A truly circular economy should be resource-efficient

Written by Tytti Peltonen and Nella Baerents on 14 June 2017 in Thought Leader
Thought Leader

A truly circular economy should be resource-efficient, argue Tytti Peltonen and Nella Baerents.

Tytti Peltonen and Nella Baerents

Population growth and booming economies have led to an unprecedented demand for raw materials. Questions surrounding the availability and intelligent use of scarce raw materials are at the heart of maintaining sustainable production, growth and investments in Europe. 

With the circular economy strategy, there is now clear political backing for keeping raw materials in the loop as long as possible. The need to meet raw material demand while striving to maintain leadership in combating climate change creates challenges for Europe. 

To address this, the Commission recently published a recast of the renewable energy directive (RED II), which aims to rapidly increase the uptake of renewables, not least in transport.


The RED does not take into account any alternatives to, or the more sustainable use of, biomass for higher value purpose other than energy. This has led member states to focus on electricity production and the manufacture of transportation fuels from valuable forest-based biomass.

Unfortunately this has all been implemented without considering the impact on several industries in the bioeconomy, that use the same raw materials for higher value purposes that help contribute to the EU's climate and energy targets.

The RED II proposal and its controversial Annex IX incentivises the use of industrial pulpwood and tall oil (a by-product of wood pulp manufacture) for advanced biofuel production even though they are finite raw materials with existing well-functioning markets. 

Incentives distort competition in the raw material market and make it increasingly difficult for Europe to achieve its climate and energy targets. It also puts jobs at risk, especially in rural areas.

Competition for resources and land will continue. In order to use the most valuable raw materials such as pulpwood and tall oil in the most resource-efficient ways, they need to be used efficiently as high added value non-energy products, rather than promoting their one-time combustion into energy.

Studies show that using pulpwood or tall oil for advanced biofuels instead of material use does not benefit the economy, society nor the environment: 

Using them for higher value uses leads to less CO2 emissions and generates much longer value chains, more jobs and more economic value for society. We fully support decarbonising transport in a cost and resource-efficient way. 

However, wood-based biofuels can only play a limited role due to the limited availability of biomass resources and the huge volumes needed for the production of transport fuels. Electrified transport and other solutions will play a much more important role in reducing CO2 emissions.

Promoting the use of our most valuable bio-based raw materials for direct energy production is neither sustainable nor supportive of the creation of a truly circular economy. The RED II proposal is an excellent opportunity for EU policymakers to ensure the resource-efficient use of one of Europe's valuable raw materials.


About the author

Tytti Peltonen is Vice President, Corporate Affairs at Metsä Group

Nella Baerents is Sustainability Policy Director at Kraton



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