Global Overview Forest Industry
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The document discusses the shift in global forest industry dynamics, highlighting the growth of paper production in emerging markets, particularly Asia, and the resulting pressures on wood availability and biodiversity in other regions. It contrasts the state of the forest industry in Canada and Finland, emphasizing the importance of modern infrastructure, renewable biomass energy, and advanced utilization of forest resources. The content concludes by suggesting that sustainable forest management can lead to significant environmental benefits and economic opportunities in the bio-economy.
Global Overview Forest Industry
- 1. Some Views on the Future of the Forest Industry Phil Riebel, M.Sc.
- 2. foret shot State of the Global Forest Industry
- 3. Some Key Points Source: Jaakko Poyry, World Fibre Outlook, 2009 In past years the growth of paper production has shifted from mature markets (NA and western EU) to emerging markets – China, rest of Asia, Eastern EU Rapid growth in Asia – Fibre requirements 41% of global consumption (1990 - 24%) – Will grow to 50% by 2025 NA and Western EU has declined from 62% (1990) to 47% – Forecasted to continue down to 35% by 2025 Market pulps - from 21% of global pulp consumption (1990) to 32% – New pulp mills close to fast-growing plantantions – High demand in fast-growing markets UPM 3
- 4. Source: Jaakko Poyry, World Fibre Outlook, 2009 UPM 4
- 5. Source: Jaakko Poyry, World Fibre Outlook, 2009 UPM 5
- 6. Source: Jaakko Poyry, World Fibre Outlook, 2009 UPM 6
- 7. Source: Jaakko Poyry, World Fibre Outlook, 2009 UPM 7
- 8. Concerns The growth in Asia and China is putting pressure on wood availability in Russia, Indonesia, and South America There is a danger that a large amount of biodiversity will continue to be lost in the Southern Hemisphere due to conversion of natural forests to plantations Buy certified forest products (ex: FSC, SFI) UPM 8
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- 10. Indonesia: 9000 ha clearcut starting UPM 10
- 11. Forestry Needs to Promote Biodiversity Native tree species Deadwood Valuable habitats Forest structure Water resources Natural Forests UPM 11
- 12. North America Many closures in Canada – Deteriorated cost competitiveness / Poorly maintained asset base – CAD vs US exchange rates – Wood availability And... – Affordable subsitute for paper in communications and advertising – E-MEDIA – Declining advertising revenues = less paper purchased Probably no new pulping capacity unless there is a dramatic change in business conditions Source: Jaakko Poyry, World Fibre Outlook, 2009 UPM 12
- 13. Questions? Where will the wood come from in growing markets? What are the impacts on the planet? How have other countries / companies coped with these global changes? ex: Finland What new strategies are being looked at by leading companies? Is there hope for our Canadian forest industry and the economy it supports? UPM 13
- 15. Finland....Many similarities with Canada Beautiful country Nature, fishing, hunting Clean Well developed economy Turbulent history, proud heritage People: – Honest, by the book – Reserved by our standards Long summer days…short and cold winter days Sauna, reindeer meat UPM 15
- 16. Finland and Canada CANADA FINLAND Population: ~33 million 6.6x Population: ~5 million Forest area 310,134,000 ha 13.7 x Forest area: 22,500,000 ha Corruption Index: 14th Corruption index: 2nd Environmental Sustainability Environmental Sustainability index: 46th index: 12th Gross value of forest industry's Forest Sector Revenues: $ 27.5 production: $54.2 billion 2x billion 16% of the total value of Share of GDP: 1.7% industrial production in Finland R&D investments of forest R&D: $364 million 0.7 x cluster = $500 million UPM 16
- 17. Lesson #1: A modern and state-of-the- art infrastructure is cost competitive Modern asset base – Automated, low production costs – Good training system – Lower wages than US and Canada Regular upgrades and re-investments in paper, pulp and energy Ex: 1.5 billion in biomass energy in 10 years (just UPM) Driven by long term thinking and strategy development + EU policy Technology focus – BAT Government support UPM 17
- 18. Lesson #2:..it also improves environmental performance and helps product marketing Effluent Flow 160 Water use at European and North American 140 non-integrated printing paper mills (ex: magazine / catalog paper) 120 100 Flow, m3/Mt 80 60 40 EU Best-available-technology level 10-15 m³/t 20 0 UPM Company UPM 18
- 19. Lesson #3: Renewable Biomass Energy = Lower Production Costs ...lower carbon footprint + creates value on EU ETS + better for product marketing Cost: 75-100 million euros Annual fossil CO2 reductions range from 75,000 to 350,000 MT CO2 per facility UPM 19
- 20. Lesson #4: Energy-efficiency in Logistics also helps lower cost …and carbon footprint Fossil CO2 emissions from transport US truck = 45 – 55 g/tkm EU truck = 33 – 45 g/tkm US diesel train = 30 g/tkm EU Diesel rail = 23 g/tkm Ship = 13-20 g/tkm Electric rail EU = 4-12 g/tkm UPM 20
- 21. Lesson #5: Take care of the forest...and keep it sustainable More intensive forest management system, i.e. semi-commercial forests – High timber quality Some company owned forest but mainly privately owned – Avg woodlot size ~3-5 ha High level of certified forests (90%+ PEFC) Companies offer a Forest Service to private woodlot owners Every person's right to use any forest UPM 21
- 22. Lesson #6: Advanced utilization of biomass creates more value Finland is one of the most advanced countries for full use of biomass from the forest. Pulp, paper, timber, other wood products Energy from biomass - Tops, branches, stumps, thinnings Use of fossil fuels in Finland is low (biomass, hydro ,nuclear) UPM 22
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- 24. Stumps from private woodlots piled at roadside for use as energy wood - Finland UPM 24
- 25. Thinnings from private woodlot piled at roadside for use as energy wood - Finland UPM 25
- 26. Wood residue left in a cut block (NB, Canada) Missed opportunity and missed value creation? UPM 26
- 27. What is the New Forest Industry? Full and more versatile utilization of biomass A key sector in the development of the next industrial wave: the bio-economy - Products from plant-based materials Leading companies are changing their strategies to capture this future Some government incentives and programs for innovation (EU, Agenda 2020 in the US, biorefineries) UPM 27
- 28. The sixth industrial revolution is bio- based 6. wave 3. wave Sustainable 2. wave Electricity Bio economy 1. wave Steam engine Chemicals Innovation Renewable energy Iron Railways Combustion Green chemicals Water power Steel engine Industrial ecology Machines Cotton Green nanotechnology Textile 5. wave Trade Digital web 4. wave Biotechnology Petrochemicals Information Aircrafts and technology space Electronics 1785 1845 1900 1950 1990 2020 28 February 2010 9/2/10 Source: Worldwatch Institute / State of the World UPM 28
- 29. Bio-based products have substantial markets Added value Nano products e.g. composite Biochemicals products Biomaterials Second generation biodiesel: emissions 85% lower than with e.g. bio oil and Biofuels for transport fossil fuels bio ethanol Bioenergy – heat and electricity for industry and households Volume grows Pulp, paper, plywood and timber products Wood-based biomass procurement and logistics Source: FIFF UPM 29
- 30. Example: Liquid Biofuels from Wood Wood waste can be processed using a modified Fischer-Tropsch method – Gas to liquid technology that produces petroleum substitute – i.e. 2G biodiesel for transportation No food crops needed..just wood 85% less CO2 emissions R&D underway for 5 years than fossil fuels Biorefinery producing liquid biofuels - adjacent to kraft pulp mill EU policy - % of transportation fuel must be renewable by 2020 UPM 30
- 31. Forest Products have a Great Environmental Story to Tell Sustainable managed forest provide unique social, environmental and wildlife values They take up carbon and help mitigate the effects of climate change They protect air and water resources Products are renewable, recyclable, re-usable...key sustainability features that few products have We are sitting on a gold mine of opportunity for the next bio- based industrial revolution...if we make the right decisions UPM 31
- 32. Opportunities in NB Biomass…yes Modern mills? Market for biomass? Green government policy that drives an economy? Green energy incentives? Good R&D infrastructure? Will NB be an exporter of chips and pellets…to countries that have done their homework? We need to "get out" and learn from what other have done…the world is changing quickly UPM 32
- 33. Additional Information Phil Riebel Senior Advisor, Sustainability & Environmental Services philriebel@bellaliant.net Office: 506-773-7304 Cell: 506-625-7304 UPM 33