Monitoring the Sustainability of the EU Biomass Supply: A Novel Hybrid Approach Combining Tracing and Selected Sustainability Impacts

Abstract

In an attempt to make a first step toward monitoring the sustainability of wood as (one of) the main element(s) of the EU biomass supply, a novel approach combining a physical accounting model with a material flow–life cycle assessment approach was used to trace the locations of origin of the wood and the associated sustainability impacts. Applying this approach to EU trade data from 2018, we found that around one-third of the wood fiber input in finished paper products consumed in the EU was imported. The main countries of origin were Brazil, the United States and Uruguay. We used Uruguay as a case study of an important country that provides wood pulp to assess the associated sustainability impacts. The results reveal synergies and trade-offs between employment, value added and environmental impacts. We highlight the need to analyze sustainability impacts in different dimensions of sustainability and consider not only territorial impacts in isolation but also from a global perspective in order to have a more holistic overview. Future extensions of the approach could include the coverage of other commodities, additional impacts along the global supply chain (e.g., post-use) and additional sustainability indicators.

1. Introduction

The transition of the current fossil-based economy toward a more sustainable bioeconomy, together with the concept of circular economy, is seen as an important part of the envisaged transformation of the economy in Europe [1]. Therefore, bioeconomy has gained attention as a political target expressed in different national and international strategies, as a pathway to achieve the 2030 Agenda for Sustainable Development, its Sustainable Development Goals (SDGs), and the Paris Agreement [2]. Although a transition into bioeconomy is often associated with a range of benefits, the transition also implies trade-offs as well as risks [3]. The expected benefits include more environmentally friendly food, feed and material value chains. Frequently mentioned problems are land use change and the associated negative impacts induced by a growing demand for biomass [4,5]. Since trade-offs (and synergies) between different sustainability objectives are unavoidable, it is important to identify them so they can be reduced (or maximized). Therefore, the goal of bioeconomy monitoring should not only be to measure the development of economic parameters of bioeconomy but also its sustainability impacts.

In a globalized bioeconomy, commodities are often traded along complex supply chains and over large distances [6]. Thus, they are often imported via third countries [7]. In this context, production and consumption are usually spatially disconnected (so-called “telecouplings” or “teleconnections”). For instance, such disconnections may occur between producers of particular commodities (e.g., beef, soy and wood pulp in South America) and global consumers (e.g., China, the USA and Europe), making the latter rarely aware of the sustainability impacts at the site of the origin of production [8,9]. Some of the sustainability impacts occur where final products are consumed (e.g., emissions from combustion), whereas others are along the transformation steps (e.g., water and energy consumption). Some of the most severe impacts, however, can occur at the site of production, i.e., where the raw material is obtained (e.g., land use change, biodiversity loss and forest degradation) [7,10]. Therefore, appropriate bioeconomy monitoring and assessment has to consider both, domestic and foreign impacts. As biomass products usually pass several stages of international trade and transformation into final products before their consumption, bilateral trade statistics do not necessarily reflect the site of origin [10], hampering straightforward analysis.

The updated European Union (EU) Bioeconomy Strategy from 2018 reinforced the importance of enhancing the knowledge of the ecological boundaries of the bioeconomy not only within the EU but also on a global scale [6]. This is illustrated by the fact that the demand of the EU is partly satisfied by growing crops on agricultural land in other countries [11]. According to Pendrill et al., 2020 [12] and Marques et al., 2019 [13], in 2017, agricultural commodities exported to the EU were grown on 203,000 ha of deforested land in the tropics, especially in South America and Indonesia. Likewise, land-use-related carbon emissions [14], impacts on carbon sequestration, biodiversity [13] and socio-economic impacts [15] related to international trade are highlighted in recent studies. For example, Chaudhary and Kastner 2016 [16] link 80–99% of biodiversity impacts in 2011 to the use of agricultural land for growing crops that were exported to the EU. Therefore, an increasing number of regulatory measures are being developed in the policy arena, such as the EU legal framework on deforestation-free supply chains (EUDR), focusing on halting deforestation and forest degradation, among others, in tropical countries [17].

The forest-based sector is a core part of the EU bioeconomy, and wood-based products, such as paper, are among the most important traded. For example, the EU was a net exporter of paper products and the world’s fourth-largest producer of paper products in 2020 [18]. The fiber demand for paper products has been partly met by pulp imports from South America, specifically Brazil, Chile and Uruguay [19]. The increasing demand for pulp has made Eucalyptus one of the most planted tree species worldwide over the last century. Therefore, there is a need to analyze the sustainability impacts of European wood demand. This paper seeks to understand the relationship between EU wood commodity demand and sustainability impacts in the countries of origin, taking the complex production–consumption interlinkages into account. First, we assessed the most important countries of origin of wood for the EU’s consumption of finished paper products. Then, we assessed to what extent the consumption of finished paper products within the EU contributes to certain socio-economic and environmental impacts in the countries of origin. As one of the top suppliers of wood for EU paper production and consumption, which is also expected to become the second-largest producer of short-fiber cellulose, we selected Uruguay as an example, in order to show how a novel combination of a physical accounting model and a material flow approach can be used to trace the origin of wood and assess the associated sustainability impacts. This article thus takes the first step toward a bioeconomy monitoring system that covers import commodities and their sustainability impacts in the countries of primary production.

2. Materials and Methods

The approach (Figure 1) is based on a combination of a physical accounting model (called a “tracing model”), originally developed for the global forest-based sector [20] and a material flow–life cycle assessment approach. The tracing model was used to trace the wood origin for the consumption of finished paper products within the EU in 2018, considering the current EU-27 Member States (i.e., without the UK). The material flow analysis and life cycle assessment approach was used to assess the sustainability impacts [21,22] in the producer countries.

2.1. Tracing the Origin: Physical Accounting Model

The physical accounting model uses country-level production data and bilateral trade data. Production data come from the forestry section of the FAOSTAT database [18] and UN Comtrade trade statistics are the primary source of trade data [23]. The functional unit used is the wood fiber equivalent, defined as the equivalent volume of wood fibers or wood-based fibers at the fiber saturation point (m³ (f)) [24]. For more information regarding the general structure of the model, data sources and functional units, see [20].

2.2. Quantifying Sustainability Impacts: Material Flow–Life Cycle Assessment Approach

Sustainability impacts are quantified for wood production in Uruguay. The material flow analysis and life cycle assessment approach (Figure 2) assesses the total amount of biomass produced, used and recycled in any value chain or even a national economy, as well as the associated sustainability impacts [22]. Hence, it enhances the resolution at the supply chain level and captures how much each step contributes to sustainability and where there are opportunities to improve it. The production data of Eucalyptus pulp were obtained from the Uruguayan production statistics [25]. In order to calculate the sustainability impacts in relation to the results of the tracing model, the reporting units of production statistics were converted into cubic meters of wood fiber equivalent (m³ (f)) using the following conversion factors: roundwood (1.00); industrial roundwood (1.00); wood chips and particles (1.00); and chemical wood pulp, sulfate and bleached (1.70). Then, national statistics, empirical studies and experts’ consultations were used to quantify the sustainability impacts within Uruguay in relation to the functional unit, i.e., value added/(m³ (f)). The impacts assessed and sources of information are detailed below and include global warming potential, carbon sequestration, land use, employment and value added.

Greenhouse gas emissions (GHGs) and carbon sequestration are the main indicators to assess climate change impact and mitigation. They were analyzed according to the life cycle assessment (LCA) estimates of Schulte et al., 2021 [26]. The system boundaries for the analysis include biogenic carbon (carbon stored in above-ground and below-ground biomass and soil organic carbon) and carbon storage in Harvested Wood Products (HWPs) (pulpwood and pulp). GHGs consider emissions and the removal of CO₂, N₂O and CH₄ along the material flow (e.g., the planting and harvesting of trees, transport from the plantation to the pulp mill and chemical pulping) related to materials (fertilizers and pesticides) and energy sources (fuel and electricity) used for the production of pulp. Direct land use was calculated as the specific area used for the production of pulp in 2018, using a mean annual increment (MAI) of 23 m³/ha/year of Eucalyptus. This value was estimated as the average MAI in Eucalyptus grandis, E. dunnii and E. globulus, which are the main species planted for pulp production in Uruguay [25]. Grassland was considered as the land use reference system. Employment was quantified as the number of persons employed in the different steps of the supply chain (roundwood production, pulping and transport) in the full-time equivalent using official data [21,25] crosschecked and complemented with empirical studies [27] in order to derive a complete dataset on employment. Value added expressed in USD millions was calculated based on the estimations of Exante 2020 [27] and national accounts of the Central Bank of Uruguay (BCU). The consumption impacts of finished paper products linked to the EU’s demand were quantified by multiplying the physical values of the sustainability impacts in Uruguay, for instance, employment generated/(m³(f)), with the quantity values of wood originated in Uruguay and exported to the EU member states from the physical accounting model.

3. Results

3.1. Origin of Wood in Paper Consumption

In 2018, 112.8 million m³ (f) of wood contained in finished paper products were consumed in the EU, 65% of which originated domestically (i.e., from within the EU) and 35% originated from other countries. Germany (26%), Sweden (12%) and France (12%) are the main consumer countries in this respect. Moreover, Germany (27%), Italy (15%) and France (15%) are the largest consumers of imported wood in finished paper products (Figure 3a). The main wood origins from outside the EU were the USA (11%), Brazil (10%), Uruguay (4%) and Russia (3.5%). Figure 3b illustrates the global distribution of wood origin contained in the consumed finished paper products within the EU.

3.2. Uruguay as a Case Study

In 2018, the total Uruguayan wood extraction (production) of non-coniferous species was 5.69 million m³ (f), of which, around 82% of the wood extracted was destined to be used as industrial roundwood. A major part of the industrial roundwood (92%) was processed in Uruguay for chemical pulping (using the sulfate or kraft process). In total, 99.8% of the total production of pulp was exported.

EU countries with the highest consumption of Uruguayan wood (Figure 4a) contained in finished paper products include Germany (28%), Italy (15%) and the Netherlands (13%). The total value added generated in Uruguay related to exports to the EU in 2018 (Figure 4b) accounts for around USD 175 billion. This represents 40% of the total value added in the Uruguayan forest-based sector. The pulping process (72%) accounted for more than three times the total value added, while roundwood production and transport accounted for 28%. The total employment generated linked to exports to the EU accounted for around 4120 people in the full-time equivalent (Figure 4b). Contrary to the value added generated, the production of roundwood and transport contributes 82% of the total employment effect, while processing into pulp accounts for 18% (Figure 4b). These different proportions highlight trade-offs between sustainability impacts among the different steps of the value chain.

Analyzing the environmental impacts, the total global warming potential (GWP₁₀₀) and carbon sequestration related to exports to the EU for 2018 is shown in Figure 4b. GHGs generated in the production of roundwood are minor (9%) compared to the industrial phase, which represents 91% of total emissions, dominated by the operations and energy requirements within the pulp mill. Biogenic carbon has a marginal impact on the overall CO₂ eq. balance (−89 kg/t) and barely offsets the emissions. Total direct land use calculated on the basis of the average MAI for exports to the EU amounts to around 22,000 ha.

4. Discussion

As one of the largest importers of biomass in the world, the EU plays a critical role in supply chains and, therefore, can influence the way commodities are produced and traded. The sustainability of EU biomass sourcing has been questioned [11] with regard to adverse direct and indirect impacts on land use changes, thus generating GHGs, deforestation and biodiversity loss, among others [4,13,14,16,28]. Moreover, as the systematic change in the EU toward a bioeconomy will rely more heavily on biomass, there is a need to analyze and optimize pathways for sustainable production and consumption. Some strategies include optimizing biomass supply, using local or regionally producing alternatives or sourcing from regions with more sustainable social and environmental production conditions [4,8,29]. Therefore, the origin of biomass is an important issue for a sustainable bioeconomy and is particularly relevant for the expanding bioeconomy of the EU. To the best of our knowledge, there is no other publication quantifying the sustainability impacts related to the wood procurement of the EU with such a detailed approach as this study.

In a globalized bioeconomy, the locations where commodities are produced are often disconnected from the locations of consumption [7,30]. This spatial disconnection usually masks impacts at the site of the origin [8,10,28], such as roundwood from deforestation or other land use change versus more sustainably managed forests. As bilateral trade statistics are not corrected for re-exports or several stages of international processing chains [31], they are of limited help in analyzing how production-related sustainability impacts are caused by consumption elsewhere. In recent years, several studies attempted to connect forest cover dynamics to the consumption of wood products in other countries using a physical trade model [28,32]. However, some wood products in advanced levels of processing were not considered. Other studies used multi-regional input–output (MRIO) analysis to assess environmental impacts embodied in final consumption [30,33]. However, due to data constraints, products are usually aggregated into product groups and countries into world regions, which may limit the informative value of the analysis. The physical accounting model used in this analysis [20] overcomes some of these shortcomings, as it has a high regional and product resolution, which enables the origin of wood contained in finished products to be traced to the countries of primary production. Thus, the origin of the wood (i.e., roundwood) can be connected to the final consumers instead of only being allocated to countries where the industrial processing takes place.

4.1. Footprints vs. Material Flow Approaches

Consumption-based accounting has advanced considerably in the last decade and provided important insights into distant environmental and socio-economic impacts connected to international trade. Some approaches have been attempted to calculate different footprints (agricultural, forest, climate and water) [4]. Footprinting has been used to account for the dependency of a country on foreign resources and possible displacement and leakage effects [8,11]. Since footprints are often used as proxies for complex cause–effect relationships, some limitations include the lack of data disaggregation and country specificities at the product level. This makes it difficult to further distinguish between more sustainable and less sustainable biomass or identify the contribution of the different steps of the value chain to the overall sustainability impacts. As suggested by Bruckner et al., 2019 [8], adding more spatial and product detail will be an important part of the assessment, as yields and impacts may differ largely within product and country groups. The understanding of how biomass is used and its sustainability impacts—reaching a far greater level of detail—can be achieved through a material flow and life cycle assessment approach [22]. In this study, we developed a novel hybrid approach that combines a physical accounting model based on international trade statistics that is able to provide a high regional and product resolution with a material flow life cycle approach based on highly disaggregated national data on specific supply chains and demonstrated that a higher spatial resolution can be obtained. A key innovation of our approach is that it is able to capture the heterogeneity of the sustainability impacts in the different steps of the supply chain and different dimensions of sustainability. This has the potential to identify synergies and trade-offs among sustainability objectives and recognize where there is potential to improve sustainability.

4.2. Remarks on Data Gaps and Challenges

The applied physical accounting model is based on official international production and trade statistics. Yet, there are still some limitations and data challenges. For example, the model cannot track highly processed industrial products unrecorded in the FAO data. Moreover, given the fact that the composition of products varies greatly across the world, harmonized, specific and more differentiated conversion factors are needed. Considering that the type of material is important for the assessment of sustainability impacts, other challenges relate, in particular, to the disaggregation of traded material components (in the case of wood, for example, into softwood and hardwood and/or tropical and non-tropical wood). On the other hand, sustainability impacts are strongly related to contextual frameworks of the site of origin, such as climatic conditions and the original landscape, among others. Therefore, country-specific information is preferred, which is one of the main obstacles. In this case, national statistics provide useful information for assessing the sustainability impacts at the country scale but have some overall limitations. Firstly, wood flows and their impacts are cross-sectoral and include different economic activities. However, the current classification systems according to sectoral economic activities (e.g., primary, industry and transport) are only disaggregated to a certain extent and do not quantify impacts on a product level. Regarding wood production statistics, there are additional limitations; for instance, different activities are merged for all forest plantations (e.g., silvicultural operations) without differentiating between softwood and hardwood. Furthermore, if a small number of companies conduct certain economic activities, the data are usually not disclosed, as results could otherwise be easily related to single companies. Another overall limitation is that environmental information often has a high level of aggregation and lacks regular updating. Strategies to improve information, especially updated environmental indicator data, should be given high priority for bioeconomy monitoring and evaluation. Consequently, additional data sources are needed, such as LCA studies, satellite images, expert consultations or other secondary statistics.

Overall, our proposed approach can capture impacts at a country- and value-chain level and can be used to assess worldwide impacts. If the goal is to identify which countries are most affected by the production and consumption of wood elsewhere, a selected number of sustainability effects could be quantified for the major wood- and wood-product-exporting countries. This would allow the identification of differences between countries regarding sustainability effects and trade-offs between sustainability effects and, hence, enable market participants to make better-informed decisions. For selected countries, the approach could focus on the value-chain level. For example, after identifying the major producing and exporting countries, it would be possible to determine which steps of the value chain contribute to certain sustainability indicators and where there is potential to improve sustainability.

4.3. EU Wood Demand and Impacts in the Countries of Origin

Our results illustrate that the EU bioeconomy depends on wood imports from other regions, especially North America and South America, from countries like the USA, Brazil, Uruguay and Chile, to supply wood for the consumption of finished paper products, for example. Our results (that used 2018 as the reference year) are in line with other results [9] that found that between 2022 and 2011, pulp and paper were a significant share of EU raw timber imports. Indeed, in this study, we considered a more recent reference year and could identify the main suppliers at a country level in comparison with an approach that aggregated the origin at a regional level [9]. Taking Uruguay as an example, we provide the first estimates of relevant sustainability impacts linked to the EU’s finished paper product consumption.

Analyzing the share of wood consumption in the EU’s bioeconomy, Germany, Italy and the Netherlands are the top three importers of wood from Uruguay for the consumption of finished paper products. In contrast, Eucalyptus pulp is the second most exported product of Uruguay in economic value [34] and plays a crucial role in the sustainable development of the country. The breakdown of the quantification reveals that three times more employment is generated in the production of roundwood than in the pulp industry in Uruguay. On the other hand, three times more value added was generated in the pulp industry in comparison to the production of roundwood. These results highlight the important role of the consumption of finished paper products in the EU for employment and value-added generation in Uruguay. It is also important to consider that the pulp industry generates additional by-products (e.g., black liquor) that induce employment and value added outside the pulp material flow.

Looking at the environmental impacts, we estimated a direct land use of about 22,000 ha in Uruguay linked to the consumption of finished paper products in the EU in 2018. The original land was assumed to be grassland. The grassland biome, in general, is currently one of the biomes with the highest probability of disappearance, given that it has one of the highest percentages of transformed habitats and the lowest percentage of protected surfaces of all the other biomes of the earth [35]. During the last two decades, Uruguay has experienced a strong expansion of Eucalyptus at the expense of grasslands [36,37,38], as opposed to native forests that are protected by law (No. 15.939/1988). As highlighted by other studies, beyond impacts on deforestation, the demand for commodities from the EU is also driving impacts in other highly biodiverse non-forest ecosystems, such as grasslands and wetlands [39,40,41]. The bioeconomy strategy of the EU does not explicitly address resource use displacement. However, as the example of Uruguay shows, the spillovers that emanate from the EU demand for wood commodities should be accounted for, and the identification and assessment of impacts outside the EU should be an integral part of any bioeconomy monitoring.

The indicators assessed and the approach and data sources for calculation provide a step forward in monitoring the sustainability impacts of the EU biomass supply in the countries of origin. However, given the complexity of sustainability, additional impacts may be appropriate for a more comprehensive overview. For instance, it is important to consider water consumption [42] and biodiversity impacts [38] when assessing the environmental impacts of Eucalyptus plantations.

5. Conclusions

The hybrid approach presented in this study allows bioeconomy monitoring in the EU and its member states to trace the wood used in imported bio-based products to the site of origin and quantify sustainability impacts. Compared to other approaches, the hybrid approach developed here improves the level of detail regarding the identification of the wood origin and the associated sustainability effects. Data gaps, uncertainty and lack of harmonization regarding trade data and conversion factors remain key challenges to further improve results. Despite recent advances, the lack of disaggregated data at the supply chain level, especially in environmental statistics, remains a main shortcoming. Future work should cover additional commodities and geographical contexts, additional stages along the global supply chain (e.g., post-use) and other sustainability indicators (e.g., biodiversity and water use). Additionally, the results of this study highlight the EU’s role as a major consumer of finished paper products while relying heavily on imports of wood from other regions. More than one-third of the wood required to satisfy the EU’s paper consumption is located in other world regions, particularly North and South American countries. Our study shows that socio-economic and environmental impacts are not confined to national boundaries. Thus, the EU bioeconomy should be assessed not only territorially but also from a global consumption perspective, with the potential impacts on distant ecosystems.