Future of European Forest-Based Sector

1. Future of European Forest-Based Sector Sinikka Västilä, Head of Office, EFINORD Bioeconomy-Based Forestry: Opportunities and Challenges in the Century of Climate Change Nordic Council of Ministers’ Office in Latvia, September 28-29, Riga, Latvia

2. EFINORD THE NORTH EUROPEAN REGIONAL OFFICE OF THE EUROPEAN FOREST INSTITUTE • EFINORD is one of five Regional Offices of the European Forest Institute (EFI), established in 2010 and based in SLU, Umeå from 2014 • EFINORD is the voice of Nordic forestry in EFI, and is adding a European dimension to existing Nordic cooperation • EFINORD network has around 30 partner organisations in its region and is open for new ones to join • EFINORD promotes forest research and its networking within Nordic-Baltic Sea-North Atlantic area, especially in issues of North European relevance • EFINORD initiates and facilitates communication of research results supporting science-policy interaction

3. EFINORDTHE NORTH EUROPEAN REGIONAL OFFICE OF THE EUROPEAN FOREST INSTITUTE • EFINORD’s broad thematic umbrella is sustainable forestry, the focus is in sustainable bioeconomy including the implications, trade-offs and synergies related to intensifying forest management, increasing biomass production and ensuring the provision of ecosystem services • EFINORD contributes to the EFI’s strategic core functions and Work Plan • The consortium of SLU, Luke and SNS jointly manage and finance (in-kind and in-cash) EFINORD • An advisory Group of seven members supports EFINORD in its tasks • Contact: Sinikka Västilä, Head of Office, sinikka.vastila@efi.int, http://www.efinord.efi.int/portal/

4. Future of European Forest-Based Sector Content: Pulp and paper industry Wood-products industry Bioenergy Services Research Summary Traditionaldivisions since more and more forest-based products are developed in chemical, energy, medicine, textile, cosmetics, construction industry. Source of fotos: Luke, EFINORD

5. Future of European Forest-Based SectorPulp and paper industry Drastic decrease in many forest products in the 21st century due Structural changes -The emerging economies are increasing their role as consumers and producers - Saturated or declining consumption of some major paper products Long economic slump Opportunities: Online trading increasing packaging paper consumption Fresh food and ready-to-eat meal packaging New packaging materials like intelligent packages Coniferous virgin fibre in food packaging Substitution of fossil-based plastic In packaging environmental sustainability but also distribution efficiency, marketing power, commercial advantages, consumer safety and convenience => There is a strong incentive of European pulp and paper sector to diversify their strategies and start to produce new low volume high value-added products and services. Forest biorefineries, multiproduct factories are one manifestation of new product strategy.

6. Future of European Forest-Based SectorWood-products industry Sawnwood, wood-based panels and engineered wood products (e.g. for construction, furniture and packaging) Affected by the financial slump, the decrease in construction in Europe and competition from eastern European, Russian and Chinese producers Opportunities: In substituting fossil based products e.g. replacing the steel and concrete in construction Renovation and additional storey construction offer possibilities Emerging prefabricated wood construction practices Climate change mitigation targets and environmental concern, as well as recent technological and institutional changes Niches for SMEs: specific customers, products Sawmilling as a provider of material for other FBS Challenges: The culture and characteristics in the construction sector Standardization of construction systems and updating regulations Lack of structure designers and architects with expertise in wooden buildings Traditions, large scale substitution will not rapidly occur in Europe.

7. Future of European Forest-Based SectorBioenergy Many studies of future demand (use) and supply (resources), a lot of variation in results Supply A large increase in the use of wood for energy would mean a shortage, or a tightening of availability of forest biomass From petroleum to biomass as the primary raw material in the chemical industry would increase the use of forest biomass… but The use of wood for traditional forest products may decrease and new forest products may require less raw wood material than the traditional ones New technologies will probably improve the energy efficiency of forest bioenergy and harvesting technology and logging Sawmills are in a key position as mobilisers of all kind of forest biomass Demand Policy targets, investment subsidies, the development of other renewable energy sources and the prices of different energy sources also determine the use of bioenergy The changes in public opinion and policy measures have unforeseen impacts on the future competitiveness and availability of wood for energy, e.g. the issue of carbon neutrality of forest bioenergy

8. Future of European Forest-Based SectorServices Product value chains include a number of service-type tasks such as management, accounting, HR, marketing, immaterial rights, branding, information systems, R&D, engineering and consulting. “Servitizing” – adding to a tangible product intangible services and selling the function of the product in addition to the product itself Digitalization or Industrial internet can disaggregate value chains into different tasks located in different places geographically and carried out by different companies. Classification of services in the FBS: forest-related, forestry-related and industry-related forest-related services like nature tourism and recreation forestry-related services like expertise services in forest governance, forest administration, inventory and information systems, forestry educations and R&D industry-related service not only selling the products but rather a solution for the customers’ need The employment and income in Europe could increasingly be generated by R&D, education, consulting, legal counselling, financing, branding, IPR, management, monitoring of the complex production and distribution networks related to global forest industry even if large-scale manufacturing would move to the emerging countries.

9. Future of European Forest-Based SectorResearch Research should support the development of the sector and researchers should listen to the costumer – but not too much Basic and applied science, avoiding fragmentation More theory and modelling, joint use of research material/data More forecast, agility, risk taking, courage to end no more relevant research More synthesis More researchers from outside traditional forest research, interdisciplinary research More research of economics, policy, social sciences Extension, from science to practice is still an important bottleneck So far on technical issues of new products, in the future more on advantages of the value-chain, business strategies, development of new service businesses, policies and their implications

10. Future of European Forest-Based SectorSummary Drastic decrease in the production of many forest products in the 21st century in Europe Mature markets for some current products Competitive advantage of the emerging countries Long economic slump Need for the forest-based industry to renew and start to produce new low volume high value-added products and services Today’s products need to be developed to remain competitive and they will bring income for many decades still Services create new possibilities for many forest-based companies adding to a tangible product intangible services and selling the function of the product in addition to the product itself digitalization can disaggregate value chains into different tasks which may be located in different places geographically and carried out by different companies The sector is coming more cross-sectorial and diversified with new actors like chemical industry involved and there are challenges related to the use of wood and forests

11. Future of European Forest-Based SectorSummary The environmental sustainability and resource-efficiency have to be included in to actions. Finding a balance between biomass production and use, increase and maintenance of carbon stocks, and protection of biodiversity will be important. The public opinion and acceptability of the use of wood and forests and policy measures have unforeseen impacts on the future competitiveness of forest-based products. Focus on end users needs and opinions, not only business-to-business Within Europe, different regions may also have different competitive advantages in producing the new products, as in the case for existing ones. There is no single solution for all countries or regions

12. Thank You!