The Circular Economy-New Idea, Re-Modeled

The definition of a circular economy is straightforward but transitioning to the new model remains challenging. Consumers and business leaders have grown accustomed to a wasteful, linear product lifecycle. Manufacturers fabricate goods, ship them to retail outlets, and people buy the items they believe provide the most significant value. But what happens afterward? Most people discard old or broken products without a second thought. Yet, a circular economy breaks the cycle of wastefulness, providing an alternative to the current system and a way to fight climate change.

The Circular Economy – The New Idea

According to the U.S. Environmental Protection Agency, a circular economy “keeps materials, products, and services in circulation for as long as possible.” The typical product lifecycle entails fabricating new items from raw materials, sometimes natural resources, but there is little emphasis on sustainability. If there’s a choice between saving money on production or operating with sustainability, most choose the easy route.

A circular economy takes a different perspective. There is a concerted effort to eliminate waste at a fundamental, systemic level. Products manufactured in the current linear economic structure will not be returned to the manufacturer and recycled.

In a circular economic model, they would. The manufacturer can repair, reproduce, or recycle products using re-fabricated parts, creating a return-loop that promotes and operates with less waste – and lower manufacturing costs. The most vital concept is to be as efficient as possible while maintaining sustainability, including (if possible) using renewable energy.

Circular Economy-Recovered and Recycled

A circular economy isn’t a theoretical framework because real-world examples exist. The difference is that the global economy has yet to shift to a new model. Still, businesses continue to demonstrate how to accomplish the feat and push back on climate change.

Supply Chain

Many international companies in consumer facing industries, like automotive or electronics, are implementing closed loop-reverse logistics programs to capture savings in their manufacturing processes. These businesses enabled a “reverse logistics” system in coordination with partners and suppliers. These organizations gather and reassemble disused components and re-sell them via their reverse logistics supply chain. The result is greater efficiency since reassembled parts cost significantly less than new components. Those savings get passed to consumers, and all parties’ benefit. These industries have renovated hundreds of thousands of parts and components that meet similar specifications as new components.

Wood Pallets

Companies in the wood pallet industry have adopted similar systems, where new products are recycled and re-manufactured from existing pallets. Circular economics in this sector have spawned businesses that recover wood in the form of used pallets and other wood waste and re-purpose it as viable products all the way through the end and beyond of its own product lifecycle. The recycled pallets have the same functionality despite being reused in the supply chain more than once. If waste byproducts occur, those byproducts get used in other ways, such as using leftover wood for compost, or even wood pellets. This way, every ounce of recycled wood has a purpose and reduces the number of trees required to meet demand.

Why is It Important?

Reduce, Reuse, and Recycle seem aimed at a personal level of responsibility to start and that is great. However, a circular economy model offers a different path forward. It allows businesses and consumers to participate in a healthy economic system that protects the environment and fights climate change. The assumption that circular economics introduces unnecessary costs is inaccurate because real-world examples prove it’s possible. The next step is the widespread deployment of circular economic principles, and that’s where the global economy stands today. There’s a clear choice between conducting business as usual or moving on to a sustainable system.

What is Cap and Trade?

The wooden pallet and container industry has been promoting the use of wood as an economical and sustainable solution for businesses and their supply chains for years. Our business model is built on recyclable and reusable packaging solutions so that customers can have faith and hard data in the implementation of their sustainability initiatives.

As climate change and greenhouse gas emissions have taken a more prominent place in consumer concerns, governments are implementing new programs and models to incentivize industries to cut emissions that have a detrimental impact on climate and populations around the world. One of the most successful models to accomplish these goals has been “Cap and Trade”.

In this Nature’s Packaging post, we’ll take a quick dive into cap and trade to learn more about it.

What is Cap and Trade?

In order to combat climate change, governments have employed a variety of methods. One such method is cap and trade. Cap and trade is a system in which the government places a limit, or cap, on the amount of pollution that companies can emit. This system would place a limit on greenhouse gas emissions and allow companies to buy and sell allowances for these emissions.

The goal of this system is to reduce emissions gradually over time while giving companies flexibility in how they meet the caps. Companies that exceed their allotted amount must purchase allowances from other companies that have not used up their allotment.

This market-based approach provides an incentive for companies to pollute less, as they can then sell their allowances to other companies. The overall goal of cap and trade is to reduce pollution by setting a limit on emissions and creating a market for buying and selling emissions allowances.

Critics of cap and trade argue that it will lead to higher energy prices and place a burden on businesses. They also argue that it is unfair because it allows some companies to emit more greenhouse gases than others. Supporters of cap and trade argue that it is necessary in order to combat climate change and that it will create incentives for businesses to develop cleaner technologies and implement sustainability processes.

A Short History of Cap And Trade

In the United States, the first mandatory cap-and-trade program was established by the Acid Rain Program of 1990. The program was designed to reduce sulfur dioxide and nitrogen oxide emissions that were causing acid rain. The program was successful in reducing emissions and provided a model for future cap-and-trade programs. According to the EPA, the program was a “pioneering effort” that helped the United States meet its Kyoto Protocol commitment.

In 2012, the Obama administration implemented a cap-and-trade program for greenhouse gas emissions. The program placed a limit on the amount of carbon dioxide that could be emitted by power plants and other large emitters.

The goal of the program was to reduce greenhouse gas emissions by 17% by 2020. However, the program was never fully implemented, and was eventually replaced by other climate change policies.

Despite its challenges, cap and trade remains one of the most popular mechanisms for reducing greenhouse gas emissions. California’s current cap and trade system has been in place for a number of years and is see as a model for future use at a broader level.

How Does Cap and Trade Work?

In order to understand how cap and trade works, it is important to first understand what it is. Cap and trade is a system that was created in order to help reduce greenhouse gas emissions. The way it works is by setting a limit, or cap, on the amount of emissions that a company or country can produce. If they exceed this limit, they must purchase credits from others who have not reached their limit. This provides an incentive for companies to reduce their emissions, as they can then sell their credits to others.

The cap and trade system has been used in the United States since 2009, when the Environmental Protection Agency (EPA) launched the program in an effort to combat climate change. The program has been successful in reducing emissions, but there are still some critics who argue that it does not do enough to address the problem.

The Pros and Cons of Cap and Trade

The cap-and-trade system is a market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants.

The pros of this system are that it provides a financial incentive for companies to reduce their emissions, and it allows companies to trade emissions allowances with each other. This flexibility means that companies can choose the most cost-effective way to meet their emission reduction targets.

The cons of cap-and-trade are that some argue it may not lead to the level of emission reductions needed to combat climate change, and it could create windfall profits for companies that have already made investments in clean technology.

The Future of Cap and Trade

As the world continues to face the reality of climate change, many countries, industries, and companies are searching for ways to reduce their carbon footprint and implement sustainability into their processes.

The pallet industry continues to explore new areas of their business models to determine where recycling and reuse can fit into a system that rewards lowering greenhouse gas emissions and the ability to sequester carbon.

While we have witnessed the voluntary carbon market slowly rise and gather momentum. It remains relatively misunderstood and somewhat of a black box in terms of value and efficacy.

In the near future, if the pallet industry is able to link custody of certain parts of the sequestration process to recycling that generates a monetary return. Industries and companies will beat a path to the doors faster than you can say, “Wood Is Good”.

Some Great Resources to Explore

Calmatters – The Basics of Cap and Trade

Environmental Defense Fund – How Cap and Trade Works

Cap and Trade – Pros and Cons

 

Forest Products Marketing Unit

Marketing Forest Products

For over 100 years, the Forest Products Laboratory has been at the forefront of optimized forestry. Their research, which started with the preservation of railroad ties, now spans hundreds of areas.

They develop technologies for wood products to maximize their economic potential. Their research is also key to combating deforestation and climate change while making the most of every harvested tree.

The Forest Products Laboratory does not exist in a vacuum. Its research is meant to be shared and used throughout the industry. Wise and efficient use of forest products results in healthy, sustainable forests and widespread economic opportunity.

Purpose

So why do they need a marketing unit? Marketing for FPL isn’t about advertising or image management. The U.S. Forest Products Marketing Unit (FPMU) is about establishing relationships with public and private entities.

These partnerships allow the research done at the FPL to benefit the forest products industry, the public, and the environment.

Organizing the distribution of information, innovation, and technology to the vast and complex forestry and forest products industries is no small task. But without these efforts, the FPL’s exhaustive research would be widely under-used and its technologies would go largely un-implemented.

The FPMU helps share and assist in the use of beneficial forest product practices across the country. With the help of federal funding, they pursue initiatives to promote smarter, better forest products, and processes.

History

Begun in 1992 and expanded in 1996, a formal relationship was established between the FPL and the forestry industry. To transfer research and technology from the lab to the outside world, the new joint Technology Marketing Unit had an ambitious goal. They would create a national framework that balanced the environmental and economic use of the nation’s forests.

That meant establishing strong cooperative partnerships with state and private industry leaders. The research and development being done at the FPL needed an organized way to reach the entities it could most benefit.

The new unit reached out to other technology marketers and diverse public and private forestry organizations to create a team. This team was dedicated to planning projects, identifying customer needs, and implementing technology to meet those needs.

When the 1996 agreement was written, a primary goal was to administer woody biomass grants. The focus of this program was using wood for energy.

In the years since its formal founding, the FPMU has expanded in scope. Their cooperative projects now include initiatives from nanotechnology to the reduction of the size and rate of forest fires.

Objectives

The FPMU has a set of objectives that cover a lot of ground. They focus on new and existing partnerships, coordination of services, and bringing the experts at the FPL to outside institutions.

For the FPL to have the greatest impact, it needs a strong core of cooperation among a large number of external entities. The FPMU establishes, grows, and maintains that vital core to extend the reach of the FPL.

The overarching objective of the Forest Products Marketing Unit is to provide coordination and assistance on a national level. This collaborative commitment is designed to maximize the economic and environmental use of FPL research and technologies.

Current objectives include incentives for increased use of biomass, accelerating reforestation, market creation, technical assistance, administration of grant programs, and more.

Managing resources nationally is a complex task. Focusing on innovative marketing and technological advances, the FPMU extends opportunities for forest product use and management across urban and rural landscapes.

Governance

The governance of the Forest Product Marketing Unit is a little bit complicated. The national scope and coordination with other entities make program direction and oversight key to its success.

Here’s a top-down look at the basic governing structure:

  • The Forest Products Laboratory Director serves as the overall program director. They provide direction for the FPMU to achieve its yearly goals.
  • Forest Service Deputy Chiefs provide broad oversight of the FPMU. They are also tasked with the important job of approving major planning elements for the FPMU. These elements include the Implementation Plan, the yearly Plan of Work, and the yearly operating budget.
  • FPMU staff includes a program manager, forest products technologist, natural resource specialist, research forest product technologist, research forester, partnership coordinator, IT specialist, and program support. This group is tasked with the day-to-day implementation of projects and programs.

This small but mighty team allows the FPL to work at a national level to guide both efficient economic use of all forest products and conserve and promote healthy forests.

U.S. Forest Products-Annual Market Review 2015-2021

The market for forest products in the U.S. is healthy, but for how long? Global macroeconomic pressures are inflicting inflationary pains on everything from wood pallets to essential household items, and the forest products business is no different. Since early 2020, the COVID pandemic’s lock down and public health and safety measures nearly ground the world’s economy to a standstill. Today, we’re still coming out of hibernation, so to speak, but there’s plenty of room for optimism too.

Forest products have weathered the pandemic and subsequent lock downs relatively well. That does not mean serious challenges remain, yet the overall outlook has a positive trajectory. With those considerations in mind, here’s a breakdown of the most critical takeaways from the latest report U.S. Forest Products Annual Market Review and Prospects, 2015-2021.

Purpose of the Annual Market Review

The annual market review aims to build a holistic analysis of the forest products industry, including a breakdown of each market segment, such as sawn softwood and sawn hardwood. The report also outlines the developments that are shaping forest product consumption. The booming housing market is a prime example, as demand for raw lumber and building supplies remains historically high.

There’s even a brief mention of how biomass energy dovetails with the federal government’s emphasis on sustainability and climate change. Altogether, each of these factors forms a comprehensive picture of the U.S. forest products industry. The author of the review, Delton Alderman, has included everything that may affect the business moving forward over the next five years or so.

Current State of the Forest Products Market

Interestingly, the report’s bottom line is this: The table end of the covid-19 pandemic is still influencing the U.S. economy at large, and the forest products market business is no different. Specifically, the review identifies the most significant contributors to the disruption as the waning global demand for wood products, geopolitical events, and the trade disputes that have been ongoing for several years.

But according to the report’s author, a healthy U.S. housing market should be a boon to the forest products industry as home prices continue to rise along with a lack of available homes for sale, including new home construction that simply can’t keep pace with consumer demand. That’s a high-level look at the report, so let’s drill down into little bits of information and data that go into the review.

Information and Data in Annual Market Review

The report’s author builds out the review by looking into information and stats that focus on forest products. The study delves into consumption, trade, prices, credit, production, and the aforementioned macroeconomic effects. The review categorizes each market segment. The downside is that the nomenclature used by the author may be different from the terminology you use internally within your company or industry. Additionally, there is also data on product prices, international trade, domestic markets, and policy initiatives.

When is the Annual Market Review released?

Published in conjunction with the United States Department of Agriculture, U.S. Forest Products Annual Market Review and Prospects, 2021-2025 comes out every year. The overriding difference this year is the depth and significance of the disruptions triggered by the COVID-19 pandemic. As such, the report looks at the market in its entirety instead of focusing on a single sub-sector.

The time frame in question may differ from report to report as economic conditions dictate how far into the future industry leaders should look for near-term trends. This time, the report outlines what the industry may soon face from 2021 to 2025. It’s the minimum amount of time necessary for a proper statistical analysis that seeks to forecast trends in juxtaposition with past data. From that point onward, the review breaks down the statistics and greatest influences for each category of forest products.

Forest product categories in the report

According to the report’s definition of forest products, the U.S. market can be broken down into several categories:

  • Timber products production, trade, and consumption
  • Sawn softwood
  • Softwood log trade
  • Sawn hardwood
  • Hardwood log trade
  • Pulpwood
  • Furniture
  • Structural panels
  • Engineered wood products
  • Hardwood plywood
  • Particle board and medium density fiberboard
  • Hardboard
  • Insulation board
  • Fuelwood

Additionally, the author explains the impact of economic conditions on each market segment. By taking this approach, the report can give a 360-degree view of the forest products industry and where it may turn in the future. Business leaders need an accurate portrayal of the industry to make investments and plan for successes – or further economic disruption due to factors beyond their control (i.e., rising inflation).

Currently, we are still in the nascent stages of a recovery from COVID-19, which most likely will affect the industry’s trajectory over the near term. And countries are facing headwinds from the invasion of Ukraine and the subsequent recessionary environment.

Some segments will feel the impact more than others. The purpose of the review is to provide a starting range on how these forces will affect those markets. Without these insights, industry-leading companies would have a much harder time getting a snapshot of the market and whether or not the exacerbating factors are beyond their control.

Take some time to review the report, which can be found at the link above, and see how the economic conditions may factor into your strategic decision making.

 

Business woman montage

Voices-Women in the Pallet Industry

March is Women’s History Month and we at Nature’s Packaging are here for it. All of the blog posts for this month were about women and their impact on forestry, forest products, and the pallet industry. For our final post of this month, we asked women in the pallet community one question:

How have women changed the pallet industry?

 

Su So-Longman – President

Pallet Central Enterprises

When I started Pallet Central Enterprises 17 years ago, it was rare to find women in a leadership role in this industry. I found such statistics exciting since I have always lived to compete and thrive in challenging circumstances.

Women have advanced light years since that beginning. Now, it is not uncommon to see some of the best pallet companies in the US, owned and operated by women. They are also plant managers, purchasing directors, and account managers among other roles. That is a testament to how involved women have become in every aspect of the pallet industry.

Women certainly possess the more traditional leadership skills, but they also bring a depth of understanding, flexibility, and true work ethic to the workplace. This is demonstrated in the loyalty and longevity of employee relationships, as well as the connections with customers and vendors.

I am proud to say that women are 80% of my in-office work family at Pallet Central Enterprises, and my management team consists of 90% women who oversee daily operations, including sales and accounting. Our national sales manager, who is also a woman, is on the board of the NWPCA.

Women of pallet industry are here to stay, and the industry is definitely better for it.


Julie DeRoush – National Director of Supply Chain

TRI-Pac North America

Women have brought a fresh perspective to the pallet industry through forward thinking and personal connection to customers. Women are largely having the day-to-day conversations with the customer base and have played an integral role in identifying and introducing innovative technology and tools that support the internal expediency and “Just-In-Time” service that customers are demanding. We are calculated risk takers and problem solvers that balance the chaos this industry tends to thrive in.


Beatrice Vasquez – President

Oxnard Pallet Company

Some strengths women have is the ability to multi-task effectively, demonstrate patience, show compassion/respect/flexibility with others (especially employees), and maintain good organizational skills. I believe our attention to detail along with all these strengths have placed an important and vital role for us within the pallet industry in helping to surge forward for more growth potential!


Kristin Kopp – VP of Communications and Marketing

48 Forty Solutions

What I have noticed from women in the pallet industry who I have had the pleasure of working with, is that they bring a sense of humility and thoughtfulness to the table. There are a lot of broader and deeper discussions taking place that might not have otherwise. Pushing the why of initiatives and results to discern “how we got here” rather than just focusing on the numbers themselves, is something I enjoy seeing. What I love most about women in this industry is there is a toughness and resilience which I think a predominantly male industry both appreciate and respect. This respect encourages pallet businesses to hire more women, softening the edges of their businesses a bit, and being open to a whole different style of thinking, feeling, discussing and problem-solving.


Carolyn Beach – Chairwoman of the NWPCA Board

Co-Owner Westside Pallets

Women in the industry are much more present.  More women are not only finding careers in the pallet industry and other industries associated with pallets, but they are more involved in the associations such as NWPCA and WPA.  It’s encouraging that it is common to see women in the pallet industry.

 

We close the month of March celebrating Women’s History and their contribution to this industry. We look forward to the continuation of women taking leadership roles in all of the trade associations (NWPCA, WPA, CWPCA) affiliated with the pallet industry.

 

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