air emissions. With the right technologies, side streams can be processed into sustainable products or used in energy generation. Watch more!


Bioeconomy and circular economy

In the bioeconomy, renewable natural resources are used to produce food, energy, products and services.2 The bioeconomy can be considered to comprise sustainable food production (yellow bioeconomy), the sustainable use of water ecosystems and services (blue bioeconomy), bioenergy and the use of forests (green bioeconomy).3

Products made from renewable raw materials, such as wood, are not completely unproblematic considering the climate if they are not consumed in a sustainable way. The circular economy responds to unsustainable consumption by extending the lifecycles of products by recycling products and reusing material and by otherwise setting up modern sustainable consumption patterns. In the forest sector, the principles of the circular economy are no novelty. The sector uses wood effectively and different stakeholders work together, for example, in the use of material flows, whereby process by-products that holds no value for its producer may end up as valuable raw material for someone else.

Wood is made from carbon dioxide in the atmosphere

However, the earth’s carbon cycle is the mightiest cycle of them all in the bioeconomy and circular economy. Its key processes are the sequestration of carbon dioxide in plants, particularly in trees when they grow in forests, and the release of the same carbon dioxide back into the atmosphere when trees decay or wood, a wooden product or production side streams are consumed as fuel.

Forest bioeconomy

In the forest sector, the expanding bioeconomy and the circular economy stand for growth and diversification. Wood is already being used in very diverse ways. It is used to make conventional well-known products, such as paper, board, timber and rayon, as well as certain lesser known products, such as ingredients of adhesives and paints, additives for the food and pharmaceutical industries and health products. New technologies have helped to expand the already broad range of forest industry products in recent years. Wood can be used to process biofuels for vehicles, raw materials for the pharmaceutical industry and ecological fibres for the textile industry.

Forest industry bioproduct plants generating more energy from lignin dissolving in black liquor during pulping than what is consumed is a traditional example of the use of side streams created in the process. Modern production facilities can transmit any excess energy to the electric grid and biogas generated from side streams suitable for anaerobic digestion for use in transport or heating. The circular economy is no novel concept in the forest industry, but innovations help to circulate material and energy more effectively at integrated paper and pulp mills and to find more users for them than before.

Read more about Metsä Fibre’s bioproduct mill

While the product portfolio of the forest industry is expanding and the industrial sector in Finland are using more and more wood, the use of wood unsuitable for other processing as an energy source is also increasing. Demand for wood is expected to continue to grow as societies aim to step away from fossil fuels in energy generation. The forest sector must therefore be able to produce wood sustainably and fulfil both purposes of the forest bioeconomy – form carbon sinks that sequester carbon from the air and make products that replace fossil raw materials.

Financial figures

The forest sector, which includes forestry and forest industry, covers roughly 40 % of the value added of Finland’s whole bioeconomy4 and approximately one fifth of the gross value of Finland’s whole manufacturing industries5. In 2019, the forest industry accounted for EUR 12.5 billion of Finland’s export of goods, corresponding to roughly one fifth (19.7 %) of total exports6. The forest industry has a considerable financial impact, as forest industry employs 42 000 people7 directly and 140 000 people in the entire forest sector in Finland. The forest sector has historically played a large and significant part in Finland’s national economy, driven for long by the paper industry, which has also topped Finland’s export statistics for decades.

High export volumes

Paper has maintained its position as the leading export product in Finland’s forest industry, with its exports totalling roughly EUR 4 billion in 2019.8 Pulp and paper industry products, including not only paper, but also board, pulp and various processed products, account for the majority, or approximately 80 %, of forest industry exports6. The remaining proportion of forest industry exports (20 %) comes from the exports of wood and furniture industry products. Exports focus on Europe and Asia, where Finland’s largest individual export countries are Germany, China and the UK.9

A global sector

The forest industry is a global sector, driven by industrial giants like China, the USA, Japan, Germany and Russia. These countries largely dominate global production volumes in pulp, paper and sawmill industries. Finland, small in size but large in relative forest area, is among the leading countries in terms of timber and paper product exports10.

Companies operating in the forest sector

Companies operating in the forest sector are known by many living in Finland. Their long history and significant role in society make them objects of national pride. Large forest companies have, over decades, been real pioneers in Finland and produced value and culture for Finnish business life. Finnish forest companies, are doing well in the industry, with three of them – UPM, Stora Enso and Metsä Group – being among the top 15 companies in the global forest sector.9 These companies operate not only in Finland, but also in other market areas.

Future outlook

The future of the forest bioeconomy is looking strong. The bioeconomy and the circular economy diversify and strengthen the future outlook. Growing demand for wood-based packaging material and the replacement of plastic build markets for pulp, paper and board far into the future. In addition, the rising standard of living in Asia creates more demand for tissue paper, and the textile industry is seeking solutions for a growing need for ecological textile fibres from wood-based fibres. Wood construction is also on the up. The sawmill industry is responding to a growing demand for ecological building material, both in Finland and globally.

Authors and references
This page has been updated 13.10.2020