The role of the policy mix in the transition toward a circular forest bioeconomy

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The role of the policy mix in the transition toward a circular forest bioeconomy☆ Luana Ladua, , Enrica Imbertb, Rainer Quitzowc,d, Piergiuseppe Moronee ⁎

a

Research Fellow, Technische Universität Berlin, Chair of Innovation Economics, Marchstr. 23, 10857 Berlin, Germany Research Fellow, Unitelma Sapienza, Department of Law and Economics, Viale Regina Elena, 295, 00161 Roma, RM, Italy c Scientific Project Leader, Institute for Advanced Sustainability Studies, Berliner Str. 130, 14467 Potsdam, Germany d Technische Universität Berlin, Chair of Innovation Economics, Marchstr. 23, 10857 Berlin, Germany e Professor of Economic Policy, Unitelma Sapienza, Department of Law and Economics, Viale Regina Elena, 295, 00161 Roma, RM, Italy b

ARTICLE INFO

ABSTRACT

Keywords: Forest bioeconomy Circular economy Policy mix Fuzzy cognitive mapping Sustainability transitions

Grand societal challenges call for a sustainability transition away from a fossil-based society toward a bioeconomy, in which energy and manufacturing production processes are based on sustainable biological resources. In this context, the forest bioeconomy can play a key role, as it links the entire forest value chain, from the management and use of natural resources to the delivery of products and services. The paper adds to the existing literature on policy mixes, seeking to identify effective policy mixes in support of the European circular forest bioeconomy. To this end, we employ a two-step methodology involving a fuzzy inference simulation, to assess the most suitable policy mixes to promote forest sector development. We considered different scenarios in order to identifying the most suitable policy mix. This analysis of alternatives revealed a number of interesting findings regarding the relative effectiveness of different policy mixes. Strengthening environmental policy resulted to be a precondition for an effective policy mix. According to stakeholder knowledge, the policy mix that performs best in pushing the bio-based forest to evolve in a circular and innovative trajectory, combines “climate mitigation policies” with “sustainable forest management policies,” “R&D policies” and “awareness raising policies.”

1. Introduction In order to meet the objectives set out in the Paris Agreement and the United Nations 2030 Agenda for Sustainable Development, major changes in production and consumption patterns are needed. First, reduced reliance on fossil fuels (European Commission, 2016) must be achieved. In this context, the bioeconomy – that is, an economy in which energy and manufacturing production processes are based on sustainable biological resources – represents a great opportunity (see, Hansen and Bjørkhaug, 2017; Imbert, 2017). According to the European Union, the bioeconomy encompasses the production of renewable biological resources and their conversion into food, feed, bio-based products and bioenergy. It includes agriculture, forestry, fisheries, food, and pulp and paper production, as well as parts of chemical, biotechnological and energy industries (European Commission, 2012). The renewed EU Bioeconomy Strategy (European Commission, 2018) strongly focuses on circularity, thereby complementing the

Circular Economy Action Plan (European Commission, 2019). Indeed, circular economy principles must be efficiently integrated within the bioeconomy to secure its sustainability. Against this background, in this paper, we focus on the forestry sector within a broader transition toward a circular bioeconomy. Currently, European forests are among the main suppliers of biomass in Europe, and their residuals represent one of the more sustainable feedstocks for bio-based products (see Ronzon et al., 2015; Siebert et al., 2018). The Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) highlights the importance of a sustainable forest management strategy for mitigating CO2 emissions. Such a strategy should aim at maintaining or increasing forest carbon stocks while producing an annual sustained yield of timber fiber for energy, materials and goods (IPCC, 2007). In addition to being used in the production of traditional wood-based products, forest biomass is increasingly being used in the production of textiles, bioplastics, chemicals and intelligent packaging, and is also contributing to the

☆ This article is part of a special issue entitled Forest-based circular bioeconomy: matching sustainability challenges and new business opportunities published at the journal Forest Policy and Economics 110C, 2020. ⁎ Corresponding author. E-mail addresses: [email protected] (L. Ladu), [email protected] (E. Imbert), [email protected] (R. Quitzow), [email protected] (P. Morone).

https://doi.org/10.1016/j.forpol.2019.05.023 Received 14 August 2018; Received in revised form 16 May 2019; Accepted 17 May 2019 1389-9341/ © 2019 Elsevier B.V. All rights reserved.

Please cite this article as: Luana Ladu, et al., Forest Policy and Economics, https://doi.org/10.1016/j.forpol.2019.05.023

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construction sector (see Hetemäki et al., 2017; Hurmekoski et al., 2018). However, the large-scale production and market penetration of these innovative products remain major challenges to be addressed (Clark et al., 2012). To this end, an effective policy framework to support innovation and investment in new technologies and production methods is indispensable. At present, while there are a wide range of forest-related policies, these are fragmented across sectors, dependent on national strategies and lacking a shared European vision (Ollikainen, 2014). In this context, the circular bioeconomy can provide an important guiding vision for the development of consistent and mutually reinforcing policies (see Wolfslehner et al., 2016). As stated by Hetemäki et al. (2017), the circular economy and bioeconomy reinforce each other through a wide variety of synergies that can be created throughout the entire value chain (including end-of-life). These synergies contribute achieving sustainability and well-being by better ecosystem services. Notably, as outlined by the authors, bio-based materials can easily adapt to circular designs (e.g. wood residuals can be used to produce bioenergy and materials). However, in the case of the forestry sector, synergies must be supported by an aligned policy framework, as weaknesses and shortcomings in this regard have been outlined (see Aggestam et al., 2017). Indeed, as already emphasized by the bioeconomy strategy (2012), the promotion of a bioeconomy is dependent on coordinated policy efforts across a wide spectrum of policy spheres. In the literature on sustainability transitions, this insight is captured by the increasing interest in policy mixes to promote transitions to more sustainable modes of production and consumption. The remainder of the paper is organized as follows: Section 2 discusses the relevant literature; Section 3 introduces the context of analysis; Section 4 presents the methodology; Section 5 shows the empirical results; and Section 6 discusses the results and concludes the paper.

mixes (Purkus et al., 2017; Rosenow et al., 2017), including policies aimed at phasing-out technologies (David, 2017; Kivimaa et al., 2017; Kivimaa and Kern, 2016; Rogge and Johnstone, 2017). Furthermore, scholars continue to debate instrument interactions, particularly between climate and renewable energy policy instruments (Del Río and Cerda, 2017; del Río González, 2007; Duan et al., 2017). Ossenbrink et al. (2018) discuss the importance of clearly delineating the boundaries of policy mixes in empirical analyses. They distinguish between bottom-up approaches, based on the perspective of affected actors, and top-down approaches, based on the strategic focus of policy makers. Based on the policy mix for zero carbon homes in the UK, Edmondson et al. (2018) explore the way in which the design of individual policy instruments feeds back into the overall policy mix via the policy process. Other researchers have focused on specific aspects of the policy mix. Rogge and Dütschke (2018) and Rogge and Schleich (2018) address the role of policy mix characteristics, such as consistency, credibility and the comprehensiveness or coherence of policy processes, as well as how these characteristics shape the perceptions and behavior of firms in the renewable energy sector. Schmidt and Sewerin (2018) compare the balance of different instruments and their design features within policy mixes for promoting renewable energy in a number of OECD countries. The majority of papers in the field focus on energy transitions in the electricity sector, renewable energy and energy efficiency. Few papers focus on the bioeconomy sector, including the sub-sectors of bioenergy and forestry. Among these contributions, Purkus et al. (2017) offer a comprehensive assessment of the policy mix shaping the bioenergy sector in Germany, including an analysis of policies at the national and EU levels. A key finding is the lack of consistent aims, which is translated into a similar lack of consistency and clarity with respect to policy measures. The paper concludes that the bioenergy sector specifically, and the bioeconomy sector more generally, are characterized by high levels of heterogeneity and uncertainty in terms of technology and their impacts. This makes the definition of a clearly defined and credible policy strategy challenging. Aggestam and Pülzl (2018) come to a similar conclusion in their analysis of the EU Forestry Strategy and its relation to EU policies that affect the forestry sector value chain. They find that the strategy omits a host of relevant policy areas and instruments, presenting a major barrier for improving policy coherence in the sector. Aggestam et al. (2017) provide a more descriptive review of the EU policy framework for the forestry-based bioeconomy, highlighting the relevance of major EU policy areas, such as agriculture, climate and energy, and competition, to name a few. Imbert et al. (2017) engage in a comparative analysis of policy strategies in support of the bioeconomy in Italy and Germany within a European policy framework. They find an inconsistent approach across the two countries, in spite of a common European strategy process. Rather than seeing this as a weakness, however, they view this heterogeneity in policy strategies as a strength in the highly uncertain process of innovation and technological change in the bioeconomy. Finally, Falcone et al. (2017) analyze possible policy mixes for the Italian biofuel sector within different context scenarios. Using a fuzzy cognitive mapping approach, they simulate the influence of various policies within two alternative context scenarios related to broader economic development in Italy: a scenario in which the ongoing economic crisis in Italy persists and deepens over time and an alternative scenario in which the crisis is reduced and the economy recovers. The key finding of the paper is that the influence of individual policy instruments is dependent on the broader context – in this case, overall economic development. Second, they highlight the relative importance of individual policy instruments, depending on the prioritization of different, potentially competing aims within the Italian biofuels sector. The fuzzy cognitive approach is identified as a useful tool for comparing the relative impacts of interdependent policy instruments (or policy mixes) within complex sectoral systems.

2. Sustainability transitions and the study of policy mixes It is widely acknowledged that policy intervention is essential for enabling transitions to sustainability. Without appropriate policies, lock-ins in unsustainable socio-technical systems are likely to persist. Against this background, scholars in the fields of innovation and transition studies have debated how policy can help to induce and accelerate the development of new, more sustainable technologies and related innovation systems (Ashford and Hall, 2011; Hemmelskamp, 1997; Kemp and Pontoglio, 2011). Furthermore, it has been widely acknowledged that individual policy instruments are insufficient for driving the systemic changes needed for transitions to more sustainable modes of production and consumption (Flanagan et al., 2011; Jänicke and Lindemann, 2010). As a result, in recent years, a number of scholars have made efforts to improve concepts and approaches to assessing and comparing policy mixes aimed at promoting transitions to more sustainable socio-technical systems. In earlier work on policy mixes, researchers emphasized the interaction of different policy instruments (Gunningham and Grabosky, 1998), the development of policy mixes over time (Kern and Howlett, 2009; Rayner and Howlett, 2009) and the importance of designing coherent policy mixes (Kern and Howlett, 2009). Building on this earlier work, scholars studying innovation and sustainability transitions have made conceptual contributions aimed at providing overarching frameworks to guide the empirical analysis of policy mixes in support of innovation in environmentally-friendly technologies and related technological innovation systems (Quitzow, 2015; Rogge and Reichardt, 2016). These overarching contributions have spurred a range of conceptual and empirical papers on the influence of policy mixes on transitions to sustainable socio-technical systems, particularly in the field of energy. There has been continued conceptual and methodological refinement in the practice of assessing the coherence and comprehensiveness of policy 2

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3. Research objectives and methodology

3.2. Methodological approach

3.1. Aim and scope of the paper

As stated above, the paper employs the fuzzy cognitive mapping approach, which is a semi-quantitative method (Olazabal et al., 2018) that models complex relationships between variables (Özesmi and Özesmi, 2004) by exploiting the knowledge of actors in a given system (Kosko, 1986). More precisely, the approach is based on the construction of individual Fuzzy Cognitive Maps (FCMs), which represent the relationships among the wide range of “concepts” characterizing a given system, as perceived by its stakeholders (Falcone et al., 2017). The aggregation of individual stakeholder maps (i.e. social cognitive map) obtained from the tacit knowledge of people involved (Falcone et al., 2018) can be used to simulate the impact of alternative policy measures throughout the system (Ozesmi and Ozesmi 2004). System concepts (or variables) can be classified into three groups: (1) senders are variables that send stimuli to the rest of the system; (2) receivers are variables that receive input from other variables and are usually used as the final monitors of the system; and (3) transmitters are variables that both receive and send inputs. The fuzzy cognitive mapping approach is ideally suited to case studies lacking statistical data, as in the case of bio-based products in general and forest bio-based products, more specifically. The approach has already been applied to several studies related to sustainability transitions (see, e.g., Falcone et al., 2018; Olazabal et al., 2018; Morone et al., 2019; Olazabal and Pascual, 2016). In order to build our social cognitive map representing the forest bioeconomy, we follow a three-step methodology involving:

Building on the methodological conclusion attained in Falcone et al. (2017), this paper applies the fuzzy cognitive mapping approach to the European forest bioeconomy. Specifically, the paper applies the methodology to test the relative impact of different policy mixes in supporting a transition toward a sustainable, circular forest bioeconomy. In doing so, the importance of interactions between different policy drivers within the broader policy mix in support of this transition process is acknowledged (Gunningham and Grabosky, 1998). Drawing on expert assessments, the fuzzy cognitive approach offers a bottom-up method for simulating these interaction effects. The resulting fuzzy cognitive map (FCM) aggregates the expected positive and negative inter-dependencies between the included policy drivers, as well as other relevant variables, and can therefore be useful in helping shape developments in the transition toward a sustainable, circular forest bioeconomy. This map, in turn, provides the basis for assessing the relative impact of different combinations of policy drivers. The assessment considers not only the direct impact of individual policy drivers on relevant variables shaping the forest bioeconomy, but also their indirect impacts on the remaining policy mix and sector structure (for a more detailed description of the methodology, see the following subsection). Based on this approach, the paper aims to provide insights at two levels of analysis. First, the development of the aggregated FCM offers an initial, static assessment of the relative importance of different policy drivers within the overall forest bioeconomy. Second, by varying the intensity of different policy drivers within the system, the analysis enables an assessment of the relative impact of different combinations of policy drivers (i.e. policy mixes) on the transition toward a sustainable, circular forest bioeconomy. At this stage, the indirect impacts of the policy drivers on each other as well as other sector variables are captured. The corresponding research questions can be stated as follows: RQ1: What is the relative importance of different policy drivers within the forest bioeconomy? RQ2: What is the relative impact of different policy drivers on the transition toward a sustainable, circular forest bioeconomy in Europe? Given the analytical focus on policy interventions and variables supporting the transition toward a sustainable, circular forest bioeconomy, the findings are limited in scope. Specifically, they do not consider macroeconomic and cross-sectoral variables or the broader socio-political environment. In other words, the analysis is strongly focused on the emerging niche of a sustainable, circular forest bioeconomy driven by decarbonization goals while, at the same time, pursuing value creation and growth. Variables representing the traditional forestry sector are taken into consideration, but essentially to outline their links and synergies with more innovative products. Notably, several new forest-based products are being created from the feedstocks and sidestreams of traditional products. Accordingly, it should be borne in mind that the boundaries between more traditional sectors related to forestry and newer sectors (i.e. energy, chemical and textile sectors) are not clear-cut (Hurmekoski et al., 2018; Jonsson et al., 2017). In this vein, it should also be considered that revenues from traditional products can be used to support funding for research and new product development (Jonsson et al., 2017). Considering the emergent nature of the transition process and the emphasis on the relative importance of different policy drivers, the proposed focus is not viewed as a major limitation. Rather, by narrowing the scope of the analysis, it enables a more fine-grained consideration of the most relevant factors currently shaping niche development.

(i) identification of the main concepts surrounding the forest bioeconomy through an in-depth review of the literature, followed by validation through sector experts; (ii) construction of individual cognitive maps by mapping the casual relationships among identified concepts via stakeholder interviews, followed by their aggregation into a social cognitive map (or FCM); (iii) assessment of policy impacts on the system in terms of promoting the emerging circular forest sector via simulations on the FMC using an artificial neural network (ANN). As a first step in our research, we conducted an in-depth review of scientific journals within two academic databases of peer-reviewed literature (i.e. Scopus and Web of Science), in order to identify the main topics related to the forest bioeconomy. This review was complemented by additional information gathering from the so-called “grey literature” (e.g. dissertations and sector- and policy-oriented reports), focusing on studies of the current situation of the bio-based forest sector in Europe. A broad keyword search was used to locate papers and reports published online prior to the end of 2018. Specifically, we paired anchor keywords (e.g. bio*, sustainab*, cascad*, circ*) with search strings (e.g. “forest/wood industry,” “forest/wood supply chain,” “forest/wood products”). This exercise allowed us to retrieve more than 400 contributions. Ultimately, following in-depth analysis of titles, abstracts and keywords, the authors jointly selected a shorter list of studies (see Annex I) that better facilitated our identification of the topics most aligned with our objective of defining the forest bioeconomy. Subsequently, the identified concepts were grouped into three main categories: (i) Sector structure: variables related to the environment, the technoeconomy and society that currently describe the forest bioeconomy. These variables behave as transmitters, as they can both send and receive input. (ii) Policy drivers: policy approaches and targeted policy actions relating to the environment, the techno-economy and society that influence the sector in different ways. These variables are defined as senders, as their role is to send stimuli to sector structure 3

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Fig. 1. Components and interactions of the identified system. Source: Own elaboration

To assess the final impact of different policy drivers on the transition toward a sustainable, circular forest bioeconomy, sector outcomes were defined as different combinations within a four field matrix. Each field in the matrix (see Fig. 1) represents an existing pole within the current forest bioeconomy with conventional and innovative along one axis and linear and circular along the other. This choice of sector outcomes provided the basis for our assessment of the overall impact of different policy scenarios on the transition toward a sustainable, circular forest bioeconomy. In the second step, in order to construct our cognitive map, we identified an additional group of eight high-level sector stakeholders from diverse backgrounds (see Table 2) to map the casual effect relationships among variables. The aim was to select stakeholders who contribute significantly to the discussions around a sustainable forest bioeconomy, while achieving a balanced geographical distribution, covering both Southern and Northern EU countries. To this aim, each expert involved in the validation of concepts was asked to provide a list of four names of relevant stakeholders. The sixteen names were subsequently pooled. From the list, the author team selected twelve experts and defined the order in which they would be contacted, ensuring a balanced set of perspectives throughout the process. Following the FCM methodology (Falcone et al., 2018; Konti and Damigos, 2018; Morone et al., 2018; Solana-Gutiérrez et al., 2017), these experts were then interviewed in the defined order, while tracking the accumulation curve. After four interviews, no new connections between the concepts were identified. To ensure a robust data set, four additional interviews were conducted, none of which revealed additional connections. In line with the FCM methodology, the interview process was concluded at that stage. Specifically, each stakeholder was asked to draw an individual cognitive map, giving their view of the relationships between the concepts identified in step 1 (listed in Table 3) and the intensity of the identified relationships. For example, they were asked about how climate mitigation policies (i.e. the first concept under policy drivers) influence market demand, assigning them an integer value ranging from −3 to +3, including 0. Accordingly, the highest values, −3 and + 3, represented a strong negative and strong positive influence, respectively. Values −2 and + 2 represented medium negative or positive influences, respectively; and values −1 and + 1 represented weak negative and positive influences, respectively. The value of 0 represented neutrality, indicating either the absence of a relationship or

variables. (iii) Sector outcomes: variables used as final monitors of the system (therefore receivers). The identified system is characterized by sector structures, policy drivers and sector outcomes and their interactions (Fig. 1). As can be seen, policy drivers may influence sector outcomes either directly or indirectly via changes in environmental, techno-economic and social variables representing the forest bioeconomy sector. The sector's outcomes are represented by four possible alternatives: conventional and linear forest-based products, conventional and circular forest-based products, innovative and linear forest-based products and innovative and circular forest-based products. An in-depth depiction of the four sector outcomes is presented in Fig.2. While it should be borne in mind, as mentioned above, that it is difficult to draw a clear dividing line between these product categories, especially within a circular economy framework, it is nonetheless convenient to draw this distinction for the purpose of analysis. Therefore, we adopted this products' classification, considering it as a useful simplification which will allow pointing the finger at the dominant features across alternative sectoral outcomes. A preliminary list of concepts, identified from the literature review, was then validated and integrated through in-depth interviews with key sector experts from academia, industry and one international organization with extensive knowledge of forest related topics at the EU level (see Table 1). To this aim, each author of the paper independently identified a list of high-level sector experts with knowledge of the European forest bioeconomy, drawing on personal knowledge and contacts. The list of names was subsequently pooled. On this basis, the author team jointly selected four high-level experts, considered to have the most in-depth knowledge on the European forest bioeconomy and to represent key organizations in the European forest bioeconomy. The list of preliminary list of concepts was sent to these four experts to rank the relevance of the suggested concepts and eventually add missing ones. Initially, this list was sent to the experts to rank the relevance of the suggested concepts and eventually add one additional concept. This exercise enabled us to focus on the most important topics, reducing the initial number of identified concepts (variables) from thirty-seven to twenty- seven. Within the final list, fourteen variables characterized the sector structure, nine described policy drivers and four outlined sector outcomes. A detailed description of each variable is reported in Table 3. 4

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Linear

Circular

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Conventional

Innovative

Traditional forest-based products deriving from the use of

Innovative forest-based products deriving from innovative

biological resources from forestry without the use of

production

technologically advanced production processes, though with

biomass (e.g. use of lignin for chemicals), which are

processes

and/or

innovative

forest-based

consideration for the after-use phase of the product. Focus is

designed with consideration for the after-use phase. Focus

given to the idea that products should remain in the cycle to be

is given to the idea that products should remain in the cycle

transformed into new products (or at least to the reduction or

in order to be transformed into new products (or at least to

elimination of waste). Such products are part of an economy

reduce or eliminate waste). Such products are part of an

that considers the sustainable utilization of natural resources

economy that considers the sustainable utilization of natural

and avoids wasting resources by exploiting them in the best

resources and avoids wasting resources by exploiting them

possible manner.

in the best possible manner.

Traditional forest-based products deriving from the use of

Innovative forest-based products deriving from innovative

biological resources from forestry without the use of

production

technologically advanced production processes and without

biomass (e.g. use of lignin for chemicals), which are

consideration for the after-use phase in product design. Such

designed without consideration for the after-use phase.

processes

and/or

innovative

forest-based

products are designed with the specific intention of maximizing profitability and consumer satisfaction. To ensure constant growth, the basis for production is based on the unsustainable exploitation of resources, which produces vast amounts of waste. Fig. 2. Forest-based sector outcomes.

an annulment caused by parallel positive and negative influences of similar intensity. All interviewees filled in a matrix with values associated with each requested relationship. Each interview lasted roughly two hours, and took place via call. Subsequently, individual matrices were aggregated into the social cognitive map through a summation of the single values obtained in each relationship, which represent the value of the relation among each pair of variables. In order to facilitate the fuzzy inference (see third step) the aggregated matrix was normalized to the range of [−1,1]. The resulting normalized social cognitive map (Fig. 3) was analyzed using standard analytical tools for the analysis of social networks. In the third step, by means of fuzzy inference, we employed a backforward artificial neural network (ANN), using our social cognitive map to perform a dynamic analysis of the system (Falcone et al., 2018). The ANN approach is able to represent the typical causative loops and feedbacks inter-connecting the FMC variables. Steps I and II provided the fundamental elements for our neural network calculations: i) the identified concepts (variables forming the system) and ii) the cause and effect relationships among concepts summarized in the FCM. First, the ANN approach was employed to provide an understanding of how, according to stakeholder knowledge, the system (represented by the identified concepts) would evolve without external interventions. This was the “initialization phase” (Falcone et al., 2018), wherein the data were operationalized by means of a variable state vector (with all

variables fixed at 1) and the connection matrix. Subsequently, the ANN approach was employed for simulating the system dynamic for identifying the effects of alternative policy scenarios on the transition toward a circular forest bioeconomy. This was the “interaction phase,” wherein the output of the fuzzy inference was represented by the dynamic of the state vector (i.e. in each interaction, the state vector was multiplied with the adjacency matrix). This calculation was repeated until the values assumed by the variables were constant, reaching the so-called system steady state (or final state) of the variables. This state of equilibrium can be interpreted to represent the importance of the variables within the system as perceived by the respondents (stakeholders). The comparison of steady state values of the variables in the simulated alternative scenarios enabled us to formulate an idea of the system's internal evolution path. 4. The context of analysis More than 44% of the land area in the European Union is covered by forests and other wooded land (European Union 2018). One-third of the forest area is owned by Member States (citizens), while the remainder belongs to circa 16 million private forest owners (Hetemäki et al., 2017); these private owners thus represent, especially in northern countries, a significant part of the value chain (see Häyrinen et al., 2017). A broad spectrum of feedstocks are derived from European

Table 1 Interviewed Experts for the validation of selected concepts. Experts

Organization

Role

Expert 1

International Organization

Expert 2 Expert 3 Expert 4

Academia Industry Academia

Highlevel representative of the bioeconomy programme of a forest related international organization representing 29 EU states, which conducts research and provides policy support. Researcher of the department of Forest Science of the University of Helsinki Institute of Sustainability Science. Highlevel representative of a Scandinavian biorefinery specializing in the development of high value-added lignin-based products. Researcher from Italy with an extensive expertise on bio-based products related to the forest sector in different northern EU countries.

Source: own elaboration. 5

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Table 2 Interviewed stakeholders for creating the Fuzzy Cognitive Map. Stakeholders

Organization

Role

Stakeholder 1

Research Institute (SME)

Stakeholder 2 Stakeholder 3

Academia Industry

Stakeholder 4

Research Institute

Stakeholder 5

Industry Association

Stakeholder 6 Stakeholder 7 Stakeholder 8

Academia NGO Government

A leading market expert on innovative wood based materials located in Germany, with particular attention devoted to market research and policy issues at national and European level. Professor of a Swedish university involved in the transition toward a sustainable bioeconomy. A representative of a Norwegian company, representing one of the most important global leaders in the production of bio-based chemicals from forestry based biomass. Expert on environmental science currently working for the most important European organization that provides policy support on forest related issues at the EU level. Highlevel representative of a relevant forest sector confederation - whose members cover 18 countries both from southern and northern Europe - actively involved in shaping the transition of traditional forest based sector into innovative bio-based products. Researcher with extensive expertise on bio-based products related to the forest sector in different northern EU countries. Policy expert actively involved in the discussion around the transition toward a sustainable bio-based economy in Spain. Future analyst currently focusing on regulations related to the bio-based economy.

Source: own elaboration.

forests (Fig.4). According to the Confederation of European Forest Owners, the forest-based industry accounts for 9%of the GDP of the European manufacturing sector, with an annual turnover of 450 billion euros. Besides having key environmental relevance, European forests therefore play a central economic role. In the EU definition of forest-based industries, the following major sectors are considered: woodwork, furniture, pulp and paper manufacturing and converting, and printing.1 This definition includes a wide range of stakeholders, industries and supply chains, encompassing farming, forest ownership and forest management, sawmilling, processing and the manufacturing of forest products. While the 20th century European forest sector mainly focused on pulp and paper and wood and timber products, today it also includes new innovative bio-based products, such as bioenergy, biofuels and biochemicals, as well as engineered and prefabricated wood products (Cai et al., 2013; Hetemäki et al., 2017; Stern et al., 2018). Meanwhile, the European pulp and paper industry (PPI) is struggling with a deep crisis. In this context, the new technologies and innovative products of the bioeconomy are frequently advocated as opportunities to revitalise its profitability (see, e.g., Hurmekoski and Hetemäki, 2013; Pätäri et al., 2016; Toppinen et al., 2017a, 2017b). New and innovative products such as plastic composites containing forest-derived biomaterials have the triple benefit of storing carbon, displacing emission intensive materials and improving material performance and thus reducing GHG emissions relative to conventional materials. Indeed, the increasing focus on the role of the forestry sector in managing the challenges of climate change is of major importance (Jonsson et al., 2017). However, there is still no universally agreed upon definition of the sustainable forest bioeconomy or, in particular, the sustainability of new forest-based bioeconomy products and materials (see Clark et al., 2012; Karvonen et al., 2017). Steps have been taken to develop certifications and standards for forest-based biomass, but further efforts are needed to define sustainability at the intermediate and advanced stages of the value chain (Holopainen et al., 2015). In this context, an effective and supporting policy and regulatory framework should be implemented (Hagemann et al., 2016). The creation of new markets, the large-scale production of bio-based products and the further development of credible sustainability certifications represent key challenges for policy makers in the sector. A wide range of existing international and European policies and regulatory measures, in addition to national policies, directly or indirectly affect the forest-based bioeconomy (Rivera León et al., 2016). Most of these policies and programs, including the EU Forest Strategy and the Timber Regulation, are outlined in Fig.5.

However, a clear policy strategy for the forestry sector in Europe is still missing and efforts to formulate such a strategy remain fragmented (Ollikainen, 2014; Wolfslehner et al., 2016). Policies are not properly integrated and, to some degree, overlap, creating inefficiencies. This calls for additional efforts to harmonize policy interventions, aimed at creating a supportive, efficient and coherent policy mix. Within this context, the subsequent assessment of policy drivers provides insights into the relative impact – and hence effectiveness – of certain policy interventions. In this way, the paper provides an assessment of particular entry points for increasing the overall effectiveness of the policy mix in support of a sustainable, circular forest bioeconomy. Conversely, it helps to identify potential interventions that are likely to bring about little improvement at the current stage of development, thus supporting a prioritization of policies to support a sustainable, circular forest bioecononomy. 5. Results 5.1. Descriptive analysis As mentioned above, a final list of 27 concepts (see Table 3), representing our system variables, was used as a starting point for the construction of the FMC. As depicted in Fig- 1, these variables were classified into three categories (sector structure, policy drivers and sector outcomes), which, in turn, were sub-grouped along three dimensions (environmental, techno-economic and social). The connections among system variables were identified through stakeholder interviews, which enabled us to construct a social cognitive map consisting of a square matrix with 702 relations. Table 4 shows the number of connections between concepts, as identified by each respondent. Fig. 6 presents the curve of accumulation of new connections (a graph showing the cumulative number of new connections identified by the experts). As it seems, the embedded knowledge of the system was sufficiently mapped by the number of interviewed respondents as no new connections between concepts were identified from the sixth stakeholder onwards. The analysis of indegree (i.e. the number of incoming relationships) and outdegree (i.e. the number of outgoing relationships) provided a first characterization of the system.2 Table 5, which reports the indegree and outdegree values for each concept, shows that, according to stakeholders, the most influencing sector structure variables (exhibiting the highest outdegree) were, in order of decreasing outdegree: “sustainable forest management,” the “availability of sustainable forest biomass,” “innovation efficiency,” “cascading use” and “market 2 Based on Kosko (1986) and Wasserman and Faust (1994) indegree can be defined as the cumulative strength of connections through which a concept is affected by other concepts and outdegree can be defined as the cumulative strength of connections with which a concept influences other concepts.

1 https://ec.europa.eu/growth/sectors/raw-materials/industries/forestbased_en

6

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Table 3 Concepts of the forest bioeconomy sector. Categories

Variables

ID

Description

Sector structure

Carbon sink capacity

SE1

Availability of sustainable forest biomass Sustainable forest management

SE2 SE3

Cascading use principle

SE4

Environmental impacts of products throughout the life cycle Innovation for improving efficiency

SE5

Feedstock price Financial resources Profitability Market demand

ST7 ST8 ST9 ST10

Regional and rural development

SS11

Growth and jobs Social acceptance Public pressure

SS12 SS13 SS14

Climate mitigation policies

PE1

Sustainable forest management Policies

PE2

Bio-based content policies Waste-related policies

PE3 PE4

R&D policies

PT5

Investment support policies Market support policies

PT6 PT7

Regional development and job creation policies Awareness raising policies

PS8

Ability of forest and wood products to capture and store carbon immediately, rapidly, in great quantity and for long periods of time (carbon sink). Also includes substitution effects, which are carbon benefits of substituting traditional materials with forest-based materials (Leskinen et al., 2018). Provision of forest biomass and residues (e.g. wood pellets). Forest management according to the principles of sustainable development. Addresses forest degradation, deforestation, biodiversity, ecosystems, etc. Efficient utilization of resources (i.e. comprehensive raw material use to extend biomass availability) and hierarchical use (first high value–added products and last energy). Also includes waste management options and disposal. Reduction of environmental impacts of forest-based products throughout the life cycle (e.g. evaluated using tools such as ELCA). Adoption of new technologies and innovations for improving biomass efficiency, including technologies for the valorization and use of second generation forest-based feedstock (also digitalization, ICT and cooperation agreements among forest owners). Adoption of new technologies and innovations for improving efficiency in production processes and refining. This includes, among others, Industry 4.0, ICT and integrated biorefineries. Average price of forest-based feedstocks. Availability of financial resources from banks and other financing channels. Generation of earnings in the short and long terms. Level and features of market demand (e.g. consumers, producers) for forest-based products, including green premium (consumer willingness to pay higher prices for a product's environmental benefits) and labor condition premium (consumer willingness to pay higher prices for a product's fair labor conditions throughout the life cycle). Sector contribution to increasing the potential of regional development, including development of rural areas. Takes into consideration that 60% of the European forest belongs to small forest owners. Sector contribution to the creation of new job opportunities and growth. Awareness of the benefits of utilizing sustainable forest-based products. NGO and consumer association pressure for more sustainable production and consumption of forest-based products. Policies directed to mitigating climate change, including those aimed at reducing carbon emissions (GHG reduction and incentive policies, such as a carbon tax) and “land use, land-use change and forestry” (LULUCF) policies. Policies aimed at protecting and improving biodiversity through policy instruments such as standards and certifications. Also includes policies aimed at increasing biomass availability. Development of indicators and targets related to bio-based content. Policies related to the valorization of forest-based waste, and regulations to promote the cascading use of forest biomass and to overcome existing barriers. Also considers the promotion of the optimal use of forest resources, reflecting the benefits of value adding. For example, renewable energy policies should not negatively affect value-adding production chains. Special emphasis of side-stream and residue-based advanced biofuels in regulations. Policies related to R&D, including tax incentives and subsidies (e.g. grants). Policies for increasing private investment in forest bioeconomy research. Also includes PPP. Production incentives; tax benefits for manufacturing. Policies aimed at supporting and boosting market demand for sustainable forest-based products, including public purchasing and procurement policies. Policies related to regional specialization and job creation.

Linear and conventional

O1

Circular and conventional

O2

Linear and innovative

O3

Circular and innovative

O4

Policy drivers

Sector outcomes

ST6

PS9

Policies aimed at improving understanding of the economic, social and environmental benefits of forestbased products, for example in schools. Traditional forest-based products, such as furniture, designed without considering the after-use phase and without using technologically advanced production processes. Traditional forest-based products obtained without using technologically advanced production processes, though with consideration for the after-use phase. New products, such as bioplastics, created using innovative production processes, but without consideration for the after-use phase. New products, such as bioplastics, created using innovative production processes and with specific consideration for the after-use phase.

Source: Own elaboration.

demand.” To a lesser extent, “environmental impacts,” “public pressure,” “regional and rural development” and “carbon sink capacity” were also perceived as important influencing variables. These findings suggest that sustainable and innovative production processes of forest based products are perceived by stakeholders as a critical precondition to stimulate market demand for forest-based products. Sector structure variables showing the highest indegree were, in order of decreasing indegree: “social acceptance,” “growth and job,” “environmental impacts” and “regional and rural development.” As it seems, “availability of sustainable forest biomass,” “cascading use” and “innovation efficiency” were perceived as both strongly influencing and strongly influenced variables.

With respect to policy drivers, “climate mitigation policies” and “sustainable forest management policies” were the most influencing policies (showing the highest outdegree values). This finding is consistent with the results of previous research that has highlighted the role of such policies in boosting the bioeconomy (see, e.g., Ollikainen, 2014). More specifically, stakeholders considered both policies to be strong drivers of “carbon sink capacity,” the “availability of sustainable forest biomass” and reduced “environmental impacts.” Notably, “climate mitigation policies” are perceived as important enablers of the “cascading use,” while “sustainable forest management policies” are considered important drivers for “social acceptance.” Interestingly, key economic variables (i.e. “feedstock price,” 7

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Fig. 3. Fuzzy Cognitive Map. Key: green circles represent sector variables (transmitters); violet circles represent policy variables (senders); grey circles are sector outcomes (receivers).

Fig. 4. Biomasses deriving from forests. Source: Own elaboration.

Fig. 5. Policy strategies and programs influencing the European forest bioeconomy. Source: Adapted from Aggestam et al. (2017).

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confirm the assumption that transition dynamics remain largely contained at a niche level and broader sector developments have only limited impact. In other words, the competitiveness of high-valueadded products (such as innovative forest based products), strongly depends on proven sustainability and innovation capacity (see Toppinen et al., 2017a, b). A concurring explanation of this result would be that, in the experts' view, “feedstock price,” “financial resources” and “profitability” are directly related to policy variables (including regulations such as the EU Renewable Energy Directive and national renewable energy policies). These policy measures impact on the prices of raw materials (e.g. forest residues), as well as on the profitability of different production options.

Table 4 Number of connections. Stakeholders

Number of total connections

Number of new connections

Expert Expert Expert Expert Expert Expert Expert Expert

336 321 199 183 109 99 87 47

336 98 36 3 1 0 0 0

1 2 3 4 5 6 7 8

Source: Own elaboration.

Fig. 6. Curve of new connections.

Therefore, the impact of economic variables is somehow mediated by the impact of policy variables.3 With respect to system outcomes, the variables showed a stronger and positive impact upon “circular and conventional” and “circular and innovative” forest-based economies than their linear counterparts.

Table 5 Concept connections. Concepts

ID

Outdegree

Indegree

“Carbon sink capacity” “Availability of sustainable forest biomass” “Sustainable forest management” “Cascading use” “Environmental impacts” “Innovation efficiency” “Feedstock price” “Financial resources” “Profitability” “Market demand” “Regional and rural development” “Growth and job” “Social acceptance” “Public pressure” “Climate mitigation policies” “Sustainable forest management policies” “Bio-based content policies” “Waste-related policies” “R&D policies” “Investment support policies” “Market support policies” “Regional development and job creation policies” “Awareness raising policies” “Linear and conventional” “Circular and conventional” “Linear and innovative” “Circular and innovative”

SE1 SE2 SE3 SE4 SE5 ST6 ST7 ST8 ST9 ST10 SS11 SS12 SS13 SS14 PE1 PE2 PE3 PE4 PT5 PT6 PT7 PS8

4.86 7.10 8.52 6.08 5.14 6.67 3.57 3.00 3.38 5.97 4.87 2.27 3.48 4.89 8.44 7.89 5.78 6.44 6.54 5.19 6.00 6.32

6.24 6.93 5.33 7.52 8.72 7.71 4.06 7.83 6.44 6.69 7.97 8.93 10.17 6.52 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

PS9 O1 O2 O3 O4

5.28 0.00 0.00 0.00 0.00

0.00 4.35 7.88 5.09 9.32

5.2. Simulation analysis (fuzzy inference) By employing the ANN approach, we explored the future evolution of the forest bioeconomy according to experts' perceptions without external perturbation. To this end, we calculated the steady state of the variables, as reported in Table 6. Almost all sector variables achieved high steady state values. Recall that the steady state of a variable can be interpreted as the importance of that variable within the system, as perceived by respondents. Thus, according to the interviewed stakeholders, with the exception of “public pressure,” all sector variables were highly relevant to the system. Moreover, the “circular and innovative” sector outcome outperformed all other outcomes, suggesting that the system, in the absence of perturbations, would evolve toward such an outcome. Against this background, we shall now investigate which policies and policy mixes are key in driving the system dynamic. We shall do so by simulating alternative scenarios and comparing them to each other. We start our investigation by simulating a “zero policy scenario” (i.e. a scenario without policy intervention), which, although unrealistic, will serve the purpose of setting a ‘zero cost scenario benchmark’ for comparison. In Table 7 we report the steady state values of this scenario. As expected, in this benchmark simulation, all sector variables and sector outcomes reduce their steady state values. Yet “circular and innovative” and “circular and conventional” outcomes preserve a high value. This finding suggests that the majority of variables that make up

Source: Own elaboration.

“financial resources” and “profitability”) had relatively low outdegree values compared to the policy drivers. This indicates that the broader economic environment was seen as less relevant to the transition process than targeted policy and regulatory measures. This appears to

3

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We are thankful to an anonymous referee for pointing this out.

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The simulations reveal that environmental policies (including PE1, PE2, PE3 and PE4 in Table 3) strongly affect the two circular sector outcomes but have a negative impact on the “linear and conventional” outcome. This finding shows that, according to the stakeholders, environmental policies represent key drivers for the system transition toward a circular model. Techno-economic policies (including PT5, PT6, and PT7 in Table 3) impact strongly on the two innovative trajectories, whereas social policies (including PS8 and PS9 in Table 3) exert a stronger impact upon the linear and conventional model. We start our policy mix analysis by comparing alternative sets of policies (e.g. techno-economic/environmental vs. social/environmental). Subsequently, we embark on a more fine-grained level of analysis, considering the impact of the inclusions/exclusion of single policy measures. In Fig. 8, we compare three alternative policy mixes, showing how – in relative terms and according to the stakeholders – the combination of techno-economic and environmental policies has its strongest impact upon the circular and innovative sector, and a negative impact on the linear and conventional model. On the opposite side of the spectrum, techno-economic and social policies together boost the linear trajectories more than other patterns of sectoral development. Finally, the combination of environmental and social policies exerts its strongest impact on the circular and conventional sector, yet has a lower impact on the two innovative (and alternative) sector outcomes. By considering policy mixes that combine single policy measures, we are able to compare a much broader set of alternatives. Specifically, we may consider alternative combinations of four out of the nine policies included in the fuzzy model. This would correspond, in a broad sense, to halving the policy effort. First, we may observe that balanced policy mixes (i.e. those incorporating at least one policy measure from each dimension – environmental, techno-economic and social) outperform unbalanced ones. In Fig. 9, we report the impact of ten alternative policy mixes. Out of the 126 alternative policy mix combinations, we report the most significant in terms of their impact upon the circular and innovative sector outcome. The first four scenarios significantly differ from the remaining six in their impact. This difference is due to the fact that these underperforming scenarios exclude “awareness raising” from the policy mix. The remaining six all combine awareness raising with two environmental policies and one techno-economic policy. The policy mix that performs best (i.e. that which, according to stakeholder knowledge, leads the system to a higher steady state value in the “circular and innovative” sector outcome) combines “climate mitigation policies” with “sustainable forest management policies,” “R&D policies” and “awareness raising policies.” This mix, above all others, seems to provide a well-balanced push to the bio-based forest to evolve in a circular and innovative trajectory. Far from being conclusive, these results show how alternative policy mixes can be compared and adopted in order to direct the system outcome toward a desired trajectory. Indeed, these results provide preliminary suggestions as well as a policy making tool to fine-tune policy interventions.

Table 6 Steady state values.

Sector structure

Policy drivers

Sector outcomes

Variables

ID

Steady state

Carbon sink capacity Availability of forest biomass Sustainable forest management Cascading use principle Environmental impacts Innovation for improving efficiency Feedstock price Financial resources Profitability Market demand Regional and rural development Growth and jobs Social acceptance Public pressure Climate mitigation policies Sustainable forest management policies Bio-based content policies Waste-related policies R&D policies Investment support policies Market support policies Regional development and job creation policies Awareness raising policies Linear and conventional Circular and conventional Linear and innovative Circular and innovative

SE1 SE2 SE3 SE4 SE5 ST6 ST7 ST8 ST9 ST10 SS11 SS12 SS13 SS14 PE1 PE2 PE3 PE4 PT5 PT6 PT7 PS8

0.985 0.988 0.973 0.976 0.998 0.994 0.647 0.997 0.981 0.980 0.996 0.998 0.999 0.050 0.500a 0.500 0.500 0.500 0.500 0.500 0.500 0.500

PS9 O1 O2 O3 O4

0.500 0.588 0.989 0.976 0.998

Source: Own elaboration. a Considering that the policy drivers, are only senders, i.e. they cannot be influenced by other variables, their value in the steady-state is fixed at 0.5 Table 7 Zero policy scenario – Steady state values.

Sector structure

Policy drivers

Sector outcomes

Variables

ID

Steady state

Carbon sink capacity Availability of forest biomass Sustainable forest management Cascading use principle Environmental impacts Innovation for improving efficiency Feedstock price Financial resources Profitability Market demand Regional and rural development Growth and jobs Social acceptance Public pressure Climate mitigation policies Sustainable forest management policies Bio-based content policies Waste-related policies R&D policies Investment support policies Market support policies Regional development and job creation policies Awareness raising policies Linear and conventional Circular and conventional Linear and innovative Circular and innovative

SE1 SE2 SE3 SE4 SE5 ST6 ST7 ST8 ST9 ST10 SS11 SS12 SS13 SS14 PE1 PE2 PE3 PE4 PT5 PT6 PT7 PS8

0.931 0.928 0.903 0.826 0.978 0.954 0.436 0.985 0.938 0.924 0.979 0.982 0.992 0.071 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

PS9 O1 O2 O3 O4

0.000 0.732 0.969 0.928 0.981

6. Discussion and conclusions The competitiveness of high-value-added products, such as innovative forest based products, strongly depends on proven sustainability and innovation capacity. Indeed, our preliminary results concerning stakeholders' views on the variables of the system suggest that the establishment of a sustainable and innovative supply side is a prerequisite for stimulating consumer demand for sustainable forest based products. Notably, “climate mitigation policies” and “sustainable forest management policies” are considered most influencing instruments impacting on the supply side. Indeed, they are considered to be strong drivers of sustainability by directly influencing the “carbon sink capacity” and the “availability of sustainable forest biomass,” and

Source: Own elaboration.

the sector structure also enable a circular forest bioeconomy. We shall now reintroduce policy drivers in a sequential way and see how these impact upon system outcomes. In Fig.7, we show the impact of alternative policies measures on the four sector outcomes. 10

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Fig. 7. Impact of alternative policy drivers against the “zero policy scenario” (variations in the steady state values). Source: Own elaboration.

Fig. 8. Impact of alternative policy mixes against the “zero policy scenario” (variations in the steady state values). Source: Own elaboration.

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Fig. 9. Comparison of alternative scenarios – Impact on the “circular and innovative” sector. Source: Own elaboration.

generating reduced “environmental impacts”. Moreover, by enabling the “cascading use” they stimulate innovation, resource and cost efficiency, therefore creating favorable conditions toward the scaling up of the market. Indirectly, by driving “social acceptance,” they boost market demand for sustainable and innovative forest based products. Another interesting finding with respect to the system outcomes reveals that the system pushes toward “circular and conventional” and “circular and innovative” forest-based economies. This suggests that circular approach represents a way to reconcile conventional with more innovative products by means of adopting different forms of innovation, including the cascading use of feedstock. The establishment of circularity in the forest based economy seems to be guaranteed not only from policies, but it is intrinsic to the system. Indeed, the results of the first simulation (zero policy scenario) show that “circular and innovative” and “circular and conventional” outcomes preserve a high value. This finding suggests that the majority of variables that make up the sector structure also enable a circular forest bioeconomy. Again, these findings confirm the existing interdependencies between traditional and innovative products. The exploratory analysis of different policy mix scenarios also reveals a number of preliminary findings regarding the relative effectiveness of different policy mixes. First, the importance of environmental policy underscores the fact that a clearly defined regulatory framework serves as the basis for investment in innovations and productive assets within a circular forest bioeconomy. Techno-economic policies, while important, are secondary to policies that set the basic framework conditions and thus shape the direction of investment. These findings are consistent with the literature on environmental innovation (Ashford and Hall, 2011). The clear policy implication is that strengthening environmental policy is a precondition for an effective policy mix.

Second, it reveals that social policies appear to favour the existing model of forest sector development. This indicates a major area for improving the policy mix by redesigning social policy measures to support the desired transition toward a circular forest bioeconomy. Rather than being employed to preserve the status quo, social policies should be used to mitigate negative social impacts of the transition process. Further analysis is needed to identify specific challenges. Third, the simulations indicate that “awareness raising” represents an important policy driver. Given its “soft” nature, this policy driver may not figure as prominently in real world policy mixes. Yet, according to the stakeholder evaluations, it appears to have an important facilitating role in reinforcing the overall impact of the policy mix. Truly, as emerged from the results, a favorable policy mix for achieving a circular and innovation forest-based economy should combine climate mitigation and sustainable forest management policies, with R&D policies and awareness raising. Finally, the paper offers a first application of the fuzzy cognitive mapping approach to the bioeconomy sector. This application focused on a set of enabling factors and policies for the transition toward a sustainable, circular forest bioeconomy. Further applications might attempt to broaden the focus by including a larger number of variables and policy drivers, favouring the traditional forestry sector. Building on the insights generated in this paper, such an analysis might help to identify how the enabling environment for a sustainable, circular forest bioeconomy interacts with broader sector developments. The initial assumption in this paper has been that developments remain at a niche level, so that broader sector structures are less relevant for the analysis. However, the finding that environmental policies represent a key driver for the transition may indicate that adjustments to the broader framework conditions are gaining in importance, warranting further investigation.

Appendix Annex I

Selected literature for the identification of concepts. Year

Title

Authors

Journal / Ed.

Information used for the study

2018

Coordinating the Uncoordinated: The EU Forest Strategy

Aggestam, F., & Pülzl, H.

Forests

There is a need to coordinate the forest-relevant policy objectives into a streamlined EU forestrelated policy framework (persistent problem of EU forest-related policy incoherence).

(continued on next page)

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Annex I (continued) Year

Title

Authors

Journal / Ed.

Information used for the study

2018

Substitution effects of wood-based products in climate change mitigation

Leskinen, P., Cardellini, G., González-García, S., Hurmekoski, E., Sathre, R., Seppälä, J., … & Verkerk, P. J

From Science to Policy

2018

Social life cycle assessment: in pursuit of a framework for assessing wood-based products from bioeconomy regions in Germany

Siebert, A., Bezama, A., O'Keeffe, The International Journal of Life Cycle S., & Thrän, D. Assessment

2018

Perceptions on the Importance of Forest Sector Innovations: Biofuels, Biomaterials, or Niche Products?

Stern, T., Ranacher, L., Mair, C., Berghäll, S., Lähtinen, K., Forsblom, M., & Toppinen, A.

2018

Diversification of the forest industries: role of new wood-based products

Hurmekoski, E., Jonsson, R., Canadian Journal of Forest Research Korhonen, J., Jänis, J., Mäkinen, M., Leskinen, P., & Hetemäki, L.

2018

D3.1 Identification of technological Ladu, L., Janire, C. trends in selected value chains

Report within the STAR4BBI Project

2018

D2.1 Market entry barriers report

Report within the STAR4BBI Project

While the positive role of forests in climate change mitigation is generally well perceived, the contribution of wood products to mitigation is much less known and understood. Currently, the substitution benefits of wood-based products are not directly attributable to the forest sector. However, this information is important when developing optimal strategies on how forests and the forest sector can contribute to climate change mitigation. There is a need for analytical tools that assess not only the environmental and economic implications but also the social implications of a transition to a bioeconomy. Wood is expected to become a major biomass resource in bioeconomy regions. Analytical frameworks should be developed in order to enable sLCA studies to assess the regional foreground activities in a wood-based bioeconomy region. Little research exists on how the industry innovativeness is publicly perceived. Observed variation in perceptions of forest sector innovativeness calls for strengthening of both firm-level R& D activity and more national or regional level functioning of the forest bioeconomy innovation system. In addition, there is impetus for improving the forest industry image and acceptability among the general public by more effectively stewarding sustainability of resources, products, and manufacturing processes. Construction, textiles, biofuels, platform chemicals, and (plastic) packaging are considered the most important new woodbased markets. Given a projected decline of global graphic paper industry revenue of 5.5 billion euros by 2030, any of the identified product groups could roughly compensate for this decline by gaining a 1%–2% share of global markets. The contribution of new products could be even greater if the firms are also prepared and equipped to accommodate more downstream operations of, for example, the textile and chemical value chains. The principle of the cascading use of biomass, alternative innovative feedstocks, digitalization and, among others, cooperation agreements with farmers and forest owners, are potential innovation that will play an important role in upscaling the bio-based industry in the timeframe of 10 to 15 years. In addition, different novel technologies for improving biomass cultivation efficiency (e.g. modern genome editing techniques) and efficiency in biorefineries (e.g. integrated biorefinery) exist. However, there is a need to support the implementation of these innovative developments and technologies with the establishment of an innovation and investment friendly regulatory framework. Existing regulatory and standardization barriers that are hampering the market uptake of biobased products in Europe, include: i) the lack of a level playing field with respect to biofuels as well as fossil-based products; ii) the lack of generally accepted end-of-life routes for different bio-based products; iii) standards that do not match the everyday practise in the market; and iv) the fact that products made from bio-based materials need to comply with standards that have been developed for fossil-based materials.

Bos, L., van den Oever, M.

Forests

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Annex I (continued) Year

Title

Authors

Journal / Ed.

Information used for the study

2018

Collaborative governance for sustainable forestry in the emerging bio-based economy in Europe

Johansson, J.

Elsevier, Current Opinion in Environmental Sustainability

2017

Visions and Expectations for the Norwegian Bioeconomy.

Hansen, L., & Bjørkhaug, H.

Sustainability

2017

Exploring the future use of forests: perceptions from non-industrial private forest owners in Finland

Häyrinen, L., Mattila, O., Berghäll, S., Närhi, M., & Toppinen, A.

Scandinavian Journal of Forest Research

2017

Innovation policies for advanced biorefinery development: Key considerations and lessons from Sweden

Hellsmark, H.; Söderholm, P.

Biofuels Bioprod. Biorefin.

2017

Food waste valorization options: Imbert, E. opportunities from the bioeconomy.

Open Agriculture

2017

What is the current state of forest product markets and how will they develop in the future?

Jonsson, R., Hurmekoski, E., Hetemäki, L. & Prestemon, J.

In Winkel, G. (ed.). Toward a sustainable European forest-based bioeconomy – assessment and the way forward. What Science Can Tell Us, no. 8, European Forest Institute

2017

The European pulp and paper industry in transition to a bioeconomy: A Delphi study What makes a European forestbased economy competitive?

Toppinen, A., Pätäri, S., Tuppura, A., & Jantunen, A.

Futures

Toppinen, A., Korhonen, J., Hurmekoski, E., Hansen, E.

In Winkel, G. (ed.). Toward a sustainable European forest-based bioeconomy – assessment and the way forward. What Science Can Tell Us, no. 8, European Forest Institute

The increasing focus on the role of the forestry sector in managing the challenges of climate change, and the push toward a bio-based, lowcarbon economy is at the epicenter of the public debate in several EU countries. In northern Europe, there are best practices on collaborative processes as well as various forms of voluntary initiatives adopted to improve sustainability using forest governance. Developing a future bioeconomy has become critical for three main reasons: (1) The need for sustainability of resource use; (2) The growing demand for both food and energy; and (3) The need to decouple economic growth from environmental degradation. To meet the challenges created by a growing dependence on non-renewable resources, radical changes are needed that involve more than development of or changes within the individual bio-based sectors. A transition into a complete bioeconomy will demand a system shift and more cross-sectoral integration between these regimes than currently exists. The transformation of the forest sector toward a bioeconomy calls for finding new sources of competitive advantage for the whole sector to retain its future viability. There are few niche markets for advanced biorefineries and a lack of long-term policy instruments for the more established renewable fuels. There is a need for innovation policy instruments that create markets for green chemicals, thus supporting technology development during a niche market. The aim of such a policy would be to stimulate learning, form value chains, and experiment with various design options on a larger scale; this complements the use of technology-neutral policy instruments such as carbon pricing, public procurement and various types of price guarantees. The bioeconomy contributes to increased energy and materials production with reduced environmental impact at the same time creating new job opportunities. It represents also a great opportunity for tackling waste related issues. Forest-based industries – pulp and paper, solid wood products, and a number of downstream value-added wood-based manufacturers – have received limited attention in the pursuit of a successful implementation of EU and national bioeconomy strategies. Links between the conventional pulp and paper industry and the bioeconomy to ensure longterm industry survival. For a forest-based bioeconomy to be viable, it must prove that it is both sustainable and competitive and that it can provide economically and environmentally superior goods and services. This implies an enhanced focus on innovation, improved industrial management processes, and addressing increasing customer needs for forest bioeconomy products and services. Finding and exploiting synergies between highvalue products and services and established value chains is necessary. Innovation is needed for industrial renewal, but you cannot have innovation without risks, which requires risk capital. Increasing investments in R&D and forest-based bioeconomy-related educational systems is of utmost importance. In practice, innovating entails risk, and hence, requires risk capital. Measures such as pilot project support and public procurement are important.

2017

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Annex I (continued) Year

Title

Authors

Journal / Ed.

2017

Green, circular, bio economy: A comparative analysis of sustainability avenues

D'Amato, D, Droste, N. Allen, B., Elsevier, Cleaner Production Kettunen, M., Lähtinen, K., Korhonen, J., Leskinen, P., Matthies, D.B., Toppinen, A.

2017

Circular by design Products in the circular economy

2016

Forest products markets under change: review and research implications

Hetemäki, L., & Hurmekoski, E.

Current Forestry Reports

2016

Global sustainability megaforces in shaping the future of the European pulp and paper industry toward a bioeconomy

Pätäri, S., Tuppura, A., Toppinen, A., & Korhonen, J.

Forest Policy and Economics

2016

CASCADES: Study on the optimised Vis and Mantau, 2016 cascading use of wood

2016

Forest bioeconomy–a new scope for Wolfslehner, B., Linser, S., Pülzl, From Science to Policy sustainability indicators H., Bastrup-Birk, A., Camia, A., & Marchetti, M.

2016

Cascading of woody biomass: definitions, policies and effects on international trade

Olsson, O., Bruce, L., Hektor, B., IEA Bioenergy (EA Bioenergy: Task 40: April Roos, A., Guisson, R., Lamers, P., 2016) Hartley, D., Ponitka, J., Hildebrand, D., Thrän, D.

2015

The Bioeconomy in the European Union in Numbers. Facts and Figures on Biomass, Turnover and Employment.

Ronzon, T., Santini, F., & M'Barek, R

EEA Report

Publications Office

European Commission, Joint Research Centre

Information used for the study Multiple actors are involved in the circular economy (CE), bioeconomy (BE) and green economy (GE). The concepts present synergies, but also limits. A need of harmonization of their divergences exists. Drivers of product design and usage are discussed in the context of emerging consumption trends and business models. For governance to be effective, it has to address the product lifecycle and the societal context determining it. Indicators and assessment tools are proposed that can help fill the current data and knowledge gaps. There is a need to significantly increase the volume of academic research and education on the global and regional forest-based product markets. Climate change, material resource scarcity and ecosystem decline are among the ten major sustainability megaforces identified by KPMG (2012) that are globally influencing business environments. However, the relative importance of these megaforces in the context of pulp and paper sector transformation is yet unknown. Cascading use is the efficient utilization of resources by using residues and recycled materials for material use to extend total biomass availability within a given system. The cascading use of wood takes place in the EU in a variety of forms and contexts. To realise its full potential multiple barriers to cascading need to be overcome. These exist in both the provision and utilization of wood and include technical barriers, such as cleaning of recovered waste wood; market barriers, such as the dependence on upstream products; and governance barriers, such as the lack of integrated approaches toward energy and material applications of biomass. Overcoming these barriers will require a mix of approaches depending on specific local circumstances. Identified measures to promote the cascading use of wood focus largely on the recovery of post-consumer wood in line with existing circular economy and resource efficiency initiatives. However, strong efforts are needed to address the current imbalance between material and energy uses of industrial residues where more significant potential for cascading exists. The forest-based sector has the opportunity to take the lead in the sustainable development of the bioeconomy. It has powerful tools in place that can be adapted and further developed for application in the bioeconomy as a whole. These tools have to be state-of-the art and continuously developed: here the forest sector can be a forerunner and role model, shaping the bioeconomy debate and its monitoring and assessment. Cascade use or “cascading” of woody biomass is increasingly being discussed as a key principle upon which to base efficient utilization of wood. There are clear risks that policy implementation of the cascading principle results in complicated legislative processes, especially pertaining to reaching agreement on the set of wood sortments that can be used for material purposes and which therefore should be excluded from energy use The importance and role of the forest sector within the bioeconomy.

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Annex I (continued) Year

Title

2015

Journal / Ed.

Information used for the study

Impact of European Union timber Holopainen, J., Toppinen, A., & regulation on forest certification Perttula, S strategies in the Finnish wood industry value chain. More from less — material resource – efficiency in Europe

Forests

Overview of EU Timber Regulation; the role of forest certificates and companies strategies in response to increased public pressure.

EEA

2014

Future of the European ForestBased Sector: Structural Changes Toward Bioeconomy

Hetemäki, L

EFI What Science Can Tell Us

2014

Natural capital and bioeconomy: challenges and opportunities for forestry Forestry in bioeconomy – smart green growth for the humankind Studying the future of the forest sector: Review and implications for long-term outlook studies Innovative wood-based products, 2011–2012 Investments into Forest Biorefineries Under Different Price and Policy Structures The Importance of RegulationInduced Innovation for SD

Marchetti, M., Vizzarri, M., Lasserre, B., Sallustio, L., & Tavone, A. Ollikainen, M.

Annals of Silvicultural Research

European policy initiatives for achieving material resource efficiency and the role of innovation for improving efficiency. Strategies/ plans related to the forestry sector and targets related to forestry or the use of timber. Complexities and cross-sectoral links in the forest sector. Overview of traditional and innovative forest based products. The renewal of the forest-based industries within the emerging bioeconomy. The EU approach to forest sector based polices. Environmental contribution of sustainable managed forests in the forest-based sector

Hurmekoski, E., & Hetemäki, L.

Forest Policy and Economics

Clark, D., Aurenhammer, P., Bartlomé, O., & Spear, M. Kangas, H-L., Lintunen, J., Pohjola, J., Hetemäki, L. & Uusivuori, J Ashford, N., Hall, R.,

Geneva Timber and Forest Study Papers.

2015

2014 2013 2012 2011 2011

Authors

Scandinavian Journal of Forest Research

Energy Economics Sustainability

Overview of the policies that can be related to the forest sector Uses of forest biomass, cross-sectoral linkages and forest products markets. Definition and characterization of innovative wood-based products. Forest biorefineries and uses of forest biomass. Financial resources and profitability Relationship between policies and sustainable technologies

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