Climate neutrality in the European Union and globally will lead to a deep transformation of existing industrial value chains, bringing new and lower-carbon products, processes and novel business models. This transformation will affect the entire industrial sector, notably including all energy intensive industries, forest based industries among them. The sector represents a full value chain, from forest owners and managers, to industries transforming the forest products and recycling. While the exact routes for this transformation remain uncertain, the technological pathways for decarbonisation are known: electrification, hydrogen, energy efficiency, circular economy, carbonneutral liquids, carbon capture and negative emissions.
For policymakers, the transition of forest-based industries raises the task of finding the right balance between the sector’s contribution to sinks, product substitution (including recycling), renewable energy and biodiversity, in addition to carbon accounting issues, especially if international trade is included in the analysis. Possible trade-offs – food versus feed, fibre versus fuel, and land versus ecosystems – will most likely become more acute after 2030 as the deadline for climate neutrality approaches.
More knowledge will be required to make the most appropriate choices, such as which energy crops have the potential to deliver the highest negative emissions, which forest management practices are optimal from a biodiversity perspective, and what role forests will play more generally in climate change mitigation and adaption. Low-carbon ‘lead markets’ can in theory support demand for climate-neutral products, including for wood-based products, but policy-driven demand is not equivalent to market-driven demand. Climate-neutral products are not necessarily of higher value to consumers, nor do they offer better functionality. Consumer preferences for biobased products in, for example, the materials or textiles sectors will matter.
CEPS policy paper was commissioned by Cepi with the aim of contributing to the public debate on the role of the forest-based industry in shaping the 2050 carbon neutral economy.
Read the full paper here.