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Published in TAPPI 360: The Forest Biorefinery
Jim McNutt, Executive Director, CPBIS

The Forest Biorefinery is moving closer to a true reality for the North American Forest Products industry.  This is an exiting time for the industry, as the technologies involved hold promise to open new markets and businesses.  As we approach technical success is this arena, I caution our industry leaders to take a moment and reflect on the past.  Our industry has a track record in which new technologies are often deployed without early and continuous analysis of the business, social, and market place factors that can heavily influence success or failure.  We must consider issues beyond the fact of whether or not we are able to achieve technical success in the Forest Biorefinery arena. 

Simply put, what is missing is the business model – the processes that will result in captured value (dollars) from technologies that inherently have no absolute value as is.  Many business models exist, even within single companies.  Success is achieved by selecting the best business model for the best technology.  This is no easy task.

Advances in the Forest Biorefinery area imply that almost any mill can become a forest biorefinery, producing green fuels, petrochemicals, pharmaceuticals, and many other attractive products beside pulp and paper.  This technological-based landscape is broad, complex and increasingly confusing to both technologists and senior managers.  What seems to be missing is the guiding context to help business leaders decide which of these technologies can and should be brought forward. 

For each possible product from the Forest Biorefinery, there must be a thorough understanding of the existing and future structure of the target market sector.  The total size of the market potential must be assessed.  The current demand profile must be understood, and anticipated changes thought through.  The competitive landscape – competitors, competing products, alternative products, patents – must be identified and assessed. 

A potential owner of a Forest Biorefinery must have a good idea of how competitors and the market segment would react to the introduction of a new source of, for example, a forest-based pharmaceutical precursor.   What would happen to pricing?  Can a forest products company deliver this product economically to chemical plants for further processing?  Who else would be introducing such a forest-based product? 

Serious consideration and evaluation must also be given to supply chain requirements for that market sector.  Critical logistics issues for delivering products to the market place must be addressed.  Will these new products be collected in tank cars, carried through lengthy pipelines?  Is it more economical – in getting the product to the consumer - to produce a liquid or gas?  What supply chain program should be employed to deliver products to where they have to go?   As you can see, there are many questions for each different product selected.

We must also consider the environmental and social aspects of deploying technologies which transform our mills into Forest Biorefineries.  What new permitting challenges are involved?  How will local communities react to their beloved mill (well, maybe not in all communities) becoming a refinery?  How will local farmers react to the competition from a tree for products that their crops are possibly destined for? 

There are many questions that need to be address beyond the technical success that our industry is already close to realizing.  Analyzing these critical business, social, and market place factors will aid the industry in selecting the most economically viable configurations.  More importantly, however, taking the time and effort to analyze these issues will increase the overall commercial success of the Forest Biorefinery. 

About CPBIS: The Center for Paper Business and Industry Studies (CPBIS) is a globally recognized and industry-valued academic center, creating knowledge and tools that support paper industry decision-makers, and producing interdisciplinary graduates who contribute to the long-term success of the paper industry. The CPBIS is co-sponsored by the Alfred P. Sloan Foundation, the Institute of Paper Science and Technology (IPST), the Georgia Institute of Technology (Georgia Tech), and the Paper Industry.


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