Category Archives: Environment

Biofuels and the future of the Finnish forest industries

It’s been a while since I last posted something original on the blog. Today I saw a news item (in Finnish) on the UPM Biofuels production in Lappeenranta, Finland. The specific interest for me was the announcement (which probably has been made before) that already during this year UPM’s biodiesel will be on offer at gas stations of ABC and ST1 in Finland. There will be a choice for either a mix of traditional diesel and biodiesel or purely biodiesel.

There are two interesting things here, at least. The first is that, in the words of Director of Sales and Marketing Sari Mannonen, the biodiesel does not compete with food production. In Sweden, there is a quite widespread use of bioethanol, but it is made of grain (and other biomass). So to some extent, stuff that could be used to feed either humans or animals is used for fuel production. Arguably this is more sustainable (especially in Sweden) that e.g. corn ethanol, but still. The innovation of UPM Biofuels is that it has succeeded in apparently mass-producing biofuels from pine oil, which is a waste product of pulp production. This means it does not (at all) compete with food production, and moves the pulp and paper industry a step closer to using waste products sensibly as well.

The second interesting part is that the product is very ready for the market. Biofuels are by itself not new but due to the scale of pulp production in Finland there should not be a shortage of raw materials for the biodiesel.

In my dissertation I pondered the developments of the pulp and paper industry in Finland. I graduated in 2012, and since then, there have been mostly positive developments – but only in specific areas! Paper production seems to lose out, but in particular pulp production has been a succesful business – even to the extent that Metsä Fibre will start building an 1.3 million t/a “bioproduct mill” (i.e. pulp and biofuels) in Äänekoski. Board is also still going quite well.

This is the speculation part: the pulp and paper industry is clearly a high tech industry. This means, that maybe, maybe, the development of biofuels will produce a fuel that is suitable for ships AND available in large quantities. My hope, and my belief, is that Finland in this way can become a global leader in environmentally friendly fuels. Finland would then overcome the “burden” of the Sulphur directive AND at the same time this directive will have achieved what it intended – banning a harmful substance and letting the private sector (with government R&D subsidies, probably) find an innovative solution. I wrote about this already in 2012, and as always, although there is a lot of noise about these things from various actors, the people in the industry do know where to put there money.

And think of it – money is virtually free to borrow from banks, even for firms. A company like UPM could make huge inroads in China with a network of biofuel mills. China’s environmental standards are bound to get tighter soon, so I wouldn’t waste time.

Innovation in the paper industry – the only way forward (pulp bleaching)

Both in my dissertation articles and on this blog I have discussed the merits of product- versus process innovation. Finland is in such a location, that its industry can’t be just as good as Germany’s or Japan’s, no, it actually has to be better, because between Finland and most of its markets there is a barrier which increases price: the Baltic Sea. Now, Finnish export industries, including their trade unions, have complained a lot about the Sulphur Directive, as it would add an unfair extra cost on Finnish exports (from 2015). As I’d like to say: yes, that is true, but the time used to complain about this issue also could have been used to gear up for changes. And beyond that, the Finnish state also has instated a compensation program. On top of that, Wärtsilä is doing great business with retrofitting sulphur-washers to older ships. And, let’s not forget that Finland has the great potential of developing sulphur-free biofuels based on processes in the pulp- and paper industry. Admittedly, this is still in baby shoes, but right now, with nearly free money from banks due to zero interest rates (nearly) the industry should throw a lot of money on this issue, as this is a sure source of demand in the years to come, in contrast to paperboard markets, which may at some point in the near future (especially regarding China’s slowdown) reach a saturation point and then the whole overcapacity drama will play out all over again.

The biofuel issue is one of product innovation, and Finland can and should be a leader in that field – all Finnish forest industries have pilot plants and bigger refinery plans in various stages of completion. Product innovation in the sense of intelligent paper etc. is probably going on as well, but I do not know how scaleable these products would be and how popular they would be. Things like packaging that announces when food goes bad sound great, but for the end-seller (i.e. shops) they might be a cost which is too high relative to benefits. But we have to see about that.

The issue of process innovation has been very important in the Finnish paper industry. Due to process innovation, labour productivity has greatly increased over the years.

As a besides, which is a well-known phenomena, labour productivity growth has both benefits and drawbacks, both for employees and employers. It is obvious that greater labour productivity enables the final product to be cheaper, but depending on market demand, rising labour productivity might endanger jobs at the site (after all, less personnel would be needed to produce the same amount of product). Furthermore, especially in the Finnish context with its high local unionization rate, labour productivity increases have also led to wage increases. These have been justified for many years, as long as markets grew. Currently, however, high labour productivity and low demand make for a problematic combination. In the Finnish legal (and labour market relations) context, the only way to combine these facts is to shed labour – it is near impossible to be flexible on wages. This kind of rationalization has its own risks – firms are very vulnerable to sickness absence and chronic understaffing also increases the risk of sickness absence. Thus, in terms of labour, labour productivity increases are not quite always positive, especially because at the moment employers would not increase wages along with productivity, because the market situation is so weak.

Enter university-led innovation. A recent report on Tekniikka ja talous discusses an innovation by the research team of Tapani Vuorinen of the Aalto University. Short and simple, the innovation is a much faster way to bleach pulp. The article mentions that the process would be 100.000 times faster than the traditional process. This means that also labour productivity would greatly increase, and thus the labour costs of making paper could drop. The article mentions that this new method would be commercially available in about three years and it would need only small investments. Again, with the availability and price of credit as it is, a no-brainer I’d think. Professor Vuorinen also states that this method would have positive impact on the environment, because it would not be necessary to cook pulp as long as currently needed.

It is clear that the current economic crisis in Europe and (possibly soon emerging in) China and other emerging markets have a strong negative impact on industries through lack of demand. However, it is not possible to revive the economy by cutting costs. Firms should be bold and take the cheap loans that are now available and take the risk. It is only through investments that new jobs can be created, and only investment can lead to growth. Why be risk-averse when it’s almost money for nothing? Shareholders do not only watch corporate debts and labour costs, but also investments, because they may tell about future

Suomalaisyrityksen keksintö vähentää laivojen päästöjä jopa kymmenyksen | Yle Uutiset |

On tosi kivaa kuulla tällaisia uutisia! Suomessa on todella paljon innovaatioita ja kuten muuallakin nähdään, yritykset reagoivat herkemmin ympäristösääntelyyn (tapoja tehdä rahaa) kuin kansalliset etujärjestöt, jotka usein taistelevat viimeisessä sodassa.

‘The economics of timber and bioenergy production and carbon storage in Scots pine stands’

An acquaintance of mine published this article with his colleagues. I provide the abstract below:


We optimize timber and bioenergy production combined with carbon storage in Scots pine (Pinus sylvestris L.) stands, using an ecological-economic model. Forest growth is specified with a highly detailed process-based growth specification and optimization is based on an effi-cient generalized pattern search algorithm. The optimized variables are rotation length, initial stand density and the number, intensity, timing and type of thinnings. The carbon pool includes all aboveground biomass (including dead trees) and timber products. The analysis includes the comparison of different carbon subsidy systems. The results are presented for the most relevant site types and thermal zones in Finland. Carbon storage increases the optimal rotation length, number of thinnings, and initial density at all forest sites. Carbon storage effects on stand den-sity and harvests are strongest at poor sites. Timber output increases with carbon price. High natural mortality in our results implies notable carbon storage in dead trees and a positive con-tribution to biodiversity. The stand-level analysis is extended to a cost-efficient national-level carbon storage plan.


New pulp industry investment in Finland/Äänekoski

Today is apparently a day for good news. On the website of Tekniikka&Talous a press release/news item was published concerning a new investment by Metsä Fibre in a so-called next-generation pulp mill, of a value of 1,1 billion Euros, which would make it the biggest single domestic investment in the pulp and paper industry in Finland.

Why is it next-generation? The english press release states:

The new mill will be the world’s first next-generation bio-product mill that can convert wood raw material into a diverse range of products. In addition to high-quality pulp, the mill will produce bio-energy and various bio-materials in a resource-efficient way. A unique bio-economy ecosystem of companies will be built around pulp production.

So this is why it is not presented as a pulp mill but as a bio-product mill: the diversity is an important issue I’d say. This development supports the ideas I have regarding the transformation of the pulp and paper industry (e.g. in the context of the Sulphur Directive: here). This is the kind of innovation Finland needs both in terms of employment (which is estimated at 2500 jobs in the whole value chain) and environmental impact. Finland has very high tech know-how regarding forest industries and more and more it is possible to see off-shoots of the ‘traditional’ paper industry developing into new industries.

Suomen elinkeinoelämän valtti: korkea laatu + kattavat palvelut asiakkaiden lähellä

Viime aikoina olen enemmän kirjoittanut Eurokriisistä ja Suomen talouspolitiikan harhoista, mutta erään projektin kautta mietin yhä mitä on ‘kilpailukyky’ Suomen kontekstissa. Olen joskus aiemminkin kirjoittanut, että Suomi ei ole maa jonka pitää kilpailla hinnan perusteella vain pitää kilpailla laadun ja innovaation kautta. Mielestäni huolet Suomen vientikilpailukyvyn heikkenimisestä ovat aivan liioteltuja ja kuten on monissa paikoissa selitetty jo (mutta parhaiten kai täällä ja täällä) Saksan yksikkötyökustannusten tuijottaminen antaa vaan täysin väärä oppia. Saksan mallin oppi on lyhyesti “siirretään takaisin halvan työvoiman maaksi.” Suomi on liian pieni siihen eikä sillä ole, kuten Saksalla, sellainen ‘takapiha’ missä tehdään kaikki työpajatyötä (Tsekki, Puola yms).

Sen sijaan, että yritetään Suomessa painaa työkustannukset Saksan tasolle (mitä ei tule onnistumaan moniin vuosiin, erityisesti jos Saksassa on matalampi inflaatio kuin Suomessa), pitää keskittyä yhdistelmään “laatutuotteet ja laatupalvelut asiakaan lähellä”. Suomessa osa “laatutuotteet” ei ole minkäänlaista ongelmaa; vaikka Suomessa vientiin ei tehdä kovin monta kuluttajatuotetta (F-Secure, Suunto ja Angry Birds tulee mieleen kuitenkin!), toiset yritykset ympäri maailmalla tietävät, että Suomessa tehdään hyviä koneita ja muuta teknologiaa – lääkealan kehityksiäkin on merkittäviä.

Toinen osa ‘kaavaa’ on vaikeampaa ja tietenkin riippuu kovasti tuotteesta, että pystyykö oikeasti asiakkaan lähellä tarjoamaan palveluja. Mutta tällä hetkellä on joitain yrityksiä Suomessa jotka osaavat tämän erittäin hyvin, ja näiden kautta näkyykin, että perinteinen jako teollisuuden ja palvelujen välillä on melko keinotekoista.

Ensinnä on METSO. Yritys aikoo avata kaksi uutta palvelupistettä liittyen kaivosbisnikseen. Myös sen entisellä osalla, VALMETilla, on hyvin kattava palveluverkosto liittyen metsäteollisuuteen. Tämä uusi tilaus Turkkiin sisältää paitsi pehmopaperikoneen itse myös “suunnittelu, asennuksen valvonta, koulutus, käynnistys ja käyttöönotto”

Sitten on Wärtsilä. On hieno asia, että pakokaasujen puhdistusjärjestelmistä “Wärtsilä oli ensimmäinen pakokaasujen puhdistusjärjestelmien valmistaja, jolle luokituslaitokset Det Norske Veritas, Germanischer Lloyd ja Bureau Veritas ovat myöntäneet kansainvälisen merenkulkujärjestö IMO -sertifikaatin.” Ajatellen Rikkidirektiiviä, uskon, että tämä on mittava kilpailuetu. Myös Wärtsilällä on hyvin laaja palveluvalikoima joka tukee sen teknistä osaamista.

Kolmas yritys mitä mainitsisin on KONE. Yritys on monesti varsin positiivisesti uutisissa, mm. sen kautta, että voitti design-palkintoja. Mutta KONE on myös saanut suuria tilauksia, kuten tämä ja tämä. Kuten toimitusjohtajansa sanoo “Olemme työskennelleet erittäin aktiivisesti pystyäksemme entistä enemmän differentioitumaan kilpailijoihimme nähden laite- ja palvelutarjonnallamme.”

Nämä ovat vain kolme esimerkkiä, ja omalla tavalla voi lisätä vaikka F-Secure siihen. Pointtini on vaan se, että pitää yhä enemmän ajatella koko arvoketjua, ei vaan tuotantoa. Olin joskus seminaarissa missä esitettiin Pekka Yli-Anttilan “Missä arvo syntyy?” -projektin kirjaa ja uskon edelleen, että siinä on hyvin tärkeitä ajatuksia. Suomen tämän hetken menestäjät näyttävät, miten se toimii.


“Trees go high-tech: process turns cellulose into energy storage devices “

[below in Finnish, shortly]

This is exciting – through some process it is possible to make cheap superconductors out of cellulose:

OSU chemists have found that cellulose – the most abundant organic polymer on Earth and a key component of trees – can be heated in a furnace in the presence of ammonia, and turned into the building blocks for supercapacitors.

These supercapacitors are extraordinary, high-power energy devices with a wide range of industrial applications, in everything from electronics to automobiles and aviation. But widespread use of them has been held back primarily by cost and the difficulty of producing high-quality carbon electrodes.

The new approach just discovered at Oregon State can produce nitrogen-doped, nanoporous carbon membranes – the electrodes of a supercapacitor – at low cost, quickly, in an environmentally benign process. The only byproduct is methane, which could be used immediately as a fuel or for other purposes.

Once more it goes to show that industries and research related to the paper and pulp industry can foster important innovations, and with environmentally sound results even.

[Ja suomeksi]

Tekniikka&talous rapportoi tästä myös, mikäli ei halua lukea englanninkielistä tekstiä. Olen aika innostunut tästä – tässä on taas esimerkki, miten metsäteollisuus voi tuottaa innovatiivisia tulevaisuuden tuotteet!