6 QUARTER 2 2018 | TAPPSA Journal

OPINION PIECE

DAVID RHODES, CEO, NEW ZEALAND FOREST OWNERS ASSOC.

Standing in a wool shed in the Bay of Plenty a couple of weeks ago amongst a group of Australasian foresters and farmers, someone asked the question – how certain are we about the forestry market when we need to look 25 years into the future?

Just in case anyone missed the message – establish an

independent body, effect land use change, address transport

emissions, integrate agriculture and let the emissions trading

scheme do the job it was set up for.

It’s a good question. All primary producers are facing considerable uncertainty given the speed and fundamental nature of some of the changes we are contemplating. Forestry investment decisions require an additional level of faith because they are long term and less easily undone once made.

Two mega trends are underway which will be pivotal.

Firstly, tools and technology will revolutionise our world in a way that some are describing as a more fundamental shift than the industrial revolution. Entire industries will be created or transformed in time frames measured in years rather than decades. The quantum leap forward is generated not so much by distinct emerging clever technologies but by those technologies connecting and exchanging data (the Internet of Things). This includes everything from smart sensors and 3D printing to synthetic biology, nanotechnology and advanced robotics. This current revolution will empower and liberate but also leave us uncertain about jobs, traditional primary production, political stability, etc.

Secondly, there is the global response to the environmental challenges on planet earth. The new international vernacular refers to the bioeconomy and the circular economy - terms which have yet to become mainstream in New Zealand. In other words, moving away from finite and linear consumption to economies that are built on non-extractive, renewable resources that are utilised for as long as possible, and then recovered and reborn as new products or materials.

I believe that both of these trends augur very well for the future of trees and a fibre industry. Forestry is infinitely renewable while all other construction materials are extractive. And following primary use in structure, there are many secondary or tertiary uses for timber construction waste that can retain its value.

Then there is the world of non-timber products.

Ushering in the bioeconomy

The global bioproducts market, at over $100 billion, offers enormous future expansion for “fibre farmers”, be it in trees or agricultural crops. These renewable biochemical and biomaterial opportunities are not always intuitive and comprise a bewildering array of applications in wine corks, glue, chewing gum, cleaners, anti-freeze, paint, aspirin, food additives, shoe polish, LCD panels, sponges, medical and dental implants, textiles, auto parts and insulation foam.

Is there going to be a market for trees in the future?

6 QUARTER 2 2018 | TAPPSA Journal

7 TAPPSA Journal | QUARTER 2 2018

An advantage of bioproducts is that they provide a way to generate more value from trees while minimizing waste. Even the sawdust and wood chips left over from milling and other forestry processes can be used to create bioproducts. And, when used as a substitute for non-renewable materials and energy sources, bioproducts can help reduce dependence on fossil fuels, cut greenhouse gas emissions and minimize environmental impacts from industrial operations.

It is clear that while timber will remain an important product for the forestry industry, it will sit alongside a suite of other potential sources of income and there needs to be a focus on utilisation of the whole tree. This diversification parallels a similar diversification that is taking place in the wood processing sector.

Adjusting to disruption through reinvention

The market for newsprint, and printing and writing paper continues to shrink as more consumers turn to digital media in place of print media. The response by a number of companies has been to reinvent themselves. Considerable research is now underway to expand pulp mills into biorefineries where the pulp residues can be used to make new bioproducts.

I listened recently to the vice president of UPM, the world’s largest graphics paper producer, describe how the company had reached the conclusion that their involvement in the paper market was a “burning platform” despite the market for packaging and tissue continuing to grow.

Their response has been to diversify into the production of high quality, advanced biofuels for transport. The company has and will commit billions of dollars to this journey. This is underpinned by their confidence in two influences.

Firstly, even with global reductions in GHG emissions, and the advent of electric vehicles, transport emissions are expected to grow significantly and will need to be reduced by 80% to meet the 2050 climate change targets.

Secondly, the government biofuel policies, without which the economics of biofuel will not work, are here to stay. The Finnish bioenergy goal was recently revised upwards from 40% bioenergy by 2030 to 53% which suggests they are right.

It is timber’s time

Meanwhile, the traditional production and consumption of industrial roundwood for the construction market (i.e. wood-based panels and sawnwood) has shown strong growth in most regions over the past five years but new opportunities are emerging there too. Timber excels where strength (or stiffness) to weight is more important than absolute strength (or stiffness). Recent UK construction sector studies have shown that off-site panellised modular timber frame systems can save up to 50% of embodied carbon and 35% of embodied energy when compared to traditional residential building methods and materials.

Other benefits include reduced waste, faster installation time, reduced disturbance for neighbours and lower costs. New products such as wood plastic composites have also shown exceptional growth (e.g. in China), primarily for decking.

In the last decade, a handful of timber buildings six storeys and higher have been constructed as engineers begin to look at the possibility of building much taller with timber.

Complexity increases with height, and creating mega buildings with plant material may require properties that do not yet exist in timber. This offers exciting research opportunities.

Sumitomo Forestry has plans for a 350-metre 70-storey building in Tokyo made mostly of indigenous wood (8000 wooden houses worth). That’s taller than the Sky Tower in Auckland including the mast, and 6.5 times higher than the world’s current tallest wooden building. Due to commemorate the 350th anniversary of the company in 2041, this is as much a commitment to the bioeconomy, and a statement about the company’s confidence in the continuing evolution of wood technology, as anything else. Foliage connected via balconies will cover the outside of the building, with the company promoting the concept of cities that become forests in their own right. Which raises a question about how buildings like the 57 storey shiny glass and steel apartment building now going up in Auckland will be viewed in the future. The last of the old world?

Parts of the timber in the Sumitomo building will be replaced from time to time and this will then be reprocessed firstly to housing materials and then to other products. Residual wood will be used for biomass power. Hence, we are back to the circular economy. The government is supporting this investment by itself committing, via legislation, to promoting the use of wood in public buildings.

Policy needs to send the right signals

The bioeconomy and the circular economy are a way of living and once embraced, they necessarily require investment and policy decisions to make them a reality. But the policy needs to send the right signals as the Sumitomo and UPM examples illustrate. The policies also need to be durable. That’s a big ask when dealing with three-year election cycles, the consistency required when dealing with the time frames that global economic and environmental transitions necessitate. The policy commitments need to be bi-partisan and free from direct government influence where possible.

The latest report from the Productivity Commission provides very clear and quantified direction on where New Zealand must go if we want to achieve what we say we want to achieve with our carbon reduction goals. The Commission’s credentials can be added to those of the Parliamentary Commissioner for the Environment, the cross-party Vivid Economics report, Pure Advantage New Zealand, the Emissions Trading Scheme review panel, and the OECD Environmental Performance of New Zealand.

Just in case anyone missed the message – establish an independent body, effect land use change, address transport emissions, integrate agriculture and let the emissions trading scheme do the job for which it was set up.

Internationally the UN Forestry Department, with support from the World Bank and WWF amongst others, has launched the programme SW4SW (Sustainable Wood for a Sustainable World) to raise awareness of the role of forest products in meeting the Global Sustainable Development Goals which New Zealand along with 192 other countries signed up to just over two years ago along with an agenda for achieving them by 2030.

The message is clear, here and offshore, that the new future that everyone is striving for goes hand in hand with a big role for forests and their products.

OPINION PIECE |