At this year’s European Conference, we invited four leaders from the forest products industry to share their perspectives and answer your questions on sustainability, from the challenges faced to innovative technologies and solutions. Read on and find out why good data and new technology are key to the industry’s sustainable future.
Fit for 55 is a set of climate, energy and transport-related policy revisions and updates to the current EU legislation. It is a part of the EU’s plan for a green transition that helps to achieve the goal of reducing net greenhouse gas emissions by at least 55% by 2030 and carbon neutrality by 2050.
On a global scale, Fastmarkets estimates that the containerboard sector within Europe and North America has less fossil CO2 emissions per tonne than other regions in the world.
“As a sector, energy performance in the pulp and paper industry is doing pretty well,” said Jori Ringman. CEPI estimates the pulp and paper sector to be the biggest industry producer and consumer of renewable energy, with 62.2% of biomass in its energy mix, followed by 32% gas and 2.7% coal.
The difficult part, Ringman said, is that the industry will have to more than double its current performance, with increasing marginal cost, to reach the climate targets.
Sustainability strategies and financial returns – are they synonymous?
There are many reasons to adopt sustainability strategies, including environmental preservation, societal benefits and business competitiveness. However, some are concerned that strategies focused on sustainability may not bring enough financial returns.
In a competitive market, businesses want to make sure every investment will have some type of return. The panelists suggest there are two reasons why some companies could be cautious to adopt sustainability strategies that hurt the bottom line.
One is the timing in which sustainability strategies have been adopted. The early adopters have learned lessons along the way and are better at managing the risks, while those embarking on their journey now are finding the market environment challenging to navigate.
The other reason is that the lower-hanging fruits have already been picked by the early adopters. Those trying to get their sustainability strategies in place, or those that are trying to advance their sustainability strategies now, are met with disproportionate costs and it can feel like their investments into sustainability are not giving enough payback.
That said, there are many businesses out there that have economic gains from employing sustainability strategies, having put in the necessary investment and changes to get them there. While financial returns may not come instantly due to their long-term nature, nor be as clear cut in the form of gains in revenue since some of them come as savings on costs, there are plenty of successful cases to learn from.
How can we get tangible results to avoid being labelled “green-washing”?
Credible sustainability data not only proves the sustainability score of the industry, but also gives the industry a positive image.
Businesses need to make sure that they have solid data to back their sustainability claims. They should have strong internal processes for data assurance and have external validations from auditors to verify the data.
Some performance indicators a pulp and paper producer can use to measure their progress include:
- Recycling rate – this is a key factor for the industry and a real differentiator against other industries. There is a lot of activity in this space and it is a target for the whole value chain.
- Water preservation – reducing water consumption and waste is becoming higher up on the agenda as the world faces freshwater supply challenges.
- Energy consumption/reducing emissions – both are required to help the industry become more efficient in energy use and ensure that energy sources are cleaner and greener.
More importantly, the data collected now will drive the digitalization of the industry.
It is important to collect data for digitalization. Knowing data is one thing but making use of it is the most interesting part.
Data can be used as a basis to understand the current situation and identify the gaps. New technology can then be created and used to fill in the gaps and optimize operations.
Is technology the main barrier to being fully sustainable?
Technology is a crucial factor in driving the industry towards sustainability and our panelists expressed their understanding of the need to accelerate innovation to bridge the gaps between where we are now and the sustainability goals the industry is trying to achieve.
For example, some mills are unable to use wood as a greener source of energy and they have more challenges in becoming carbon neutral on their energy usage due to technological constraints.
Achieving carbon neutrality, our panelists said, requires disruptive innovations. While we have products and technologies like automation that enable a certain level of carbon neutrality, we need more of these to take us further.
The barriers currently come in three forms: developing the solution itself, getting the funding required, and the industry’s own conservatism when it comes to taking risks in adopting new technology. Solutions for these could include a push via policies and funding support from the EU.
However, our panelists also pointed out that there are many other factors that sustainability strategies could focus on where the technology is already available. Looking at the wider picture, reducing water consumption, improving efficiency in fibers usage and optimizing energy consumption are also areas pulp and paper mills can work on.
Where are the major factors in play in the European market in the next few years?
Energy transition and technological solutions will be key to sustainability developments in this industry, said our panel.
Solution providers like Valmet and Voith are already innovating and introducing new technology to improve energy efficiency as a part of their efforts to drive sustainability. Energy transition remains a bigger issue as the industry looks to source clean and affordable fuel in the industry. It is a difficult path to go down due to the costs and changes involved for those that have not yet been able to make the switch.
A big barrier to overcome will be to justify the investments put into sustainability projects, since it may be a while before financial returns are seen. While the solutions are not yet on the table, it is important to set out a vision and join forces to achieve the goal together.
