Implementing Circular-Bioeconomy Principles across Two Value Chains of the Wood-Based Sector: A Conceptual Approach

Abstract

The wood-based sector has the potential to contribute significantly to the circular bioeconomy. This paper examines the potential for implementing circular bioeconomy principles across two value chains, covering five sectors: “sawnwood”, “bioenergy”, “construction”, “paper and pulp”, and “cellulose-based fibres and plastics”. The qualitative value chain analysis is limited to the material flow and demonstrates that a circular approach requires transformation across entire value chains. Implementing circular bioeconomy principles will require new business models, cooperation across sectors and companies, and the application of new technologies and management tools. More importantly, the results demonstrate that more applicable tools and methods are needed to analyse circularity. The results likewise confirm prevailing conceptual ambiguities surrounding the circular bioeconomy concept, such as the relationship between circularity and sustainability, which would need clarification. For example, circularity does not equal sustainability, nor guarantees economic viability for the wood-based sector. The paper argues that a circular wood-based system needs tailored governance approaches as there are no one-size-fits-all solutions. The wood-based sectors will also need to account for sustainability criteria and the natural limitations of wood (as a material) to close value retention loops.

1. Introduction

Forests and the wood-based sector have the potential to contribute significantly to the circular bioeconomy [1]. As the sector goes through significant development and diversification, opportunities to contribute to the circular bioeconomy are emerging [2]. However, one of the many hurdles in this development is the varied conceptualisations of the circular bioeconomy as a concept [3]. So far, the concept has mainly been discussed within academia and policy circles. Whereas existing conceptualisations may bring important, broad, strategic overviews of how the circular bioeconomy could be implemented, they are vague regarding hands-on and actionable examples of how value chains need to be reconfigured and optimised to become circular.

The first important step in addressing some of these conceptual ambiguities is to bring the “circular” and “bioeconomy” concepts together. One recent understanding of the bioeconomy developed by the European Commission expects that industrial inputs (e.g., material, chemicals and energy) are derived from renewable biological resources stemming from the forest and agricultural sectors [3,4]. However, since the bioeconomy is not necessarily “circular by nature”, the European Commission has included principles of a circular economy to minimise waste generation and increase the life cycle of products, materials, and resources [3,5]. In its Action Plan on the Circular Economy, the European Union (EU) has characterised circularity as an economy where “the value of products, materials and resources is maintained (…) for as long as possible, and the generation of waste minimised” [6]. Similarly, the Ellen MacArthur Foundation argues that a circular economy should decouple economic activity from the “consumption of finite resources” by eliminating waste and pollution, circling products and materials, and regenerating nature.1 These perspectives demonstrate that the circular economy differs across sectors and disciplines; however, they share some principles, such as responsible natural resource use and minimising waste and pollution [7,8]. The circular economy is often characterised as an approach that can reduce natural resource use by slowing, closing, or narrowing resource loops [9,10].

The case for transitioning to a circular bioeconomy is strong. Prevailing linear economic models rely on an unsustainable output of raw materials extracted and processed into goods and disposed of as non-recyclable waste. This is often referred to as “take, make, and dispose” and has generated unsustainable socioeconomic and environmental consumption patterns. For example, humans presently consume ecological resources as if we lived on 1.75 Earths [11]. Over the last 50 years, global material consumption has increased from 28.6 billion tonnes in 1972 to more than 100 billion tonnes in 2019 [10]. From all of this material consumption, the 2022 Circularity Gap Report reports that the global economy is only 8.6% circular [9,10]. This means there is a more than 90% circularity gap when considering all the minerals, fossil fuels, metals, and biomass that enter the global economy each year [12].

Forests are the most substantial land-based renewable resource [2] with a promising potential to help close this circularity gap. More specifically, forests provide a natural resource (wood) that is reusable and recyclable. Wood also sequesters carbon while being renewable and biodegradable. This means that when wood cannot be reused or recycled, it can be returned to the biosphere as nutrients [13,14,15]. These unique characteristics of wood (as compared to other materials like metals) make it an interesting case study. Previous studies have addressed the circular-bioeconomy potential of the wood-based sector.2 For example, Stegmann, Londo and Junginger [5] identified strategies for bioeconomy clusters’ feedstock and product focus by investigating the role played by biorefineries, circular solutions, recycling and cascading. Hassegawa et al. [16] reviewed some of the most innovative circular bioeconomy products that are already on the market, and could enter international markets in the near future. Similarly, Hurmekoski et al. [17] examined how the position of the wood-based industry in a given value chain determines the production value in the circular bioeconomy. Nevertheless, a concise and universally adopted conceptualisation of the circular bioeconomy for value chains of the wood-based sector is still missing.

This study aims to examine the potential for implementing circular bioeconomy principles across different value chains in the wood-based sector. The reason for taking a value chain approach is that opportunities for closing production loops and raw material circles are fundamentally interlinked with how the industry is structured [18,19,20]. This would also suggest a need for different governance approaches, depending on the value chain. However, given the many definitions and applications associated with the circular bioeconomy [21,22,23], this paper will begin by clarifying some of the historical and conceptual ambiguities underlying the circular bioeconomy and set out what circularity means for this paper. This will be followed by a comparative value chain analysis covering different sectors utilising wood as a raw material. Finally, the paper will discuss the main strengths and weaknesses of the proposed conceptual approach and sketch out a way forward for future empirical research on the topic.

2. History of the Circular Economy

The circular economy framework is older and more diverse than what is commonly recognised in the literature. Circularity should be seen as a continuation of ideas starting at the onset of modern industrial practices, initially dominated by linear production models and early attempts to repurpose objects and materials [22,24,25]. The early ideas surrounding the reuse of materials came from efforts to optimise resource use and improve economic efficiency.

From an academic perspective, circularity is not based on a particular economic model or philosophical theory; it is, however, significantly rooted in ecological and environmental economics and industrial ecology [26,27]. In the “spaceman economy”, which is often credited for providing the first reference to a circular system, Boulding [28] introduced the concept of a “closed system”, noting that all outputs from consumption would need to be constantly recycled to become inputs for production. This, and other academic contributions, such as “Limits to Growth” [29] and “Overshoot” [30], and more recently, “Cradle-to-Cradle” design [31] and the “Performance Economy” [32], have provided a background for the circular economy to develop. The father of the bioeconomy, Georgescu-Roegen, was the first to use the term “bioeconomics” when siding with Dennis Meadows [29] in response to criticism by conventional economists favouring the pursuit of growth [33]. Georgescu-Roegen’s “minimal bioeconomic programme” advocated against waste and a quest for “sufficiency” by consumers [34]. In their review of the linear economic system, the circular economy was introduced by environmental economists Pearce and Turner [35]. Similar to Boulding (1966), they drew their ideas from the principle that everything is an input to everything else to develop a “circular economy”.

During the earlier stages of the circular economy, it principally shaped practices in waste management and recycling for different waste streams, such as paper and plastics [22]. These initial efforts focused on technological innovations for turning waste into valuable inputs for other processes. In contrast, reusing or remanufacturing materials and systematically reducing material consumption remain rare [25,36]. Over the last 20 years, circularity has moved towards a more comprehensive socioeconomic approach. This builds, in part, on political developments, such as the Rio Declaration [37], which takes a systems perspective on natural resource use. More recently, the 2030 Agenda for Sustainable Development [38] highlights the importance of transitioning to circularity for successfully achieving the SDGs [39].

Nevertheless, conflicting narratives prevail in the circular bioeconomy literature. For instance, one strand of work tries to operationalise circularity within the boundaries of current economic systems [40,41], while another strand seeks to transform the socioeconomic order [42,43]. These strands differ in how they view the societal capacity to overcome resource limits and decouple ecological degradation from economic growth [44]. Similarly, Giampietro [45] also argues that two narratives on the circular bioeconomy currently prevail: (i) a new economic paradigm based on technological progress that seeks perpetual economic growth (ii) and an entropic narrative that reflects the limits for economic growth. These opposing perspectives reveal that the circular bioeconomy concept is equally fuzzy (ideologically and conceptually) and that there remains a strong need to build a theoretical foundation for the circular bioeconomy.

It should also be noted that the discourse on circularity has largely been dominated by non-academic actors advocating for social, economic and environmental benefits from circular business models and policies [9,10]. The work of the Ellen MacArthur Foundation is one example [46,47]. Another example is the EU, which has been considerably active in promoting circularity on the international stage. International organisations have taken up the EU’s conceptual work on the circular economy, such as the United Nations Environment Programme [48]. More recently, the idea of transitioning to a circular economy has been articulated in the EU’s action plan for the circular economy as part of its new strategy for the industry in Europe and the European green deal [6,49].

What does Circularity Mean?

Several concepts and ideas have influenced how circularity is defined; as a result, it remains a contested concept with a diverse range of definitions and approaches. For example, a systematic analysis conducted in 2017 identified 114 different circular economy definitions [23]. This creates a risk of misinterpretation, greenwashing, and image depreciation [50]. However, despite the lack of a clear conceptual framework for the circular bioeconomy, most definitions focus on material use and system change [51]:

(1)

Definitions that focus on material use commonly follow the three guiding principles of reducing (minimum use of raw materials), reusing (maximum reuse of products) and recycling (high-quality reuse of raw materials). This is known as the three Rs of sustainability or the 3R-approach.

(2)

Definitions that focus on system change concentrate on closing production cycles while using renewable energy and applying systems thinking.

The 3R approach relates more to a reuse economy; however, in a closed-loop system, it is not only necessary that materials are recycled correctly but that products and raw materials retain stable quality. The number and sequence of these Rs have consequently evolved, and a more comprehensive 9R-approach has been developed. It may be seen as a combination of the two definitions noted above, focusing on material use and system change [24]. The 9Rs include: Refuse, Rethink, Reduce, Reuse, Repair, Refurbish, Remanufacture, Repurpose, Recycle, and Recover (

Table 1. Value retention loops.

Description	Guiding Principles (9Rs)
It covers the stage of the value chain when a product provides its primary function to the user, including efforts to optimise material efficiency (e.g., ensuring that products can be used for as long as possible).	0. Refuse: Make product redundant. * 1. Rethink: Make product use more intensive. 2. Reduce: Use the least materials possible for production.
Refers to parts of the value chain stage where end-users can interact with producers to update the functionality of the products, for example, to extend their lifespan.	3. Reuse: Use the product in different applications or, where possible, turn the product into a service to be used by different users. 4. Repair: Amend the functionality of the product. 5. Refurbish: Upgrade the product’s functionality with the latest technologies and design. 6. Remanufacture: Dismantle the existing product to use its parts in new products. 7. Repurpose: Dismantle products into parts to include them in new products with different functions.
It focuses on the value chain stages where specialised enterprises treat products at the end of life to turn them into secondary materials for other businesses.	8. Recycle: Recycle residues into secondary materials. 9. Recover: Incineration with energy recovery. *

* Refuse (making a product redundant) and recover (energy recovery) are not applicable guiding principles in this case (Table adapted from Kirchherr, Reike and Hekkert [23]).

).

Another critical factor is that certain materials are not recyclable. This is also why wood is fascinating to review. For example, wood fibres deteriorate over time and can be recycled around 25 times with little to no loss of integrity [52]. Another relevant topic in this context concerns bioenergy production. Since recycling energy (e.g., heat) is impossible, energy cycles are not commonly considered in circular systems unless the entire carbon cycle is accounted for. Most circular approaches (or definitions) consequently do not consider energy production from biomass as circular [53,54]. For wood-based industries, it is thus more common to consider the cascading use of wood-based materials [55]. One example of this would be the use of by-products (like black liquor) for the co-production of heat and power, where energy has a one-way flow and cannot be recycled. While it is beyond the scope of this study to answer whether energy production and the carbon cycle should be part of the circular model, it continues to be a highly relevant question for the wood-based sector, not only because the sector relies on bioenergy but also because of the characteristics of wood as a material. The general argument is that a cascading approach may be more appropriate for wood-based products [5,56,57].

Circularity in this paper will be based on the concept put forward by Potting, Hekkert, Worrell and Hanemaaijer [24], where the circular (bio)economy is characterised as three value retention loops (Table 1 and Figure 1). These loops cover the entire life cycle of a product, or materials, from extraction to production to end-of-life. Table 1 highlights that circularity can be achieved within the respective loops (user-to-user, user-to-business, and business-to-business) and, crucially, through design. The number of materials used can be significantly reduced through design, which can be considered a guiding principle from extraction to end-of-life (Figure 1) [24].

3. Methods

The paper will focus on the material flow across two wood-based value chains (woodworking and pulp, paper and paperboard). It is based on existing wood-based materials produced by wood-based industries. The 9R approach is used as part of a value chain analysis (VCA) to capture the entire product life cycle (Table 1 and Figure 1). The scope of this paper is to map and analyse five sectors: (1) sawnwood, (2) bioenergy, (3) construction, (4) pulp and paper, and (5) cellulose manufacturing. Furthermore, the study applies three value retention loops, as indicated by Potting, Hekkert, Worrell and Hanemaaijer [24], considering the life cycle of a product, from extraction to production to end-of-life (Table 1 and Figure 1).

Given how varied these sectors are (horizontally and vertically) and the scale of analysis (macro-level value chain mapping), it should be noted that the analysis primarily considers qualitative aspects of the respective value chains. This is mainly because the analysis is meant to showcase the need for different value-chain governance approaches across the wood-based sector. The study is also, in part, based on earlier work carried out for the United Nations Economic Commission for Europe (Aggestam et al. [58]) and the European Commission [59].

Value Chain Analysis

The VCA provide a map of wood-based industries against which it is possible to consider how each value chain can address the circular model [20,60]. More specifically, the VCA will clarify how a circular bioeconomy can be adopted by focusing on various activities involved in producing and using different wood-based products. The primary purpose of the VCA is to illustrate the chain of activities that run from the production of raw materials to the end-of-life into strategically relevant segments [20,61].

The value chain graphs (Tables 3 and 7) are based on the Statistical Classification of Economic Activities in the European Community (NACE) Revision 2 codes [62,63,64,65]. However, as the classification provided by NACE does not include all products which could be understood as wood-based products and production processes, additional product classifications, such as the FAO classification3, were considered. The value chain graphs demonstrate what products are assigned to which product group and the degree of processing (primary, secondary, and tertiary). Waste streams have not been indicated.

The modular value chains were originally adopted to assess the cumulative cost impact of specified EU legislation and policies on the EU wood-based industries [59]. There are two main reasons for using these value chains: (1) The value chains have been developed with industry representatives from relevant sectors. In total, 12 representative organisations4 were involved in developing these value chains. (2) The value chains (with some modifications) encompass a more significant segment of the wood-based industries, providing a generic overview of the sectors from a system point of view.

It should also be recognised that the listing of products covered by each product group is non-exhaustive. Moreover, some products can have more than one preceding product, such as wood-based panels consisting of sawnwood, recovered wood and by-products. There can thus be many variations of the given value chains (e.g., pulp and oriented strand board (OSB) can be produced using pulp logs). The value chains principally showcase the complexity and variety of products within one product group and sector. They also demonstrate how different the respective sectors are, even though they depend on the same raw material.

Finally, the results that are highlighted (

Table 2. Cross-cutting issues and loops across the wood-based sector.

Cross-Cutting
Integration across value and supply chains. Knowledge, education, and awareness. Certification, quality standards and labelling.		Policy frameworks (regulatory and legislative frameworks). Innovation & and technological development.
User-to-User	User-to-Business		Business-to-Business
→ Re-designing systems and products. → Improving system effectiveness. → Reducing the environmental impact of production. → Reducing competition over raw materials. → Encouraging a circular lifestyle.	→ Extending producer responsibility. → Designing for circularity. → Making repair and refurbishment economically viable. → Building trust in secondary materials and products.		→ Increasing the use of post-consumer waste streams. → Expanding the available product mix. → Improving the infrastructure for the collection and recycling of wood-based products. → Creating markets for waste streams.

, Tables 4–6, 8 and 9) for the respective value chains (Tables 3 and 7) come from a review of scientific and grey literature, focusing primarily on key messages contained in outputs on the circular (bio)economy issued by relevant representative organisations.

4. Results and Analysis

One problem during the analysis was categorising cross-cutting issues according to the respective loops (Figure 1). For example, “access to information” is generic and applicable across value chains, loops, and Rs. This implies that specific issues can be addressed systemically across all wood-based sectors, such as encouraging a “circular lifestyle” or, within the respective loops, for all producers and users of wood-based products (Table 2).

4.1. Woodworking Value Chain

Wood, as raw material, can arguably be considered naturally circular, primarily as a renewable resource that can return nutrients to the biosphere. Being a bio-based and non-toxic material (if not treated), it follows a natural cycle, even if the loop may stretch over many decades [54]. This implies that wood has significant advantages and disadvantages compared to non-biodegradable materials (e.g., metals). For example, wood cannot be transformed or renewed in closed production loops (e.g., through chemical processes) as cellulose fibres can only be reused a limited number of times. Wood use is commonly seen through a cascading use/transformation perspective rather than a circular perspective.

4.2. Sawnwood

The sawn wood sector (NACE 16.1) operates in what is generally described as the solid wood value chain (

Table 3. Woodworking value chain.

Primary Processing		Secondary Processing			Tertiary Processing
Hardwood	16.1 Sawnwood	16.21 Wood-based Panels	Particle and fibre boards	Plywood	16.23 Other builders’ carpentry and joinery	Windows & doors
				OSB
Softwood				MDF		Construction products	Scaffolding
			Veneer sheets	Hard & Softboard			Formwork
				Particleboards			Frames
Industrial wood		Solid wood products (part of 16.21)		Glulam			Beams, trusses
	By-products (e.g., chips and bark)			CLT			Outdoor products
				Solid wood panels		Prefabricated wooden buildings
Post-consumer recovered wood		16.24 Wooden pallets & other wooden packaging
		16.29 Bioenergy products		Wooden pellets	16.22 Parquet floors
				Briquettes

Source: Adopted from Rivera et al. [59] and Aggestam et al. [58].

). It is a resource-based sector where maximising resource efficiency is critical for economic viability. Sawnwood, or associated side streams, are commonly used for a wide range of wood-based panels, solid wood products, construction products (such as beams, windows, and doors), and wood chips and sawdust for bioenergy. In addition, wood waste generated through the sawn timber production process can be a raw material for particle boards or pulp production, where the quantity of wood co-products is directed to side streams and dependent upon the type of wood being sawed (

Table 4. Sawn wood.

User-to-User	User-to-Business	Business-to-Business
Improve the design of products to ensure that sawn wood is used for as long as possible while waste products (e.g., sawdust) are reused. Sustainable forestry and/or labelling to ensure sustainable wood use and/or import. Address how end-users and consumers perceive and use sawn wood (e.g., improve recycling rates), accept new business models (e.g., renting modular and recycled wood-based products), and promote wood from sustainably managed forests.	Ensure that sawn wood is cascaded down, * mainly because of material deterioration of wood (e.g., incineration can be considered a leakage out of the system) and remove (or reduce) negative externalities (e.g., water and noise pollution). Facilitate interactions with related sectors/actors to maximise material use (e.g., sawdust used to produce energy in the mill can be cycled back as ash to the forest). Recovery and utilisation of post-consumer wood (waste wood), such as discarded wood (e.g., untreated wood, painted or glued wood and impregnated wood) for recycling, depending on the wood quality (e.g., sawn wood, chipping, or raw material for biofuel).	Design out waste and harmful practices (e.g., woodworking machines that generate less dust) and reduce the imbalance between material and energy uses of residues (e.g., only waste wood that cannot be downcycled should be incinerated). * Connect producers and users (e.g., using multi-actor networks) to identify potential loops and/or side streams up/downstream (e.g., waste products are valorised). Improving capacities and infrastructure, both on the consumer and producer side, for improved recycling/reuse of sawn wood.

* Presumes that energy production and cascading use is integrated into the circular economy model.

).

4.3. Construction

For wood construction (NACE 16.23), systemic developments are needed to enhance the sorting, separating, and recovering of post-consumer wood (e.g., efficient recycling/demolition is critical) to ensure that construction waste can be cycled back efficiently at end-of-life (Table 3). This requires increased integration across the value chain, including deconstruction operators. Furthermore, increased integration will require cross-cutting and networked systems with more robust collaboration between business ecosystems (e.g., municipalities, architects, designers, builders, and end-users). There is also the issue of the logistics and infrastructure surrounding the recovery process. For example, the attached metal must be removed by hand to recycle contaminated wood. If further milling is required, additional metal detection processes must be in place before processing to avoid damaging milling tools (

Table 5. Construction.

User-to-User	User-to-Business	Business-to-Business
Design and detailing of mass timber buildings for greater durability and for holding materials in place longer. Changing the mindset of people working in the construction sectors and end-users (e.g., customers) across timescales and different (and longer) ownership. Make new housing models more available for consumers, such as housing co-operatives.	Design for combined manufacture and assembly and disassembly (e.g., modular elements made of massive wood). Ensure that buildings are constructed with wood life-cycle phases in mind and that raw materials originate from sustainably managed forests. Change the construction sector’s business models to enhance “designing for disassembly” thinking to ensure that buildings can be dismantled to recover systems, components, and materials. Systemic developments are needed to enhance the possibilities for sorting, separation and recovery (efficient recycling/demolition is critical) to ensure that buildings are recycled as efficiently as possible at end-of-life.	New approaches to value chain management to integrate sustainable thinking into supply chains. Enhance efforts to decrease emissions (e.g., water and carbon), implement efficiency in material design, and eliminate material waste at the design stage (e.g., new material audits, matching and logistics). Integrate smart design, considering system design (e.g., involving architects), construction techniques and building service technologies (e.g., routing of building service technologies outside modular elements), and re-assembly wooden buildings. More efficient use of side products. Accommodate cross-cutting and networked systems. Stronger collaboration between business ecosystems (e.g., municipalities, architects, designers, builders and end-users) is needed.

).

4.4. Bioenergy

Bioenergy (NACE 16.29) has been included as secondary processing in the woodworking value chain (Table 3); however, biofuels can come from various sources across the supply chain (upstream and downstream). Wood energy primarily comes from wood processing residues. For example, a sawmill may have an integrated biomass power plant that uses waste residues from the milling process to supply energy for the mill’s operations. This is not the optimal use of generated waste from a circular perspective. However, from the sawmill’s perspective, it means valorising what used to be waste and lowering production costs. Moreover, from a sustainability perspective, using the waste locally (e.g., directly in the sawmill) may lower the environmental impact (e.g., no transport or further processing). This highlights an important trade-off in that circularity does not necessarily equate to sustainability, particularly as the optimisation of material reuse can generate environmental costs (e.g., increased emissions) (

Table 6. Bioenergy.

User-to-User	User-to-Business	Business-to-Business
Labelling of bioenergy products needs to be improved for end-users (e.g., producers and consumers). Comprehensive standards and better regulations for labelling and monitoring procedures are needed. Address non-economic objectives, such as land use, job creation, governmental policies, environmental impacts of removing residues and recreational aspects of forests.	Increase the supply of sustainable biomass by improving the utilisation of residues from forestry. Finding resource-efficient combinations of biomass sources, conversion technologies, and energy end-uses remain a significant challenge. Competition for biomass feedstocks. The competition between different uses of wood and associated market conditions drives the bioenergy sector. Highlights the importance of having a proper hierarchy of uses (e.g., prioritising long-life material uses). Bioenergy should be used to improve forest conditions, increase the value of managed stands, and increase the sustainability and resilience of the forest landscape. Improved practices in ash management. The bioenergy industry should ensure that ash is utilised for recycling nutrients in the biosphere.	Reduce the environmental impact of biomass production (e.g., sustainably growing biomass for energy on land that is underused or not used for other purposes). Expand the available product mix and engage downstream value chains to ensure the sustainable extraction of biomass (e.g., the biomass supply chain is characterised by unpredictable raw material quality and costly transportation). Cascading principles * should be adopted while restricting bioenergy production to end-of-life uses, primarily as an alternative to disposal (e.g., landfills). Efforts should also be made to improve biomass partitioning (e.g., each portion of biomass is first used for its most valuable function, such as wood construction and engineered wood).

* Presumes that energy production and cascading use is integrated into the circular economy model.

).

4.5. Pulp, Paper and Cellulose Value Chain

The complexity of the pulp and paper value chain (NACE 17.11, 17.12 & 17.2) makes the transition towards circularity a challenging prospect (

Table 7. Pulp, paper and paperboard manufacturing value chain.

Primary Processing				Secondary Processing			Tertiary Processing
Pulpwood	17.11 Manufacture of pulp (bleached-unbleached, hardwood-softwood pulp)	Mechanical pulp		17.12 Manufacture of paper and paperboard (rolls and sheets of paper)	Graphic paper	Newsprint paper	17.2 Manufacture of articles of paper and paperboard	17.23 Paper stationery	Notebook, envelopes
						Printing & writing paper (uncoated mechanical, coated mechanical, uncoated woodfree, coated woodfree)
		Semi-chemical pulp
		Chemical pulp	Sulfite pulp					17.21 Packaging (industrial and food & beverage packaging)	Sacks and bags of paper
			Sulfate pulp		Packaging paper & paperboard	Containerboard, carton board, wrapping paper, other paper & paperboard for packaging			Liquid packaging board
Other fibres than wood		Recovered fibre pulp							Carton and corrugated cases
Recovered paper								17.22 Household, sanitary & 13.95 non-woven products	Toilet paper, tissues, towels, napkins
Industrial by-products					Household & Sanitary Paper				Sanitary towels, absorbent hygiene products
					Other paper & paperboard, incl. industrial & speciality paper	Cigarette and banknote paper, labels, etc.			Paper filters, textiles, medical applications.
									Cellulose wadding products
		By-products: wood chips, black liquor, tall oil, hemicelluloses.						17.29 other articles of paper and paperboard
					Manufacture of cellulose wadding and webs of cellulose fibres
				19.20 Biofuels for transport
				20.16 Manufacture of plastics (e.g., cellulose and its chemical derivatives)

Source: Adopted from Rivera et al. [59] and Aggestam et al. [58].

). While the sector has a high recycling rate, it needs to reduce fibre loss and use less virgin resources in paper production. This can be achieved by preserving the value of the recycled fibres while actors within the paper and pulp sector partner with related enterprises (e.g., producers of inks, dyes, and glue). For example, enterprises could co-design additives that are easier to separate from paper and, if possible, ensure that non-toxic by-products from other industrial processes are used to produce paper. This would require improved coordination across the value and supply chains (e.g., to allow for recycling plants that can handle new materials) (

Table 8. Pulp, paper and paperboard.

User-to-User	User-to-Business	Business-to-Business
Increase recycling participation. The sector needs to understand better the recycling behaviours of end-users (e.g., incentives or information). Build demand for recyclables. For instance, lack of accurate information, consumer perceptions (e.g., mistrust) and risk aversion may be barriers to further uptake. Certification (e.g., FSC) reduces deforestation, environmental impacts and protects High Conservation Value forests. Ensure improved traceability of current and new materials (e.g., packaging).	Make paper products more durable to optimise recycling properties and extend the lifespan (e.g., prolong product use). This could include how paper is physically structured or reacts to the inks it will come into contact with. Make paper easier and safer to recycle and preserve the value of recycled fibres. This includes reducing fibre losses and the number of virgin resources utilised in paper production (e.g., replacing virgin inputs with secondary resources). Standardisation of new fibre-based materials. Coordination across value chains to ensure that recycling plants will handle new materials.	Cross-industry cooperation (e.g., the ink and glue industries) to co-design products that are easier to recycle (e.g., additives that are easier to separate from paper) and ensure that waste streams are utilised in other production processes. Reduce waste generation and discharge to the environment. When possible, coupling increased recycling with improved materials and energy recovery reduces waste discharge. Further, reduce material consumption and improve resource efficiency (e.g., water and energy are the two most significant resource inputs into the papermaking process, aside from wood pulp).

).

4.6. Cellulose-Based Fibres and Plastics

Recent innovations in cellulose-based fibres (NACE 20.16) have expanded the potential use of wood-based materials, adding value to the wood-based sector and addressing the growing demand for recyclable, responsible, and ecologically sustainable fibres (Table 7). For example, cellulose-based fibres may deliver better environmental benefits than synthetic fibres in terms of biodegradability. However, producing cellulose-based fibres, particularly viscose, requires many chemicals in a process that raises serious environmental concerns. The same arguments apply to bio-based plastics, which provide an alternative to fossil-based plastics and are, in most cases, non-toxic, renewable and biodegradable. However, bio-based plastics can be divided into three categories, namely, plastics that are (1) bio-based and non-biodegradable, (2) bio-based and biodegradable, and (3) fossil-based and biodegradable. This means bio-based plastics do not imply that they are better for the environment (

Table 9. Cellulose-based fibres and plastics.

User-to-User	User-to-Business	Business-to-Business
Increase the demand for wood-based textiles/plastics from end-users (e.g., improve access to information). Improve the traceability of textiles/plastics. Transparency and traceability have become priorities to encourage sustainable production and consumption patterns. Manufacturers and recyclers need to trace textiles and plastics to forecast the quantity and value of recycled materials. Standardisation and eco-design certification to ensure product quality and performance (e.g., industrial compostability and standards for material efficiency).	Eco-design of multi-materials and maximising product recyclability, considering the entire life cycle of textiles/plastics (e.g., mixed plastic pollutants). Setting up recycling schemes and improving recycling technologies for textiles/plastics is essential (e.g., separating materials) to address the complex waste streams. This could entail improving the recyclability of textiles/plastics to be environmentally friendly (e.g., non-hazardous recycling and disposal). Pollution prevention. For instance, textile production, especially the treatment and dyeing of textiles, causes significant freshwater pollution. In addition, the production of cellulose fibres is commonly also based on toxic and explosive chemicals.	Collaborative relationship-building across supply chains. For instance, the production of wood-based textiles could be integrated with the production of solid wood products. Networks for waste management could also be developed across value chains. Address increased competition over raw materials. The impact of wood-based textile/plastics production on other supply chains should be considered, and synergies should be explored. Expand the resource base to produce cellulose fibres. Currently, the raw material base to produce cellulose fibres is limited (e.g., dissolving grade wood pulps is common practice amongst producers). Improve resource efficiency. Reduce the raw materials needed for textiles and plastics production, which would reduce material resources, costs, and energy.

).

5. Discussion

This paper set out to consider the prospect for circularity in the wood-based sector, using two value chains (Table 3 and Table 7) and covering five wood-based sectors: sawnwood, bioenergy, construction, pulp, paper and cellulose manufacturing. The analysis demonstrates that each value chain and the sector has its own set of limitations, challenges, and opportunities to become circular. The number of possible value chain variations and combinations creates a complex industrial ecosystem where a wide range of circular approaches can be applied. For example, the resource, energy use, and waste management practices across woodworking and pulp and paper manufacturing vary significantly (Table 2, Table 4, Table 5, Table 6, Table 8 and Table 9). This emphasises that there is no “one size fits all” approach for the wood-based sector. More crucially, different value chain dependencies need to be accounted for when considering solutions to closing value retention loops (Table 1).

Additionally, there is a significant degree of lock-in (or path dependency) whereby the industry carries out practices that are not circular (e.g., sawmill residues are commonly underutilised and end up being used in low-value products or for energy production). Investments are primarily geared toward efficiency improvements, not circularity [66,67]. This suggests that the value chains remain linear, even though cascading use principles are applied to varying degrees [13].

The above-noted problems are exacerbated by the general notion upheld by the wood-based industry that since “wood is renewable”, it is, de facto, circular [68,69,70]. Not only is further innovation needed to solve critical barriers (e.g., degrees of recyclability), but the awareness, acceptance and uptake of circular approaches models remain limited [66]. This means that changing perspectives and mindsets on wood is crucial for the respective sectors to become more circular, both on the supply and demand side of the equation. Even more, the intermittent supply streams of post-consumer wood, and its varied quality, compound its characteristics as a low-value product. It is not a competitive product in many commercial operations when considering the cost of transport and the environmental sustainability of reintroducing wood.

Another relevant issue to consider concerns negative externalities generated by circular practices. For example, transportation accounts for the largest share of emissions within the wood supply chain [71]. This implies that technical and organisational solutions to eliminate negative externalities that arise from implementing the principles of a circular economy are needed. Solutions include eco-design or eco-innovations, extending the producer’s responsibility, coordinated action to invest in collection infrastructure, technologies supporting sorting processes, and the geographical proximity between production facilities and waste stream users.

Furthermore, it is important to mention that wood-based innovations are not necessarily sustainable, nor can they be considered “eco-innovations” by default [72]. By creating and using novel products, services, procedures, management systems, organisational structures, or business models, eco-innovations seek to lower environmental hazards, pollution, and emissions throughout their life cycles [72]. Wood-based innovations can sometimes cause adverse environmental and societal effects, potentially conflicting with some of the sustainable development goals. For example, deforestation in other countries or through unintended trade-offs resulting from indirect land use change [73]. Identifying such challenges and spillovers across sectors and supply chains warrants further attention and analysis.

Limitations and Outlook

From a methodological perspective, it is worthwhile noting that it was not easy to apply the value retention loops (Table 1 and Figure 1), mainly because it is not always possible to categorise issues following the assigned loops (Table 2). Future applications, whether in research or practice, could benefit from integrating cross-cutting issues more systemically [24,48]. For example, it would make sense only to have two loops covering users and consumers and producers and enterprises. Also, introducing a cross-cutting dimension could be useful, as done in this paper. This may help avoid overlaps.

Another point of reflection relates to the results being rather generic. While the applied approach can allow for a useful comparison across value chains, highlighting the significant variations between sectors, future studies would benefit from utilising more complex value chains that follow actual case studies. Also, reducing the number of sectors would allow for more in-depth comparisons and analysis.

This study reveals that the wood-based sectors’ circular efficiency—or the potential for circularity—relates to different parts of the value chain. While this may be apparent, it implies that opportunities and approaches for becoming circular vary significantly between value chains, even though they share the same raw material. Not only in terms of the solutions (e.g., technologies and infrastructure) but also in terms of the awareness and knowledge needed to become circular (e.g., circular principles are not yet understood nor applied equally across the wood-based sector) [23,50]. The basic premise for moving towards circularity is that upstream decisions are coordinated with downstream activities and users within the value chains. This implies that upstream actors must better connect with producers, distributors, consumers, and recyclers. It also suggests the need for better incentives across the supply chains. In other words, governance solutions must be tailored at the sector and enterprise level.

Furthermore, the design for end-of-life valorisation, which means reducing wood waste, may become one of the most crucial factors for wood-based industries that wish to embrace circularity [74,75,76]. This will require producers to develop, improve, and operationalise end-of-life resource management options (e.g., entering into industrial symbioses) to reduce resource consumption and maximise the value of waste and by-products. For example, biorefineries have been identified as promising candidates for implementing symbiotic systems on a large scale, thereby significantly contributing towards a circular bioeconomy in the wood-based sector [77,78].

Finally, it should be recognised that circularity and material efficiency can only go as far as wood and the natural systems’ regenerative capacity allows. For example, sustainable forest management may be important to safeguard ecosystem services and ensure the long-term provision of wood sustainably [54]. More importantly, wood-based industries need to adequately answer what a transition towards circularity imply for the sector (e.g., technical requirements). Therefore, it is crucial to have a clear and shared conceptual understanding of what it means to be circular. It would also be crucial to clarify what the biological cycle of forests and raw material sustainability vis-à-vis the technical cycle of manufacturing and use of wood means for the value chains. While there may be many excellent examples from both practice and science, there is still no coherent agreement on what circular bioeconomy practices mean.

6. Conclusions

This paper helped improve our conceptual understanding of what the circular bioeconomy means for a raw material like wood. Considering wood circularly across sectors poses an interesting challenge as the material deteriorates over time and cannot be recycled, such as other non-bio-based materials like glass and metals. Even though the analysis was limited in scope (it focused on two supply chains), the results demonstrate that the implementation of circularity is complex and requires tailored approaches across value chains. Both macro and micro solutions are needed (e.g., what is cross-cutting and what needs to be addressed at the policy vis-a-vis the enterprise level). Moreover, circularity requires the application of new technologies, innovative business models, increased (cross) sectoral connectivity and collaboration, as well as new management tools. It will also require increased awareness and training on circularity and existing approaches, both on the supply and demand side.

The analysis also confirms prevailing conceptual ambiguities surrounding the circular bioeconomy concept, such as the relationship between circularity and sustainability, which would need to be clarified [23]. For example, circularity does not equal sustainability nor guarantees economic viability for the wood-based sector. Moreover, a circular wood-based system that emphasizes the continuous reuse of materials may increase emissions (e.g., due to transport) compared to other approaches, such as cascading use [39,56,79]. There are, as such, no precise answers nor shared solutions for implementing circularity when it comes to wood-based materials. Even more, the wood-based sector will need to account for sustainability criteria and the natural limitations of wood to close value retention loops (Table 1 and Figure 1).

It is further apparent that more practical tools and methods need to be made available to analyse circularity. This analysis was limited by the characterisation of circularity using three value retention loops [24]. Applying factors to different loops is not always a clear-cut affair once actual value chains are considered. While particular distinctions (e.g., user-to-user, user-to-business & business-to-business) make sense on a conceptual level, more work is needed to develop analytical approaches that work in practice for the scientific community, policymakers, and industry. The most sensible way to do this may be to work more actively with the industry to develop applicable conceptual frameworks to measure circularity at both the policy (macro) and enterprise (micro) levels. Policymakers need to know what they can do to optimise measures, while enterprises need practical tools to assess their practices and identify optimal solutions. This re-emphasise the need for tailored governance approaches as there are no one-size-fits-all solutions.