Corking Climate Change

Building materials for climate change adaptation, one cork at a time.

As climate change alters weather patterns, spawns new regulations, and leads to technological and demand shifts towards materials and processes that are more sustainable, one industry stands to benefit: the cork industry in Portugal, which accounts for about 60% of world trade in cork.[1] Within the country, the company Corticeira Amorim is the world’s largest producer, manufacturing more than 3.6 billion wine stoppers every year (the main use for cork).[2]

Cork is a sustainable material by design

Cork is the bark of the cork oak endemic to the Iberian Peninsula and Northern Africa. One of its unique attributes is that it is the only tree whose bark regenerates, so it can be harvested every decade without any tree having to be felled. The bark becomes smoother after each harvest, thus increasing in value and quality. Over the course of its lifetime averaging 200 years, each tree may be stripped around 17 times.[3]

As concerns about climate change come to the fore, the sustainable characteristics of cork harvesting recommend it as a perfect hedging instrument. The harvested bark is not only fully recyclable and renewable, but it also improves the carbon absorption properties of the tree: harvested cork trees absorb 3-5 more CO2 than non-harvested trees.[4]

These sustainable features can be monetized through carbon offset programs or emission trading permits, should a carbon tax or cap-and-trade program be enacted in Europe, which is currently at the forefront of greenhouse gas regulation. However, there are other exciting opportunities for Corticeira beyond carbon accounting: cork can be used at a broader scale as insulating material to address rising energy efficiency standards, as well as a renewable fuel in power generation, thus creating energy-saving synergies within multiple industries.

Energy efficient materials are a growing market

Energy efficiency is one of the easiest and most cost-effective ways to reduce environmental impacts and it is one of EU’s main environmental policy goals. The scale of investment needed to meet EU’s 2020 energy efficiency target is estimated at €100 billion annually.[5]

Cork’s durable and highly insulating properties recommend it as a sustainable material in energy efficient applications, not just in the construction sector, but also in high-tech applications. Corticeira Amorim already has experience in this space as supplier of insulation solutions to NASA (beginning with the Apollo 11 mission) and the European Space Agency.[6] Due to the high expected demand for energy efficient materials, the company is well positioned to capture a significant share of the energy efficient investment market.

Cork can be used to produce renewable energy

The European Union has equally ambitious renewable energy targets – at least 20% of its total energy must come from renewable resources by 2020. Some of these targets could be met through combustion of cork residue, which has been proven[7] to be an efficient fuel for electricity generation. Moreover, by reusing discarded materials, Corticeira can build tighter, more sustainable supply chains with multiple sources of raw material monetization.

Climate change could still threaten the industry

Even though cork trees are adapted to warm climates and arid soil, they are not immune to stresses caused by climate change, such as drought and high temperatures. Over the past twenty years, cork bark has been reported to be getting thinner.[8] Lower yields increase prices, since production is geographically concentrated in Portugal and Spain. Without hedging strategies, this could ultimately lead to a death spiral of reduced demand and depressed revenues, since Corticeira Amorim is not diversified across many geographies and raw materials.

Recommendations

To address the potential threat of climate change to production, Corticeira Amorim should both attempt to diversify geographically and improve its own agricultural processes. Its current R&D spending of only 1.2% of sales (€7.5 million per year)[9] is insufficient to address the challenge. More research could help improve yields and production quality across the entire geographic footprint of the company.

Moreover, to take full advantage of the industry synergies described above, the company should diversify its product offerings to anticipate other potential uses and reduce its exposure to demand from the wine industry. The unique renewable qualities of the bark provide numerous expansion opportunities.

Lastly, Corticeira must improve recycling collection. Even though in 2009 it built the world’s first licensed cork recycling unit, the facility only processes discarded cork stoppers. By not reusing discarded materials from other cork products, the company leaves money on the table.

Let’s uncork a bottle of wine and toast to the world of opportunities available to Corticeira Amorim!

(Word Count: 799)

 

Citations:

[1] http://www.nytimes.com/2013/01/24/business/energy-environment/24iht-green24.html

[2] Ibid.

[3] Coritceira Amorim company website, available at http://www.amorim.com/en/why-cork/what-it-is/.

[4] 100% Cork Initiative website, available at http://100percentcork.org/why-cork/good-for-the-environment/.

[5] European Commission, Financing Energy Efficiency, available at https://ec.europa.eu/energy/en/topics/energy-efficiency/financing-energy-efficiency

[6] Corticeira Amorim company website, available at http://www.amorim.com/en/for-your-business/Aerospace/39/.

[7] A. Al-Kassir et. al, Study of Energy Production from Cork Residues: Sawdust, Sandpaper Dust and Triturated Wood, Energy, Volume 35, Issue 1, January 2010,

[8] R. Teixera et. al, Comparison of Good- and Bad-Quality Cork: Application of High-Throughput Sequencing of Phellogenic Tissue, Journal of Experimental Biology, June 2014.

[9] Corticeira Amorim company documents and Reuters stock data

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5 thoughts on “Corking Climate Change

  1. I was unfamiliar with the highly sustainable nature of cork, so it was interesting to learn more about the industry. I’ve personally noticed wine producers increasingly using synthetic corks for bottling, and have also noticed a general increase in alternative packaging options for wine, such as cans and boxes. I’m interested in understanding the wine producers’ underlying motivations for these packaging / bottling trends. It seems like the more environmentally responsible choice would be for continued use of cork, but am sure there must be economic considerations to address. I wonder if Corticeira’s business is feeling an impact from these trends, and how they have taken action to address / curb them.

  2. Wow! This is a fascinating opportunity. I never knew it was so much more sustainable to harvest than wood and of course it would be much lighter to ship. I feel like there are so many other applications for cork that could be realized beyond even insulation. While I was reading I kept thinking about IKEA and their interest in using particle board. I’ve actually been googling around for cork furniture in response to your post! There are a few items out there, but it doesn’t seem to be the most aesthetically pleasing material. I wonder if it could be used more as an internal or backing material, rather than the exterior. For particle board is most often placed on the back of ikea products where its not seen. Thanks for writing on such an interesting topic!

  3. I really enjoyed your post, thank you for covering an enlightening topic. I have seen a cork tree before, and they are pretty neat. I agree with your point about building an infrastructure to recycle corks. I found a website listing cork recycling collection centers with a couple in the Boston area: https://recork.org/locations and apparently Whole Foods http://www.wholefoodsmarket.com/blog/whole-story/small-steps-add-recycling-cork-reharvest. Perhaps there needs to be more efforts in promoting cork collection rather than throwing out or holding corks for Pinterest projects that never get finished. There would need to be an educational component to sort between the synthetic corks mentioned above and real corks.

  4. This is pretty fascinating. I wonder how cork trees CO2 absorption compares with other trees when it is stripped and non-stripped (i.e. on a net basis are these trees better than a substitute at absorbing CO2). With that in mind, one interesting and threatening trend to this business is the use of alternatives for sealing wine bottles. Increasingly wine does not use cork on the lower end of the wine spectrum and my understanding is that the cost of shipping and manufacturing the product doesn’t offset the slightly decreased wine quality enough for the wine producer to need to purchase corks. I wonder if cork production and transportation may also be large contributors to CO2 production which aren’t immediately obvious that will be agitated against with time (unless the trees benefits stack up favorably to alternatives).

  5. I thoroughly enjoyed the post, thanks for sharing. Cork is buoyant, elastic, and fire resistant. Even NASA uses the material for lightweight insulation. Cork companies might be inclined to adapt to changing markets by marketing their product as a building material. Cork can be used to build sustainable exteriors for homes, as outlined in the following article:
    http://www.telegraph.co.uk/finance/property/green/9617290/Eco-living-Lets-hear-it-for-cork.html

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