DECEMBER 1, 2023
A groundbreaking investment initiative is taking aim at one of the world’s most pressing environmental challenges: the destruction of forests for paper, packaging, and clothing production. The Next Gen Solutions investment strategy, launched by Nicole Rycroft (Awardee 2020) through the Climate Breakthrough Award program, seeks to mobilize $500-800 million in strategic investment to develop sustainable alternatives to wood-based products and enable the construction of commercial-volume Next Gen pulp infrastructure within the next decade.
The Challenge
Every year, millions of hectares of climate-critical forests are logged to provide fiber for day-to-day commodities like packaging and clothing. This deforestation and degradation is currently the second largest source of human-caused greenhouse gas emissions. Meanwhile, valuable alternative materials go to waste: of the 100 billion units of apparel produced each year, 50 billion are estimated to end up in landfills within a year. At the same time, agricultural residues that could serve as alternative fiber sources for paper and packaging are routinely burned as a disposal method, which according to the FAO leads to over 34 million tons of annual CO2 emissions globally.
The Initiative
The Next Gen Solutions investment strategy aims to bridge a critical gap in the market. While technologies exist to create pulp from alternative materials like agricultural residues, waste textiles, and microbial cellulose, these solutions often struggle to secure the substantial funding needed to scale up to commercial production. A typical pulp mill requires $150-200 million in capital expenditure, putting it outside the scale of investment that progressive funds and venture capitalists are able to entertain.
To address this, the initiative will work to establish a Strategic Investment Vehicle (SIV) that will provide the necessary equity to help promising technologies cross the commercialization “valley of death.” The initiative aims to support the construction of 8-12 commercial-scale Next Gen mills, which would prove the commercial viability of Next Gen solutions and build investor confidence.
These facilities would use on average 75% less energy, fewer chemicals for processing, and 90% less water than conventional mills. Additionally, they would transform what is currently considered waste into valuable raw materials, helping to address multiple environmental challenges simultaneously.
The Vision
The ultimate goal is to transform unsustainable supply chains to replace 50% of wood fiber currently used in the pulp, packaging, paper, and viscose supply chains with lower-footprint Next Gen feedstocks by 2030, resulting in 1.3 Gt of avoided emissions.
Success in this initiative could catalyze a broader transformation of the industry. As early investments prove the commercial viability of Next Gen solutions, the initiative expects to leverage additional billions of dollars in financing.
But beyond the environmental benefits, the initiative provides conventional producers with an “off-ramp.” Rewiring supply chains that have been in place for more than 100 years, with billions of dollars of investment embedded in vertically integrated operations, is extremely challenging but achievable with the right market leverage and financial conditions.