In July, the European Commission set out its climate and energy policy. The proposals for emission reductions and zero-emission energy are most welcomed. UPM has been following this path for a long time, and our schedule is more ambitious than the Commission’s. However, will the EU’s policies generate green growth?
Jussi Pesonen is the President & CEO of UPM.
The Fit for 55 proposal is critically important for all EU industries. It is especially important for the forest industry as we can enable green growth investments that replace fossil consumption with renewable. Several of the Commission proposals touch upon our sector.
Sustainable forest management and fossil substitution in a key role to enable EU’s green growth
My first impression is that the climate impact of forests is seen as somehow disconnected from the production and consumption value chain, which offers great potential to replace fossil consumption with renewable raw materials, energy and products.
Above all, slowing down climate change requires a shift away from the fossil economy. The potential of sustainable forestry in this transition does not seem to be sufficiently recognised in the recent proposals. My concern is that attempts are being made to kick-start green growth through regulation, restrictions or taxes, rather than offering “carrots” to consumers and businesses.
For businesses, climate change is the most strategic issue. Every well-managed company proactively anticipates this change. In order to enable the needed green investments, companies require sufficient regulatory certainty. In February 2021 UPM signed The Climate Pledge. We are now one of just over 100 companies worldwide committed to meeting the Paris Climate Agreement targets well ahead of schedule.
UPM’s climate strategy is clear. We contribute with a significant climate impact by developing new products, reducing emissions and managing forests sustainably.
New innovations replace fossil consumption
Our new products are innovations made from renewable raw materials to replace fossil products. Concrete examples of climate-positive products include wood-based renewable diesel and wood-based biochemicals. Plastics can also be made from renewable raw materials.
We are working with the Finnish Environment Institute SYKE in Finland and the Institute for Energy and Environmental Research IFEU in Germany to scientifically and comprehensively verify the positive climate impacts of our products.
We are committed to reducing emissions by 65% (from 2015 levels) by 2030, well ahead of the EU target. We will increase efficiency, recycling and the use of renewable energy. In addition to our production facilities, we will cut emissions from the logistics chain.
At the heart of the developing bioeconomy
UPM creates more forest than we use. In a climate-positive forestry sector, growth is increased by combining economic, ecological and social aspects. Substitution of fossil materials, carbon sequestration, biodiversity protection and creating economic value should be approached holistically, not in silos.
The annual carbon sink of UPM’s owned and leased forests is more than 6 million tonnes of CO2, which corresponds to the carbon footprint of more than half a million Finns. In Uruguay, together with landowners, we have created new carbon storage of 40 million tonnes of CO2 in the planted forests.
An analyst from a well-known international bank wrote in a July report that “UPM’s operations are at the heart of the developing bioeconomy”. That is how we see it and we hope that legislators will understand it too.
Above all, companies need an incentive to do so. The public sector can create the conditions for new markets where companies compete, take risks and innovate.
UPM calls for a strong signal to replace fossils with renewable materials when creating EU climate neutrality pathways. Legislators can and should steer the direction of the future, but too much detail is not an incentive. The best guidance comes from consumers and markets. Enabling market-driven development is an important role for government actors. Consistency is essential. Industrial companies are investing for decades to come.
Industry and regulators should now work together to enable the EU’s Green Growth potential to the fullest.