1. Transforming the forest products industry through innovation Opportunities for the Future Forest Products Industry Ron Brown President and Executive Director Agenda 2020 Technology Alliance North Carolina State University Pulp and Paper Foundation Annual Meeting September 12, 2013 1

2. Transforming the forest products industry through innovation Where Will the Paper Industry Be in 10-20 Years?  United States: AF&PA Better Practices, Better Planet sustainability goals for 2020  Canada: FPAC Vision 2020 – One-third growth by 2020 from product innovations, significant sustainability improvement  Europe: CEPI Roadmap for low-carbon economy (To impact 2050, must develop new technologies now!) 2 Next-Level Process Efficiency Next-Level Sustainability Growth in Current and New Markets

3. Transforming the forest products industry through innovation Many Projections of the Industry’s Future 3 Better Practices, Better Planet 2020 AF&PA Canada: Bio-Pathways FPAC FPI Tech Roadmap Agenda 2020 Europe: Unfold the Future 2050 Low-Carbon Roadmap CEPI Canada: Vision 2020 FPAC Europe: Horizons – Vision 2030 EU FTP Europe: Strategic Research Agenda for 2020 EU FTP End of Tunnel? PPI Survey Transformations Sten Nilsson Future from Fibre WBCSD Facts Trends Vision 2050 WBCSD State of the Pulp Industry Rod Fisher Growing the Future PWC Living Forests WWF Intl Environmental Vision Envir Paper Network Global Trends 2030 Natl Intelligence Council Manufacturing the Future McKinsey Vision 2050: New Agenda for Business WBCSD

4. Transforming the forest products industry through innovation Consensus: A Vibrant Future Industry 4 Worldwide demand of traditional paper products grows 1.5% per year average over next 40 years Steady growth in packaging grades Printing and writing grades continue declining to 2030 Many opportunities in the emerging biobased economy Forest resource is excellent foundation No competition with food Biobased materials offer value, not competition for fiber Integrate with existing manufacturing

5. Transforming the forest products industry through innovation Opportunity: Forest Biomaterials in the Emerging Bioeconomy  Get the highest possible value from resources – wood, forest residuals, recycled fiber  Develop new markets while growing markets for traditional wood and paper products  $200 billion a year global market potential (FPAC) $100 billion a year for biobased polymers (Lux) (U.S. forest products are $200 billion) Green chemicals and biofuels Plastics Lightweight composites Bendable concrete with cellulosic nanomaterials (example shown) 5

6. Transforming the forest products industry through innovation Forest Biomaterials: $200 Billion Global Market Potential (FPAC Biopathways, 2011) 6

7. Transforming the forest products industry through innovation Unfold the Future: The Forest Fibre Industry 2050 Roadmap to a Low-Carbon Bio- Economy CEPI, 2011 www.unfoldthefuture.eu 7 The Bioeconomy Requires Innovation

8. Transforming the forest products industry through innovation Opportunity: Improved and New Products  Lighter, stronger paper and paperboard Strength from cellulosic nanomaterials  Higher-value, specialized papers and packaging Novel optical properties Barrier to vapors, reduced sensitivity to moisture Niche products for population that is aging and more urban Smart packaging  New products Flexible electronics (example shown) Clear films from renewables 8

9. Transforming the forest products industry through innovation Opportunity: Wood and Fiber 9 Wood is available. Wood removals in 2050 three times current rate. (WWF Living Forests, 2012) Steadily growing demand for wood and paper products Escalation in wood for bioenergy Annual Wood Removals WWF Living Forests Model (million cubic meters) 201020302050 3,4017,168 – 7,553 11,356 – 13,082 Forest plantations are more productive than natural forests and will become larger portion of global wood supply. Global demand for long-fiber kraft pulp is opportunity for southern U.S.

10. Transforming the forest products industry through innovation Opportunity: Sustainable Manufacturing 10 Many calls for a sustainable industry Renewable energy – good progress with fuels and CHP More attention needed on mill water and energy demands Concerns about future access to water in some locations Little or no recent progress in water or energy use per ton Envir. Paper Network chart for 2000-08

11. Transforming the forest products industry through innovation Challenges: Sustainable Manufacturing 11 Improving sustainability metrics is difficult without new equipment North American mills mostly are well-optimized and have much old equipment World’s oldest fleet of bleached kraft pulp mills in N. America Best available technologies offer 20-25% reduction in energy use per ton in U.S. High capital investment needed to implement BAT New technologies if developed could give another 20% reduction

12. Transforming the forest products industry through innovation Challenges: Sustainable Manufacturing 12 Recovered fiber will become larger share of furnish Higher waste recovery rates, lower fiber quality Impacts on strength and mill operations Mills will become host platforms for bioproducts Mill infrastructure is good foundation for producing biomaterials as add-on processes Integrate process systems to reduce energy, water, wastes, capital Opportunity to improve mill sustainability metrics

13. Transforming the forest products industry through innovation Opportunity: Marketing Industry Advantages Forest products offer many advantages to society Renewable raw material from sustainable forests Recyclable products, high rate of recovery and reuse Renewable energy The paper industry intends to launch a new marketing program in 2014 – do a better job of telling our story Paper Check-Off (www.papercheckoff.com)www.papercheckoff.com USDA-sanctioned fund from producers Organizational activities led by AF&PA 13

14. Transforming the forest products industry through innovation Opportunity: Breakthrough Technologies Urgent need for breakthrough technologies to address the opportunities New and improved products More efficient manufacturing Get “a better story to tell” Start development now to be ready for first installations by 2030 to have large impact in 2050 14

15. Transforming the forest products industry through innovation Challenge: Outlook for Innovation Is Bleak 15 Industry spends less on R&D than competitive industries: R&D % of sales: 0.24% paper, 0.7% textiles, 1.3% plastics Patent intensity: 1.2 paper, 4.1 textiles, 10.7 plastics Lacks capacity for much mid and long-term research Federal R&D spending is available but mostly bypasses our industry.

16. Transforming the forest products industry through innovation Agenda 2020 – A Unique Voice for the Industry Identifies full set of industry technology needs (2010 Forest Products Industry Technology Roadmap) Drives consensus on R&D priorities Promotes R&D programs funded in part by government Informs government agencies and universities about industry research needs Member-funded 501(c)(3) organization Not a lobbying group Supports and works closely with AF&PA 16

17. Transforming the forest products industry through innovation Agenda 2020 R&D Priorities 17

18. Transforming the forest products industry through innovation Conclusion: Pursue the Opportunities 18 Attractive opportunities exist and need new technologies Forest biomaterials Sustainable manufacturing Improved and new products Best technologies available today are expensive and not sufficient to achieve market potential and sustainability Research on breakthroughs is needed now More money for industry R&D New technologies must be in place by 2030 to have large impact by 2050

19. Transforming the forest products industry through innovation Thank You 19 For More Information Ron Brown President & Executive Director Agenda 2020 Technology Alliance ron_brown@agenda2020.org 202-463-2742