Opportunities and challenges

The concept of circular bioeconomy is causing a paradigm shift in global economics. This shift provides the forestry sector with a large portfolio of long-lasting opportunities for growth and diversification. Meeting the related growing expectations also presents challenges to forestry and forest-based industries, both at the systemic level and in practical details.

When it comes to achieving carbon neutrality through circular bioeconomy, an optimal system combines the following features:

• Captures atmospheric CO₂ in plant biomass through photosynthesis at a high rate
• Stores the carbon so captured in long-lasting and circular products with high demand
• Provides means for reducing the use of fossil resources

The modern, sustainable forestry sector is in the unique position to operate such a system. It is recognised for

• Efficient timber production by sustainable, long-term forest management,
• Efficient use of harvested log wood for sawn goods, panels, advance wood construction solutions, furniture and other high-value-added products,
• Efficient use of smaller wood from forest thinning and saw mill residues for the manufacture of packaging products, hygiene and printing papers, textile fibre, chemicals and bioenergy, and
• The substitution for the use of fossil resources in fulfilling various human needs and desires.

In their jointly published vision to 2050, 11 major European bioeconomy-related organisations concluded that, on a system level, this is the most efficient carbon capture and utilisation system we have today ¹.

This vision spans the entire value-chain of forest-based products, from forest owners and managers to industries, academia and research and development. The purpose of this vision paper is to present how the European forest-based industries can contribute to the ambitious agenda set by the European commission for achieving its 2050 climate neutrality target ², and to discuss the related challenges and solutions to overcome them. Many of these challenges and solutions are valid also in the global perspective.

• Supporting SME’s, pilot-scale R&D and break-through innovations
• Assuring efficient timber production in well-managed forests without compromising forests’ other functions and ecosystem services.
• Meeting new requirements on wood qualities as new wood-based products are developed
• Cooperation between timber-producing countries to promote sustainable forest management and facilitate transparent supply chains.
• Developing recovery of re-use of secondary wood in woodworking industries.
• Harmonised standards and legislation
• Leveling the playing field between fossil and forest-based products by phasing out subsidies to fossil-based products.
• Free trade and transparent supply chains
• Improving awareness of environmental benefits of forest-based products.
• Improving the awareness of the forest-based industries’ potential as the key contributor to carbon neutrality, and more generally to circular bioeconomy.

The starting position for overcoming most of these challenges is already strong in leading countries and regions. For instance, the EU is the leading region in sustainable forest management. With the support of research and innovation, at least a 30 % increase in sustainable timber harvesting in the region is envisaged³. In the European particle board industry, 40 % of raw material is recovered wood. The paper recycling rate is at 72 % and fibre-based packaging rate at 85 % – the highest of all packaging materials ².

It is relevant to focus on such products and end-uses, where wood’s biological structure can be utilised best. In such end-uses, forests and wood can contribute most to circular economy. Its macro-scale composite structure is highly valuable in construction materials, which substitute for the use of carbon-intensive concrete and steel. The natural micro-scale composite structure of wood fibres makes wood pulp a very versatile, recyclable raw material of paper and board for packaging, communication and hygiene end-uses. Cellulose and lignin, two natural, polymeric constituents of wood serve well in textile fibres and adhesive resins, respectively. Wood extractives, or pitch, are recovered from the pulping process as by-products and refined to a great variety of high-value chemicals.

As a source for market bio-fuels, wood is at its best, when wood residues are utilised. There is growing demand of pelletised wood residues also on bio-fuel markets. Wood-based, second generation bio-ethanol entering the market as a non-fossil additive to gasoline and wood-based biodiesel is available for diesel engines ^8,9. However, providing more extensive low-carbon energy solutions is expected to be done by means other than wood; by solar, wind, and nuclear power⁴. In practice, wood-based bio-products are in most cases competing with fossil-based products other than fuels.

Oil, coal and natural gas are cheap largely because all of their true costs are not included in their prices. In simple terms, the cost of recycling fossil CO₂ has long been externalised from prices of fossil-based products, for coming generations to pay. This is a market failure, which is now gaining much attention from financial institutions, policy makers and industries. It is also causing frustration and even denial among consumers as scientists have revealed some severe consequences of the prolonged inaction, like climate change ^4,5.

The International Monetary Fund, a subsidy of the World Bank, has estimated that externalised costs correspond to annual subsidies of trillions of dollars to the fossil fuel industries ⁵. Such subsidies, of course, seriously distort the market, and make it difficult for bio-based products to enter markets where so heavily subsidized oil-based products are present.

In the global perspective, carbon pricing is intended to correct the aforementioned market failure and to drive the shift away from high-emissions products to low emissions products and processes ⁶. This is one way in which the cost of recovering past fossil-based CO₂ emissions can be allocated to fossil-based products, in line with the user-pays-principle and other fundamental features of a sustainable market economy.

Nevertheless, whoever pays the cost, the forest sector is needed to actually capture atmospheric CO₂ in the trees of its sustainably managed forests, and to convert it into various useful products. Oceans capture considerable amounts of CO₂ from the atmosphere, which affects their carbonate chemistry and doesn’t produce useful material like forests do. As of today, no feasible man-made carbon capture and sequestration (CCS) system is available on a large scale, and, more importantly, there are no large-scale uses for the CO₂ so captured. There is good basis to see the forestry sector becoming the most competitive and sustainable provider of net-zero carbon solutions ². At the same time, large mainstream investors are increasingly factoring in the development and implementation of low-carbon strategies when evaluating their portfolios ^6,7.

Figure 1. What a tree can do (Source: CEPI) available online

Listen to when President and CEO Johanna Buchert from Natural Resources Institute Finland discusses how the forest industry can mitigate the climate change be replacing fossil raw materials.