Sustainable Forest Industries Opening Pathways to Low-Carbon Economy

1. Sustainable Forest Industries Opening Pathways to Low-Carbon Economy ACPWP-52 Montebello Jukka Tissari FAO Forestry Department 23 May 2011

2. Forest industry is in the core of low-carbon economy There is room for improvement within the three pillars of sustainability There are much greater new pathways in de-carbonazing the economies Innovation and partnerships are imperative Opening Messages

3. An intelligent extension to the nature’s production process and carbon cycle Forest industry is in the core of low-carbon economy

4. Economic: • Issues: sound use of resources, innovation vs. market saturation, overcapacity vs. competitiveness shifts, emerging countries’ development stages, cost of compliance (carbon, legality, certification) • Environmental: • Issues: certification, LCA, product & company carbon footprints, energy savings and efficiency gains, lowered emissions to water and air, compatibility with energy and climate change policies • Social: • Issues: legality, employment, collaborative forestry, community engagement, education, lifestyles Three Pillars of Sustainability in Forest Industries

5. Issues: • sound use of resources • innovation vs. market saturation • overcapacity vs. competitiveness / investment shifts • emerging countries’ developmental stages • Responses: • resource efficiency (fiber, water, chemicals) and recycling • improved SFM, integrated land-use • proactive companies innovate & change business models • mature markets home; growing emerging markets • product and process innovation, partnerships, leveraging finance • value-added per cubic meter of industrial RW used grows in woodworking industry but falls in P&P, • regain competitive position by relocating investments • unequal distribution of benefits of globalization • copy or leapfrog steps in forest industry development Responses of Forest Industries to Economic Sustainability

6. 5 Fs Food; [animal] Feed; Forest [conservation]; Fibre and Fuel REDD+ The Land Issue

7. Meeting the multifunctional demands on forest resources and their sustainable management Enhancing the availability and use of forest biomass for bio-based products and energy Developing of intelligent, resource and energy efficient manufacturing processes Developing of innovative products for changing markets and customer needs Innovation Pathways of Sustainable Forest Industries

8. Forest harvesting: simultaneous localization and mapping, real-time forest modeling and ICT, extracting multiple biomass streams: grass-root solutions for scaling up the bio-economy • Mechanical forest industry: mostly incremental innovationon existing products and processes, comb. heat & power, composite products and building systems, product carbon sinks and energy efficiency • Chemical forest industry: game-changers from bioenergy, biochemicals and biomaterials, biofuels, high-performance fibres, intelligent paper/packaging, nanotechnology, lowered GHG emissions through substitution of oil-based products • Past to present: Proprietary R&D and incremental innovations • Future: Increasingly open innovation approaches, partnerships, multidisciplinary teams, higher ambitions Innovations along the Value Chains

9. Leapfrogging through Investments? • Old mills in the North: conversion into a biorefinery platform, energy and emission improvements, continue weathering cyclical BAU, or divest • New mills in the South: best technologies and largest scale, energy improvements, generate carbon offsets and credits • Old, small mills in the South: incremental improvements, or divest • Pace of change: BRICs make 20% of wood pulp, 30% of paper and board Wood Pulp (mill. tons) Paper and Paperboard (mill. tons)

10. Issues: • certification • lowered emissions in water and air • compatibility with energy and climate change policies • Responses: • voluntary compliance started before mandatory • becoming enforced by new trade legislations • linkages to FLEGT, forest carbon MRV • lowered process water usage, treatment and closing the loops • emissions per unit of output, end of pipe capture • energy efficiency is improving in most regions and most parts of the industry • process improvements, increased use of self- generated energy from waste, co-products and biomass • seek political influence and inclusion of forest management into REDD+ and other climate change accords • industry promotes wood and paper products as moreenvironment, climate-friendly than alternatives • de-carbonizing economies Responses of Forest Industries to Environmental Sustainability

11. Despite increased output levels, the global pulp and paper industry consumed only marginally higher amount of steam and electricity in 2009 than in 2000 • Strive to improve performance against BAT has resulted in 15% energy savings, mainly from the better circulation and re-use of process water, larger scales of mills and higher consistencies of pulp • Water consumption declined from 37 bill. m3 to 31 bill. m3 in 2000-2010 • Producers in the USA pledge by 2020 to: • increase the paper recovery for recycling >70% • improve energy efficiency in purchased energy use by min. 10% • reduce the intensity of the industry’s GHG emissions by min. 15% • consider an impressive 50% freshwater reduction target • P&P producers in Brazil raised the use of black liquor & biomass to 84% of energy 2009 • Europe's industry has lowered its specific CO2 emissions (measured in kt of CO2 / kt of product) by 42% in1990-2009 Energy Efficiency, Water & Emissions

12. Globally, direct emissions intensity (direct GHG emission per product ton) declined by 13% in the pulp and paper industry, and by 16% in the wood products industry between 2002-2007 • Total GHG emissions from the forest products value chain were 890 mill. tons CO2 equivalent per year • Net sequestration of CO2 from the atmosphere back into the forest products industry value chain was 424 mill. tons CO2e in 2007 • Nearly a half of the emissions were offset by product sinks; out of manufacturing related emissions, the products sequestered 86% Greenhouse Gas Emissions

13. Responses: • out-grower schemes, conflict resolutioncapacity & dialogue to engage local communities in wood production and SFM • other than productive activities: schools, health • knowledge of local conditions, social structures in communities and cultural aspects • mostly local workforce, including seasonal / part-time • direct vs. indirect, multiplier effects • higher mechanization and efficient processes • basic & vocational, community members & payroll staff, skills & safety • educating consumers and designers, specifiers • low-carbon products promotion, communication • Factors: • collaborative forestry • community engagement • employment • education • lifestyle changes Responses of Forest Industries to Social Sustainability

14. When competing land uses, subsistence farming and landless people come across unprepared industry... ... it may be too late Inter-cropping Silvipastures Engage Communities in SFM and biomass production

15. Research on the CSR claims of the Top-100 global pulp, paper, and packaging producers (Han 2010): • Top claims were: • “Resource and energy use” • “Sustainable forestry” • “Pollution and waste management” • “Mitigating climate change” • “Community support” • “Health, safety, and well-being” • The least claimed were: • “Ethical leadership” • “Responsible/fair remuneration” of the workforce • “Promoting social and economic inclusion” in the supply chains • “Mapping key stakeholders and their main concerns” Communication on sustainability

16. The industry is: • improving sustainability of resource use • employing local workforce • recycling discarded products back into production, energy • increasing energy security and efficiency • reducing product carbon footprints • The punch line is about reconciling production with consumption: sustainable products and energy for responsible consumers • Three steps of effective communication: • demonstrate mastery of the technical issues • demonstrate caring about the matter • propose a plan to fix things Inclusive communication on difficult technical details

17. Repositioning Forest Industry • Forest-based carbon: green-blue solutions (REDD+, CDM, VCM) • Sawnwood and wood-based panels: a solution-provider to the “Built Environment and Living Habitat” cluster • Pulp industry: a biorefinery platform for “Green Energy, Chemicals and Materials” cluster • Paper and packaging board industry: partner for the “Intelligent Media and Functional Packaging” cluster • Quote: ”A recent AF&PA survey revealed that 80% of the American youth opined they cannot live without paper.”

18. Pathways of Forest Industry: break out of BAU • Shares: consumption growth shifting to Asia, Latin America, Africa • 2050 population age pyramids are explanatory: compare India, China, Africa (Ethiopia) • Tonnages: slowing growth of basic P&B business in traditional markets

19. The Energy Pathway World primary energy mix IPCC prediction: 77% of primary energy could come from renewable in 2050 (407 Exajoules, needs $12 trillion investments by 2030!) Biomass sources in primary energy mix

20. Forest Industry Pathways for Bioenergy, Fuels

21. Sugar is the Future’s Oil? Path: Crystalline cellulose >> Glucose>> Fermentation >> Fuels & chemicals • Cellulose and hemi-cellulose contains C5, C6 sugars • Stable, long polysaccharides, difficult to break up, lignin impact • Cane, corn easier to process into bioethanol

22. Solid and Liquid Biofuels: a Growing Energy Cargo Wood pellets for energy & chips to pulp: the fastest growing forest product segments (15-20 mill. tons/yr. both) Global fuels market: $4 trillion. Biofuels: from 55 mill. tons (oil-eq) to 750 mill. tons 2050

23. What are the Projects in Cellulosic Ethanol Biorefinery Pathway? • North America: • Not one single technical setup, but several fuel types, technical options and local configurations • High levels of public support in pilot & demonstration plants in the USA (46 biorefinery projects funded); Renewable Fuel Standard 2 from EPA • DOE: $564 mill. to 19 integrated biorefinery projects, 8 focusing on wood biomass, USDA $47 mill. to eight new biorefinery projects (inc. Domtar) • Forerunners mainly outside forest industry: Cobalt, KiOR, Codexis, Mascoma, INEOS, Enerkem, Bluefire Ethanol, etc. • The US pulp industry benefited from alternative fuel mixture credit for black liquor, now cellulosic biofuel tax credit in place • In Canada, Fed. Gov’t invests in mill upgrades under Pulp & Paper Green Transformation Program ($1 bill.) & Transformative Technologies Pilot Scale Demonstration Program (Tolko, Cascades, Canfor) • Others: G2 BioChem, Rentech, Lignol, Woodland Biofuels

24. What are the Other Projects for BiofuelsBiorefinery Pathway? Timeframe: 3-5 years before large commercial scale mills operate Worldwide:

25. Intermediate Pathway: Chemicals • Chemicals industry uses some 10 different raw materials (fossil fuels, minerals, salt, water and biomass, etc.) • Some 85% of all chemicals are produced from 20 base chemicals (ethane, propane, butane, ammonia, benzene, methanol, chlorine, etc.) • Base chemicals are converted to some 300 intermediate chemicals (acetic acid, formaldehyde, urea, ethane oxide, acetaldehyde, etc.) • Some 35,000 consumer products (plastics, solvents, detergents, pharmaceuticals, etc.) are produced from the intermediates • Canada’s BioPathways Project estimated a $200 billion market for green chemicals • Integrating forest industry platforms into these chains & processes opens up innumerous end use segments, where consumptionis rising especially in emerging economies • A huge opportunity for forest-based sector, but raw material concerns (availability, most valuable use, cost) require strategic assessment.

26. Thank You!