Scenario 1 green renewal

”The Green renewal” Scenario description Forestcluster Ltd’s Bio-based economy scenario process Tiina Pursula, Juha Vanhanen and Paula Tommila Gaia Group Ltd | 15.11.2011

Bio-based economy scenarios in 2030

Main Drivers ”How the critical factors develop”

• World trade & Economy

• Innovations and renewal

• Policy and regulation

• End-user Demand

• Societies

• Food

• Energy

• Natural resources

• Environment and climate change

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Outcomes 2030 ”How the world looks like”

• Business opportunities

• Value networks

• Material flows

• Markets

• Products, services and concepts

• Development of regions … Competitiveness

… Well-being

… Sustainability

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Scenario story in 2030: Green renewal

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Successful renewal of the international cooperation takes place. International regulation is renewed so that it provides a favorable operating environment for business innovations and a good basis for growth of bio economy. Global economy is on a rather solid state after re-organization of financial regulation after crises of the 2010s and led together by EU, USA and China. Globalization has to some extent turned into localization, especially when it comes to wise use of natural resources and primary production. However, global markets are open and more transparent than before. Welfare and stability overrules maximal growth in developed countries.

Global agreements on mitigating climate change, safeguarding biodiversity and consuming natural resources sustainably are agreed on and implemented. People emphasize sustainability of products and processes and BoP markets create business opportunities for cleantech companies. Overall energy and resource efficiency are remarkably better than in the 2010s. Development of bio economy provides equal opportunities for improved welfare both in urban and rural areas. However the least developed countries find it difficult to respond to the combination of tight environmental regulations, growing population and needs for improved wealth of the people. This leads to increased migration, conflicts and international negotiations on more balanced burden sharing. Global carbon sinks are regarded important and global deforestation development slows down.

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Main Drivers Important variables

World trade & Economy

Global economy is on a rather solid state and led together by EU, USA and China after re-organization of financial regulation after crises of the 2010s. Developing countries are entering the global markets after the collapse of trade barriers in the Western world. Globalization has to some extent turned into localization, especially when it comes to wise use of natural resources and primary production. However, global markets are open and more transparent than before. Welfare and stability overrules maximal growth in the developed countries while biomass based solutions create new business and growth in the developing world. Biomass markets are more developed and regulated than in the 2010s. Especially key biomass fractions and intermediate compounds (or platform chemicals like ethanol and lactic acid) have global open markets and prices are followed in various economic indexes in wider scope, higher precision and more global coverage than today. Biomass and biomass fractions (like residues, process sidestreams and sorted waste) with lower value addition have local or regional markets with tailored network of actors and optimized logistics. Bioeconomy is an attracting area for public and private investors both in developed and developing countries. Availability of funding for investments and R&D in the area of bioeconomy is relatively easy in areas with sufficient return of investments, clear sustainability gains and sufficient base of references. In developing world various funding mechanisms are based on international climate and biodiversity agreements, and these form a major source of funding. Funding for long term high end R&D projects and investment projects is channeled to world-class highly networked teams with excellent references. Funding landscape is more competitive and international than in the 2010s.

Scenario 1: ”Green renewal”

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Innovations and renewal

International regulation is renewed so that it provides a favorable operating environment for business innovations and a good basis for growth of bio economy. EU leads the bio economy development together with China through new efficient and affordable technological solutions. Knowledge management has an important role in innovations development. New information channels, communities and social media are used for information delivery and development of novel concepts on open innovation platforms. Innovation partnerships are increasingly virtual in nature: exchange of ideas, concepts and IPR occur despite of the physical distance. Value of partnerships comes in strong innovation ecosystems, as no single company or research institute can alone master the whole value chain and all relevant areas of competence in a world that is continuously getting more complex and regulated while technologies and knowledge are getting more and more sophisticated. Innovations are applied and developed further in teams with crossing competences and value chain coverage. Innovations in the area of bioeconomy are increasingly developed based on recycled feedstocks due to tightened regulation on sustainability of biomass utilization. Solutions on collecting, logistics, sorting, upgrading and characterizing various mixed biomass feedstocks are one focus of innovation. Innovation leadership in this area is in countries with high level of technological competence, lively ecosystem of technology providers, limited availability of virgin biomass and high degree of urbanization, eg. in Japan and United Kingdom. Another important area of innovation is development of integrated biorefineries with optimal usage of the feedstock and a range of products with varying value addition, covering also high-end uses like pharmaceuticals. Innovation leadership in this area is where sustainable feedstock with consistent quality is available together with highly skilled R&D actors, technology providers and companies with power and competences to carry out large investment projects, eg. in Nordic countries and North America. For high end uses the virgin biomass is the predominant feedstock.


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Policy and regulation

Successful renewal of the international cooperation takes place. Global agreements on mitigating climate change, safeguarding biodiversity and consuming natural resources sustainably are agreed on and implemented. International regulation (especially taxes and laws) is renewed so that it provides a favorable operating environment for business innovations and a good basis for growth of bio economy while incentives for fossil fuels have ceased. International agreements include and support the elements of bio economy: climate agreement supports the bio economy by supporting sustainable use of biomass fractions to replace fossil fuels and limiting energy use of biomass with sustainability boundaries. Biodiversity agreement safeguards the quality and future availability of biomass by protecting areas with high biodiversity. Agreements on global ocean policy are in place and support sustainable and diverse utilization of marine natural resources. In the political context, especially in the leading industrialized countries, former sector-specific policies (eg. agro, forest, natural resources, environment, energy) are integrated into a comprehensive political framework on sustainable management and utilization of natural resources taking into account the system wide approach on sustainability. For this advanced and comprehensive sustainability assessment methods and standards are utilized and developed further (beyond LCA and current sustainability indicators). Certain leading countries support development of company ecosystem in the area of bioeconomy by lead market regulation. These countries set very ambitious targets on material efficiency and share of sustainable bio products in public procurement. This lead market regulation is often linked to national biomass resources, eg. in Finland wood-based bio products are supported and in Japan ocean is the origin of biomass feedstock for various purposes.


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End-user Demand

People emphasize sustainability of products and processes and BoP markets create business opportunities for cleantech companies. Population growth and changes in its geographical balance shape the development of end-user demand. Asia has a leading role in the development of every day commodities. Developing countries develop leap-wise: the development path that the old industrialized countries followed in the post WWII era is not valid any more. Strong sustainability regulation and support for technology transfer guides to direct development from poverty and rural communities into material and energy-efficient urban living, with inherent elements of the bio economy. People use directly mobile phones and net applications for various needs, and skip the development phases with newspapers, TV and personal laptops. Accordingly solar charged electric scooters may become the first means of personal transportation while entering the lower middle class from poverty. Business can be based on remote and distributed working in virtual communities instead of offices. People lease certain home electronics devices and equipment instead of buying one, and use services instead of doing things themselves. Transformation may happen directly from rural to service society. As urban infrastructure is developed from scracth, various technological options are open and lead to new sustainable concpets and innovations. This creates large growing markets with completely new market areas. End-user demand especially in the area of commodities is strong and growing in the regions with healthy age-pyramid (like Africa and Far East) and slows down in ageing regions, like Europe and Japan. Large share of global production is directed to fulfill the needs of the growing, dynamic markets. In old industrialized countries concepts which enable continuation of high standard of living with reduced costs and impact on environment create growing markets also in niche and luxury areas.


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Societies Development of bio economy provides equal opportunities for improved welfare both in urban and rural areas. However the least developed countries find it difficult to respond to the combination of tight environmental regulations, growing population and needs for improved wealth of the people. This leads to increased migration, conflicts and international negotiations on more balanced burden sharing. Increased education levels improve the stability of societies in the developing countries. Population growth slows down all over the world. Population is still growing in Sub-Saharan Africa but many Latin American and Asian states including China have reached their population peaks. Immigration and lengthened working careers respond to the challenges created by growing numbers of elderly and diminishing numbers of young people in Southern and Eastern Europe, especially in Russia.

Multipliable small scale business concepts (Base of the Pyramid markets) in the fields of food, basic services and education are growing in the developing world. In the industrialised countries, bio economy development is often invisible to urban population as it takes place mostly within the hidden infrastructure. Consumer products are manufactured from recycled materials in a way that they can be easily assorted for recycling, and consumers give their input for bio economy mainly through sorting their waste according to the instructions created by the industries. The forerunning societies based on bio economy are countries like Costa Rica where the importance of sustainable resource utilisation and production was adopted as a developing path at an early phase of national development and growth. Also countries like Sweden are showing the path towards bio economies through their intensive work on sustainable community development and efficient utilisation of natural resources.


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Food Local food production is on the rise, and traditional, local breeds are preferred. Food production is secured through limitations on energy crops cultivation and meat production. Still, food crises occur especially in poor regions where environmental hazards cause crop losses. In industrialized countries demand for highly sophisticated food supply which is tailored for individual needs and for optimized well-being with inherent sustainability, grows. Globally, concepts for fair and sufficient distribution of food are developed. Aseptic food packaging systems are used all over the world to minimise the food losses caused by contamination and spoiling. Concepts for sustainable local food production are developed to fit different environments. Emphasis is given on fertiliser recycling from household waste, efficient irrigation systems and selection of most suitable crops for local environment and needs. Side products of food production such as straws, shells and waste are used as raw material for other industries all over the world.


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Energy Subsidies for fossil fuels have been phased-out and replaced with incentives for renewable energy. Overall energy demand is rather steady, as energy efficiency improvements compensate growth of the emerging economies. Global emissions per MW produced are greatly reduced from the level of 2010s due to cleantech innovations and utilization of hydro, solar and biomass based energy. Local goods production solutions decrease energy consumption in transportation. Electricity is often produced locally and power stations are connected to smart grids covering multi-national regions. Industrial side streams are used for energy when they don’t provide better value in other industries. Biogas is produced from industrial and communal waste through anaerobic digestion systems and other methods. Biofuels are often produced at integrated biorefineries where fuel production is combined with other production. Sources of biofuels include industrial waste, algae and bio based gases. Large share of bio based energy production units are of small-scale and utilise feedstock from the nearby areas. Small-scale production is enabled by regional smart electricity grids that control electricity supply and delivery according to the real time needs. Also energy storage systems like water-based systems and industrial scale battery systems make on-time production and delivery of electricity easier.


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Natural resources

Development of bio economy provides intelligent use of natural resources in a high variety of societies and communities. Overall resource efficiency is remarkably better than in the 2010s, but some resources like phosphorus are becoming critical. Resources utilized depend on the local stocks and goods production is located according to the available stocks. Recycling and waste utilization are made more inviting than consumption of virgin natural resources. Sustainability and sufficient food production guide land use decisions but growing needs create new tensions especially in densely populated areas and in regions with decreasing fresh water resources. Oceans provide a variety of resources on all continents. Biodiversity sustaining is considered important in all decision making related to natural resources. Resources like wood, cereals and residues from other food crops are used in a variety of ways: fibers, chemicals and other components are used where they provide best value. Algae is farmed for both energy and chemical industries in oceans and artificial on-land farming sites. Non renewable natural resources are replaced by renewable ones whenever possible. However, minerals like phosphorus and other nutrients have to be recycled as they don’t have renewable substitutes. Nutrients are recycled e.g. from household and sanitation waste and fish waste. Fresh water is a critical resource in many regions, and efforts are made to save, purify and recycle it as much as possible. Affordable small scale water purification systems are needed in all inhabited areas suffering from water scarcity, and large scale water treatment systems are developed for farming and industrial needs.


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Environment and climate change

Global agreements on mitigating climate change and safeguarding biodiversity are agreed on and implemented. Global carbon sinks are regarded important and global deforestation development slows down.

Farming of perennial, fast growing carbon absorbing plants is highly supported. Land use decisions have an important role in carbon management, and peat land management is seen essential due to their vast carbon storages. Concepts for carbon storage is a strongly developing area with advanced models for storage potential in different locations and circumstances. High taxes set on high emissions accelerate the development of low-carbon solutions. Water resources are looked after very carefully in arid and semi-arid areas and strict regulations on regional water resources utilisation apply. Environmental issues guide industrial production, and production of highly polluting goods such as heavy metals and toxic chemicals is expensive due to high requirements on production technology and producer responsibility. Changing weather patterns change natural vegetation systems and force farming crops to be reselected in certain regions. Protected rain forests maintain high biodiversity which provides a source of medicinal resources that are mimicked artificially for medicine production.


Winning concepts of Bio-based economy in 2030

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”The Green renewal” International regulation is developed so that it provides a favorable operating environment for renewal and development of the bio-based economy.

© David Ciemny

© mbbirdy

• Integrated technologically advanced biorefineries for both urban and rural based feedstocks and a range of products with varying added value

• Advanced bio-based energy products and systems • New plants for specific purposes • Concepts for optimized biomass supply chain including waste and side

streams • Recycling concepts for closed cycles of carbon, phosphorus and other

nutrients

Integrated

Biorefinery

Bio materials and bio

products

End use

Bio waste

Sorting, handling, logistics

Biomass feedstock

Winning Concept: Integrated biorefinery

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Bio fuels and bio energy products

Virgin biomass

Urban biomass: waste biomass from industry and communities

Weak signals of Bio-based economy in 2030

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”The Green renewal” International regulation is developed so that it provides a favorable operating environment for renewal and development of the bio-based economy.

© David Ciemny

© mbbirdy

• Robust process concepts combining small and large scale, re-thinking processes and on-site processing (e.g. during transportation)

• Land use management concepts optimizing various needs and safeguarding biodiversity and overall sustainability, keeping the biomass supply chain in mind

• Concepts for sustainable local food production and fair and sufficient distribution of food

• Community scale production e.g. transport fuels from household waste on site • Fresh water production from sea water (and waste water) • Ecosystem services and immaterial value of natural resources

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Scenario 1 green renewal

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