A Global Player Made in Europe

The European paper industry is a strategic sector, playing an active part in Europe’s sustainable re-industrialisation. Our natural, renewable bio-based resources and our knowledge of wood and fibre chemistry give us a key role in adding value and creating jobs within a long value chain. The many European sectors that use paper-based products or supply goods and services to the paper industry benefit considerably as a result.

Our industry’s European credentials are second to none. At least 82% of our raw materials are sourced in Europe from responsibly managed forests which are more abundant and healthier now than they were 40 years ago.The production equipment in our mills comes from large European manufacturers and we engage with a variety of European-based chemical and mineral suppliers.

Paper and board production in Europe increased gradually until 2007 but suffered significantly from the economic crisis in 2008 and 2009, along with most industrial sectors. European pulp and paper production in 2012 continued to be affected by the economic slowdown that began in mid-2011. However, the European pulp and paper industry remains an important contributor to EU economic growth and job creation, with its performance still stronger than other energy-intensive sectors in Europe.

CEPI has had to address a number of ‘greenwashing’campaigns by other organisations and European institutions that cast paper as old fashioned and/or environmentally harmful, especially in comparison with digital products. These campaigns misrepresent the truth and they are damaging to the graphic grades in our sector. In fact, paper is the original bio-based product as it is both recyclable and biodegradable and comes from renewable resources.

Our industry is a financially sustainable and strategic industry in Europe.

Competitiveness and Profitability

Incorporating sustainability into innovation activities contributes to resource efficiency, which leads to reduced costs and a smaller environmental footprint. Greater competitiveness and profitability is vital for the European pulp and paper industry as it adjusts to tougher market conditions and tighter regulations.The industry must be able to compete with other packaging materials, such as plastic, in Europe and faces changing consumer behaviour with regards to ICT (Information andCommunication Technologies) usage. It also has to face increased competition from pulp from Brazil and from paper and board from China and US paper products produced with very low energy costs.

The latter half of the last decade turned out to be significantly less profitable for the European pulp and paper industry. In 2011, the business environment slowed down due to declining pulp prices and weakening demand for both pulp and paper. Industry restructuring continued andclosures took place. However, paper-based packaging, tissue as well as speciality papers are seeing a rise in popularity with customers and consumers in a world that increasingly focuses on bio-based products.

* Data based on the investments carried out and envisaged by the 35 largest European companies for which some data are available. For the period 1990-2012, investments that have been completed, or for which work has started or the project has been confirmed or the funding approved are included. For the period 2013-2020, projects that are under study phase have been also considered.
The economic and financial crisis has dramatically highlighted the need to reignite industrial growth in Europe. To restore properity, Europe must attract investment. Coherent policies and bold measures are needed to realign Europe’s industrial policy and to encourage investment in new areas such as the bioeconomy. The European Commission has already set a goal to increase the share of European industry in GDP to 20% by 2020.
Energy costs are indeed a large part of the paperindustry’s cost structure, accounting for almost 16% (electricity + fuels). So are fibres that represent close to 44% of the cash manufacturing cost in our sector. Cash manufacturing percentages have not changed significantly in recent years, while labour productivit yhas significantly increased.
Labour productivity (gross value added per person employed) is 50% higher in the pulp and paper industr yin Europe than in the whole manufacturing sector (80 compared to 46 in 2009) in EU27. In fact, the European paper industry intends to play a significant role in the EU reindustrialisation scenario, as it matches all the relevant priorities and measures set out in the Industrial Policy Communication of the European Commission. The European paper industry can play a large role in this EU reindustrialisation scenario as it ticks all the boxes:

EU INDUSTRIAL POLICY

  • WE ARE an important part of the new industrial revolution
  • WE ARE BUILT on a strong European presence, while competing in global markets.
  • WE ARE MODERNISING a traditional industrial base and entering new sectors.
  • WE ARE INVESTING in research into advanced manufacturing technologies for clean production.
  • WE REPRESENT a large market for key enabling technologies.
  • WE SUPPLY the bio-based product markets.
  • WE HAVE a skilled workforce with a large range of competences.

Investments

The investment level in the European paper industryhas not returned to pre-crisis levels. Meanwhile, the EU economy continues to face tough challenges. Just like other industrial sectors, the pulp and paper industry needs a positive regulatory environment to attract the necessary investments to develop new sustainable technologies that deliver added-value products. Coherent policies and bold measures are needed to realign Europe’s industrial policy to encourage investment in new areas such as the bioeconomy. The unfavourable paper market development in Europe led to restructuring across different grades: over the last two years, 4.7 million tonnes of pulp and paper capacity were closed down, while 1.5 million tonnes were put on the market. In the years to come, close to 75% of the investmentsin new and rebuilt capacities that are envisaged by the European companies will take place outside the EU while between 1990-2000 more than 90% of the EU investments took place within the EU.
BIOREFINERY FOR SUNILA PULP MILL
Stora Enso recently decided to invest 32 million euros in building a biorefiniery at its Sunila pulp mill in Finland, which is set to reduce CO2 emissions of the mill by replacing up to 90% of natural gas by lignin extracted from black liquor. This will be the first step towards selling lignin to external customers.
* Data based on the investments carried out and envisaged by the 35 largest European companies for which some data are available. For the period 1990-2012, investments that have been completed, or for which work has started or the project has been confirmed or the funding approved are included. For the period 2013-2020, projects that are under study phase have been also considered.

Trade - an international perspective

Economic pressures affecting the industry include its declining added value as a global commodity, and the challenge of investing when faced with increasing costs.The overall output performance of CEPI countries in 2012 was similar to that of other major traditional paper-producing regions (USA, Japan, South Korea and Canada).China and Brazil performed better however.
The total world production of paper in 2012 was 400 million tonnes, and of pulp, 185 million tonnes. The map shows the trade flows of paper and pulp to and from CEPI countries, as well as paper production per region and the changes in production in the last 5 years. Too often in Europe we are faced with regulations that disadvantage our industry in global markets and in international trade. While Europe is fully open to foreign products, approximately half of European paper exports face tariff barriers abroad. Furthermore, not only is the European market open, but there is also weak enforcement of import rules.The lack of rigour in the surveillance of the European papermarket penalises the local industry for complying with European standards and legal requirements.
Europe is a net exporter of paper and board: Brazil, China, Russia, Turkey and the US are the main export destinations. But Europe is a net importer of pulp: Brazil, Canada and the US are the main countries of origin.

We export 21.6% of our production.

Changes in the last 5 years indicate clearly a reduction in production and consumption, but an increase in exports of our products. Operating conditions both inside and outside the EU must be improved to ensure that the European pulp and paper industry maintains its ability to compete on an equal footing. CEPI is calling for free access to raw material and energy markets, especially as in recent years some countries attempt to adopt protectionist measures and restrict access to raw materials.
The European pulp and paper industry is a trusted industry partner in Europe.
Over the last years, there has been a multiplication of trade disputes impacting European pulp and paper trade. Above a short overview of some cases. We also observed fuel tax credits to US companies and subsidies to Canadian graphic paper production which led to a high competition distortion globally.

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CEPI aisbl / Confederation of European Paper Industries
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