Industry Value Chain by qdj24924


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									The forest products value chain:
 Energy and Climate Change

               A Discussion Sponsored by:
 The Sustainable Forest Products Industry Project of the
  World Business Council for Sustainable Development
The International Council of Forest and Paper Associations
             Overview of
The Forest Products Industry Value
Chain and the Global Carbon Cycle
The Climate Change-Related Issues
Faced by the Forest-Based Industry

       Presented by Reid Miner, NCASI
What is the Forest-Based Industry Value Chain?
                           Value Chain Elements
                           • Forestry
                           • Manufacturing
                           • Transport
                           • Product Use
                           • Recycling
                           • Other End-of-Life Uses
                           • Product Disposal
                           Value Chain Attributes
                           • Carbon Cycle
                           • Recycling
                           • Biomass-based
                           • Substitution effects
                           • Economic & Social benefits
  Why a Value Chain Perspective?
• Allows a holistic examination of impacts and
• Provides insights that can be important to public
• Is required to properly understand sustainability
  – “The climate change issue is part of the larger
    challenge of sustainable development. As a result,
    climate policies can be more effective when
    consistently embedded within broader strategies
    designed to make national and regional [and
    corporate] development paths more sustainable.”
    (IPCC 2001)
The Forest Products Industry Value Chain
                 and the
Connections to the Climate Change Issue

 • First, an overview of the current situation
 • Then some of the issues faced by the forest-
   based industry
  Sequestration of carbon in forests
        and forest products

• The forest-based industry is intimately
  connected to the global carbon cycle
• Some background
                                         Gigatonnes C


Te                     or
     m                   es
              t   e
                         r   es
      Bo                       ts


                 l    fo
                                                                                IPCC, 2001

 To                          es
       ta                      ts
          l   Te
                         s   tri
                                                                                             Stocks of Terrestrial Carbon
    Major Carbon Stocks
               IPCC 2001

               730 Gt C

Terrestrial                Oceans
2,300 Gt C                38,000 Gt C
 Major Carbon Stocks and
Gross Annual Carbon Flows
                    IPCC 2001
                 730 Gt C

Terrestrial                       Oceans
2,300 Gt C                      38,000 Gt C
(1200 in Forests)
Relatively Small Net Annual Fluxes are
Causing Increases in Atmospheric CO2
                  IPCC 2001


Burning Fossil
   Fuels         Terrestrial   Oceans
Changes in Global Forest Carbon Stocks
               (IPCC 1996, 2000, 2001)

• Forest carbon stocks are generally stable or
  increasing in middle and high latitudes.
• Forest carbon stocks appear to be declining in
  the tropics, but estimates are uncertain.
Carbon Stored in Forest Products
• Carbon in forest products
  – removed from atmosphere in the forest
  – remains sequestered during product use
• Forest Product carbon pool growing
  – recent estimate = 0.04 Gt C yr , (IPCC 2003)
• Forest Product carbon pool will continue to
  grow for a long time
  – long times-in-use for many products
  – slow decomposition in landfills
  – increasing standards of living
   Estimating Carbon Stored in
         Forest Products
• National Inventories
  – IPCC’s 2003 “Good Practice Guidance for
    Land Use, Land-Use Change and Forestry” -
    Appendix 3a.1
• Corporate or Value Chain Inventories
  – ICFPA Tools being developed
  – Based on the “100-Year Method”
  – Will be reviewed for use under WRI/WBCSD
    GHG Protocol
 Manufacturing Emissions of GHGs
• Global forest products industry direct emissions
  – 0.072 Gt C yr
  – Approximately 1.3% of global C emissions
• Global indirect emissions more uncertain
  – Indirect emissions from purchased power are perhaps
    50% to 75% of direct emissions
• The forest-based industry’s GHG profile benefits
  – Extensive use of biomass for energy
  – Extensive use of Combined Heat and Power (CHP)
Benefits from Biomass Fuels and CHP
• The forest products industry derives more of its
  energy from biomass than any other industry
  – Approximately 50% of energy requirements in
    OECD countries
• The pulp and paper industry is among the
  leaders in using CHP systems
  – Reduces fuel requirements, including fossil fuels
  – Often powered by biomass fuels
  – In many countries, CHP systems supply more than
    1/2 of electricity needed by pulp and paper mills
     Estimating Manufacturing
        Emissions of GHGs
• Pulp and paper mill calculation tools
  – ICFPA/NCASI calculation tools
  – Accepted for use under WRI/WBCSD GHG
• Solid wood products manufacturing
  calculation tools
  – Developed for AF&PA and FPAC by NCASI
  – Being reviewed by WRI/WBCSD for use under
    the GHG Protocol
So we see that the carbon profile
  of the forest-based industry
           consists of;
•   Carbon in the forest
•   Carbon in products
•   Biomass energy
•   Carbon recycled, beneficially used, disposed
•   Manufacturing emissions
•   Indirect emissions
•   Other emissions along the Value Chain
Issues for the Forest-Based
       Carbon Sequestration Issues
1. The Productivity - Sequestration connection
  – Higher forest productivity = Reduced footprint
  – Higher productivity = Cost competitive carbon-
    sequestering products that can displace more GHG-
    intensive alternatives
2. Dangers of emphasizing forest sequestration
  –   Leakage of benefits
  –   Misses importance of other value chain effects
  –   Makes carbon-intensive substitutes more attractive
  –   Carbon storage in the forest probably saturates more
      quickly than storage in forest products
     Carbon Sequestration Issues
3. Managing for multiple objectives
  – Developing tools that allow the cost of carbon and
    other environmental attributes to be reflected in
    forest management decisions
4. Integrating carbon into corporate sustainability
  – Connection to sustainable forestry
  – Impacts on industry’s ability to provide economic
    and social benefits to rural communities and other
        Biomass Fuel Issues
1. Competition for fiber
  – Market-distorting public policies
  – Many non-carbon benefits accrue when fiber is
    used as a feedstock rather than fuel
  – Unintended substitution effects
2. Need policies that encourage additional
  supply of virgin and recovered fiber
   Manufacturing GHG Issues
1. Opportunities for improved efficiencies
  – Incentives
2. Regulatory and market barriers to increased
  use of CHP and export of electricity
3. The costs to achieve GHG reductions
4. Changing fuel costs
5. Different types of mills have different
6. Must consider the turnover of capital
     Value Chain GHG Issues
1. Net effects of forest management on
  emissions from the forest
2. Indirect emissions can be significant
  – Purchased power, transportation, energy-
    intensive raw materials
  – Opportunities for partnering or process changes
    to achieve reductions
3. End-of-life emissions from forest products
  – The complicated effects of recycling
  – Less organic waste is going to landfills
  – Biomass fuel from landfill methane and non-
    recyclable paper
     Substitution Effects Issues
1. Over the long term, substitution effects are
  very important
  – Often greater than sequestration
  – Most substitution effects are “permanent”
  – Building products as an example
2. Some substitution effects are understood
3. In many cases, however, a better
  understanding is needed
       Many issues to discuss
• Sequestration of carbon in forests and
• Manufacturing emissions of greenhouse gases
• Biomass as a substitute for fossil fuels
• Combined heat and power
• Value chain emissions of greenhouse gases
• Choices between products based on GHG-
  intensity and climate concerns (substitution
         Closing Observations
• The globe’s population is growing while
  standards-of-living are increasing
• An examination of the value chain suggests
  that the forest-based industry can help meet
  this global sustainability challenge.
• The industry has the opportunity to provide
  products that
  – provide carbon and other environmental benefits
  – provide a range of economic and social benefits
  – support rural economies
• But a range of issues must be addressed

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