The European pulp and paper industry and forests Safeguarding wood availability

1

The Balance of Power
CEPI workshop, 30 November 2005,
Brussels European Paper Week
2

The Balance of Power Introduction
Armando Cafiero - Chairman Managing Director of
Assocarta, Italy
3

The Balance of Power The importance of energy
CEPI Directors and Managers
4

The Balance of Power Renewable Energy Sources
Bernard de Galembert, CEPI Forest Director
5
European context on RES

• EU White Paper on renewable energy sources
• RES-Electricity Directive
•  Intelligent Energy for Europe  Programme
• EU policy options on RES-Heat
• Communication on RES

6
European context on RES

• Johannesburg Renewable Energy Coalition (JREC)
•  We express our strong commitment to the
  promotion of renewable energy and to the increase
  of the share of renewable energy sources in the
  global total primary energy supply. 
• Communication on The share of renewable energy
  in the EU (May 2004)
• Forthcoming Biomass Action Plans with a clear
  approach to securing adequate supplies of biomass
  through European, national and regional/local
  action.

7
Wood availability RES as a threat
7
8
Renewable energy

• Promote the use of wood as a source of renewable
  energy (Green certificates, Feed-in tariffs,
  Investment subsidies, etc.)

Competing use of wood
Distorted wood market
9
Wood availability
1.000
36 million m3
900
195 million m3
800
million m3 of roundwood
700
89 million m3
600
27 million m3
500
400
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
10
Declaration of Intent RES as an opportunity
10
11
Declaration of Intent on RES
1,000 TJ
600
550
500
450
Declaration of
400
Intent period
350
1990
1995
2000
2005
2010
12
Future activities
12
13
Guidance document  For an effective
implementation of the EU RES policies 

• Better mobilisation of wood
• Support policy to be based on a proper assessment
  of the wood market
• Encourage the production and use of energy crops
• Subsidies targeted to improve the efficiency of
  technologies
• Parallel improvement of mobilisation conditions
  for wood and for secondary raw materials
• Subsidiarity should not lead to discrepancies in
  biomass definitions
• Encourage RD in the field of RES

14

The Balance of Power Climate Change
Esa Hyvärinen, CEPI Environment Director
15
Energy Climate Change in the pulp and paper
industry

• Development of certain energy-related parameters
  since 1990
• Pulp and paper production has increased by 53.
• Energy efficiency has improved and specific
  electricity consumption per tonne of production
  has decreased by 13.
• Pulp and paper industry has become more
  self-sufficient in energy electricity production
  has increased by 74.
• More than 93 of the electricity generated
  on-site is done with the help of CHP.
• About 52 of the fuels used are biofuels.
• As a result, specific CO2 emissions have
  decreased by 25, but the absolute emission
  increased by 9.

16
Energy Paper Industry

• Energy is a key input for the pulp and paper
  industry
• Up to 30-35 of production costs.
• 42 of electricity used is produced on site.
• The industry still purchases 66 TWh of
  electricity per year.
• Policies affecting on energy have a direct impact
  on the pulp and paper industry.

17
Energy Climate Change in the pulp and paper
industry

• Basically all CO2 emissions from the pulp and
  paper industry result from combustion.
• Therefore, if someone says climate change, a
  mill manager would hear energy.
• The costs pulp and paper mills face as a result
  of climate change policies are two-fold
• Costs from the reduction of own emissions
  manageable to certain extent.
• Costs faced by power producers passed through the
  electricity prices price takers.

18
Climate Change and EU Emissions Trading Scheme

• The way emissions trading has developed has been
  probably a surprise to everyone
• In general the price of allowances was expected
  to be around EUR 10 / t CO2
• Low allowance prices at the beginning, followed
  by a strong increase during the summer
• Strong increase of electricity prices up to 40
  since the beginning of 2005.
• Costs were expected to come from
• Compliance with the quotas each installation has
• Increase of electricity prices due to marginal
  pricing mechanism.
• Pricing in the opportunity cost of allowances
  received for free exceeded even the worst
  expectations.

19
Climate Change and EU Emissions Trading Scheme
20
Climate Change and EU Emissions Trading Scheme

• Basic dilemma of the pulp and paper industry
• Costs raise in the EU but product prices are set
  on the global market
• Cost pass-through is not possible without loosing
  market shares.

21

The Balance of Power Energy efficiency
Danny Croon, CEPI Environment Manager
22
What is energy efficiency?

• In most cases depends on in which context it is
  used
• Large number of references with more or less
  comprehensive attempts to define the term
• The Commission published its Green Paper on
  Energy Efficiency in 2005 (Green Paper on Energy
  security of supply of 2000 as background)
• Does not contain a definition on energy
  efficiency
• Initiating a broad discussion on how to curb
  rising energy use in EU and arrive at a reduction
  of 20 by 2020
• To improve energy efficiency via (amongst others)
• Use of best technology
• Promotion of cogeneration

23
What is energy efficiency?

• The draft directive on energy end-use efficiency
  and energy services defines energy efficiency as
• A ratio between an output of performance,
  service, goods or energy, and an input of energy
• This definition seems to be more or less as
   specific energy consumption  and it does not
  take into account e.g. the product grade and the
  rate of capacity which are of essential influence
  on figures of specific energy consumption in our
  industry

24
BREF on energy efficiency

• Driving force European Climate Change Programme
  (ECCP) adopted October 2001
• Promote effective implementation of energy
  efficiency provisions in the IPPC Directive
• Prepare a special horizontal BREF addressing
  generic energy efficiency techniques, giving
  voluntary guidance
• Content (amongst others)
• Approaches and methodologies for energy use
  optimisation and energy efficiency
• Descriptions of good energy efficiency methods
  and techniques applied in several sectors (CHP
  included)

25
BREF on energy efficiency

• Technical Working Group on energy efficiency in
  industrial installations kick-off meeting in May
  2005
• Currently discussing energy efficiency in
  industrial installations how should it be
  defined?
• Paper production from sulphate pulp may serve as
  an example of energy efficiency improvements
  (e.g. reducing energy losses or using waste
  energy for power production)
• To reserve the term energy efficiency for
  measures that are taken with the main purpose to
  use the energy in a better way
• To make agreements on what type of measures that
  should be called energy efficiency improvements
• Draft version of BREF on energy efficiency
  available early 2006 for consultation (finalised
  2nd part of 2006)

26
Energy Efficiency in the European Pulp Paper
industry

• The pulp paper industry is energy-intensive but
  is also an energy efficient industry
• The high cost of energy has always been a major
  incentive and continuous driving force to improve
  energy efficiency
• Improved energy efficiency via co-generation
  (combined heat and power)
• CHP 3035 energy saving compared to
  conventional technology
• In 2004
• 43 of the electricity used was produced on-site,
  i.e. nearly 50 TWh
• 93 of this 50 TWh (being 46,5 TWh) is produced
  via CHP the remaining bit (7) is produced via
  wind hydro installations

27
Energy Efficiency in the European Pulp Paper
industry

• Comparing 2004 with 1990, the specific primary
  energy consumption decreased by 11 thanks to an
  increase in process technology efficiency and CHP
  investments
• The European pulp and paper industry naturally
  continues to strive for increased energy
  efficiency, but cost/efficiency has to be taken
  into account and recognised
• Furthermore
• Each unit is unique
• differences in raw materials recovered paper,
  wood, coatings, fillers
• different processes de-inking, pulping, coating
• different products
• impossible to compare mills with each other
• Energy efficiency is a mill specific question

28
Energy Efficiency in the European Pulp Paper
industry

• The efficiency of both paper production and
  energy production can be improved by
• the development of process monitoring
• skilled and motivated personnel
• availability of reliable process information
• Changes in the use and maintenance of mills and
  power plants are the most feasible measures
• Heat and fuel consumption can successfully be
  reduced by
• closing of water circuits (decrease use of water)
  and
• efficient heat recovery of secondary energy
• Drying of moist fuels (increase heat value of
  biofuels) offers a opportunity for increasing the
  energy efficiency of power plants
• Efficient usage of biomass based CHP is natural
  in our industry

29

The Balance of Power The energy challenge
Peter Nygren, SCA
30

The Balance of Power Energy market liberalisation
Augustijn Van Haasteren, DG Competition
31

The Balance of Power Conclusions
Armando Cafiero - Chairman Managing Director of
Assocarta, Italy