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Scenario 2 drifting or steering

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  • Drifting or steering? Scenario description Forestcluster Ltds 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

    2

    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: Drifting or steering?

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    Attempts to re-organize global economical and environmental regulation and incentives continue, but with low success, which leads to slight loss of power for international organizations. Several blocks and countries focus on individual short-term economic targets, leading to confrontation and fragmented regulation. Sustainability is not a major issue on international political agenda. Global economy continues to be prone to rocky crises, and funding and incentives for renewal remain low. Globalization has to some extent turned into localization due to trade barriers and opportunistic national policies. Importance of developing countries increases in global cooperation, but these countries fail to take leadership. Funding and incentives are not sufficient for renewal. Some countries, like India and South Korea, show leadership in innovations and reduced energy and resource intensity, while many continue as before. Higher energy and material prices are the main drivers for efficiency improvements. Sustainability is a minor criterion for most people when purchasing products but sustainable consumption has become mainstream especially in old industrialized countries. Urbanization continues. Emerging economies try to boost growth by market-based opportunistic policy, leading to deforestation and loss of biodiversity and ecosystem services. Heterogeneity in available resources and wealth grow, leading to increased migration and conflicts and unbalanced development.

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  • Scenario 2: Drifting or steering?

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    Main Drivers Important variables

    World trade & Economy Attempts to re-organize global economical regulation continue, but with low success. Global economy continues to be prone to rocky crises, and funding for renewal remain low. Globalization has to some extent turned into localisation due to trade barriers and opportunistic national policies. Importance of developing countries increases in global cooperation, but these countries fail to take leadership. Many country blocks have different targets which leads to standoffs. Price of labour continues to direct the production site locations while global trade takes place in information networks. Markets of biomass feedstocks remain fragmented and to some extent trade barriers limit global trade. However, certain widely used easily applicable biomass fractions like sorted paper waste, process residues and energy crops are traded in regional and global biomass markets. High end intermediates from biomass (like lactic acid) remain niche products and their trade happens mainly between the business consortia, which are mainly formed along the value chain to enable providing comprehensive solutions. Funding for bioeconomy related investments and R&D is available mainly through private sources and in areas where the economy grows and bio economy concepts provide cost-effective solutions to crucial challenges, like resource scarcity. Public funding remains low, as regulation does not provide incentives for increased role for bio economy in the division of limited economical resources.

    New trading routes open up as the climate change melts the Arctic sea. North West passage is in use few weeks a year and provides new options for logistics in the Northern hemisphere.

  • Scenario 2: Drifting or steering?

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    Main Drivers Important variables

    Innovations and renewal

    Funding and incentives (both market based and political) are not sufficient for renewal. Some countries, like India and South Korea, show leadership in innovations and reduced energy and resource intensity, while many continue as before. Also Latin America is eager to develop. Innovations follow economical activity and spring therefore in regions with high economical growth. Innovations are increasingly developed in business-led consortia with comprehensive value chain coverage. Social media and communities for open innovation are popular in academic world, but business-led nature of research limits the open idea exchange also in the research communities. The environment is not favourable for generic and basic research. This slows down the development of emerging technologies and directs the resources into incremental research. A growing proportion of innovations is based on application of existing technologies in different market areas and integration of varying technologies and services into larger concepts for tailored end use demand. As innovations follow economical activity, the bio economy innovation leadership is in growing economies with urgent need to solve resource depletion problems. Examples of these countries are especially India and China. Another strong focus area is in wealthier countries with relatively high level of competence, high standard of living and urban style of living with highly developed metropoles, but poor pool of natural raw materials (biocapacity). These countries, like South Korea, develop cutting edge concepts for zero-waste urban communities. In general, innovations happen where resource depletion is severe and economy is growing, and no single area or country takes overall leadership of bio-economy innovation. One country can be strong eg. in water related innovations but not in other areas of bio economy, and so on.

  • Scenario 2: Drifting or steering?

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    Main Drivers Important variables

    Policy and regulation Attempts to re-organize global economical and environmental regulation and incentives continue, but with low success which leads to slight loss of power for international organizations. Several blocks and countries focus on individual short-term economic targets, leading to confrontation and fragmented regulation. Sustainability is a minor issue on international political agenda (or does not lead to concrete actions). Emerging economies try to boost growth by market-based opportunistic policy. Short term visions and reactivity guide regulation. In countries with resource depletion problems regulation is used as a tool to cope with the situation. Laws are used to increase resource-efficiency and limit export of critical resources. This may lead to eg. limiting of export of wood from African countries to cover only certified wood. Another aspect is increasing amount of trade barriers for securing higher national value addition of available natural resources. One example of this kind of development is the Russian taxation of round wood import. Continuing population growth and food crises lead to increased focus on food security, and supporting regulation. On the other hand many emerging economies support economic growth by incentives for industrial investments based on short-term visions and leading to loss of biocapacity, eg. supporting investments on virgin biomass-based energy production with unoptimized and relatively inefficient technology. Bio-economy lead markets are supported by policy and regulation in countries and regions like EU, which have invested (both public and private actors) on bio-economy related education, R&D and technologies.

  • Scenario 2: Drifting or steering?

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    Main Drivers Important variables

    End-user Demand Sustainability is a minor criterion for most people when purchasing products, but sustainable consumption has become mainstream especially in old industrialized countries and other societies where living standards are relatively high. Consumption patterns depend on available natural resources and living standards while well-being standards vary from region to region. In developing countries the growing population and dominance of young generations creates a growing need for commodities and growing base of pyramid markets. Need to improve standard of living is the dominant driver and cost-efficient means to support better life are popular. This includes low-cost smart phones, modular construction, furnishing and home electronics products for improved suburban living and low-cost aseptic packaging for safe food supply. In the growing economies the commodity markets grow at a steady state fuelled by increasing middle-class and boost of foreign investments. Dietary patterns, way of living, and consumption patterns change accordingly creating increasing markets for bio economy related products like processed food, food supplements, design furniture, magazine papers and textiles for recreation use. In old industrialized countries organic food, ethical clothing and bio-based and recycled-material based carbon neutral products are popular among the segment of consumers that emphasize sustainability. These also provide a price premium for the producers. However, overall demand is slightly reducing in many product segments due to ageing population.

  • Scenario 2: Drifting or steering?

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    Main Drivers Important variables

    Societies Urbanization continues. Heterogeneity

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