Recycling: from niche market to core business.

Much has changed from the days when recycled paper was considered a niche market. Recycling is now an integral, part of daily life for many people and recycled paper is an integral part of the paper chain, on an international scale. Many grades of packaging materials, newsprint, and tissue are made wholly or in part from recycled fiber and its use in the manufacture of printing and writing papers is rising steadily. The electronic revolution has also led to increased use of white papers in household streams as printers become standard in homes.

One third of the 600 million metric tons of materials processed by the recycling industry annually is traded internationally. According to the Bureau of International Recycling (BIR), a UK-based trade association, the global recycling industry (plastics and metals as well as paper) employs 1.5 million people in more than 50 countries and generates annual revenue exceeding US$160 billion.

Apart from good economic reasons, a major force in this drive to recycle comes from political and public pressure to reduce the amount of used paper landfilled as waste. This is particularly true in North America and increasingly so in Europe, especially in Germany, which has been the driving force behind pan-European recycling legislation.

EUROPE PLEDGES MORE

Last November, the Confederation of European Paper Industries (CEPI) and the European Recovered Paper Association (ERPA) launched a European Declaration on Paper Recovery. The declaration pledges that Europe will recycle at least 56% of the paper and paperboard products it uses by 2005, and that the industry will take further measures to improve environmental performance. In real terms, this will mean increasing recycling in 2005 by 25% more than today, or recycling an additional 10 million metric tons or more of recovered paper.

CEPI says that paper recycling in Europe increased markedly throughout the 1990s with recovered and recycled paper up roughly 65% at the end of the decade compared to the start. Europe's recycling rate (the percentage of recovered paper used compared to total paper consumption) was 48.7% in 1999, compared to 38.8% in 1990.

CEPI's Recycling Committee chairman is Ulf Frolander, also president and group executive officer of SCA, the Stockholm, Sweden-based paper company. "The most significant increases took place in countries where collection rates are currently the lowest. In some countries, collection rates are already approaching very high levels and further increases are becoming very difficult," he said.

The new 56% target is an average for Europe, and collection and recovery vm3, widely from country to country. To monitor the progress of the declaration, a European Recovered Paper Council will be set up. It will be open to industry associations within the paper chain and representatives of European institutions.

USA: CLOSE TO 50% GOAL

The United States has also made progress toward its recycling goals. According to the American Forest & Paper Association (AF&PA), based in Washington, D.C., USA, approximately 45% of the paper Americans use is now being recovered for domestic recycling, export and other uses. In 1997, that totaled 47.3 million tons of recovered paper, up more than 50% since 1990. "The U.S. paper industry is closing in on its goal to recover one half of all the paper Americans use, an accomplishment no country with a similarly dispersed population can claim," said the AF&PA.

"Behind this success story is an effective and growing environmental partnership between the American people and the U.S. paper industry," AF&PA continued. "Consumers separate their used paper in ever-growing volumes--bundling old newspapers and magazines and separating office papers and corrugated boxes. Meanwhile, U.S. paper companies have made extraordinary investments--an estimated US$ 10 billion in the 1990s--in new machines to recycle this used paper."

As a result of United States papermakers' commitment to expand recycling, recovered paper has accounted for 80% of the industry's incremental fiber consumption since 1988. More paper is now being recovered in the U.S. for recycling and reuse than is landfilled, a dramatic turnaround from the beginning of the decade, when the country was concerned about running out of landfill space.

Consumption of recovered fiber at mills was up 4.1% in 1999. Over the past 10 years, recovered paper accounted for three quarters of the industry's incremental fiber consumption, increasing recovered paper's share of total fiber consumption to 36.5% in 1999. This is up from 36.1% in 1998 and 25% in 1988. The largest component of recovered paper--44.8%--is used to make containerboard. A full 21.7% is used for other paperboard, 10.8% is used for newspaper, another 10.7% for tissue, and 6.5% for printing-writing papers. The balance is used in the construction, paper packaging, and specialty grades.

Recovery rates for office paper and printing/writing paper were up considerably in 1999, according to AF&PA, with office paper now 43.2%, compared to 40.5% in 1998, and printings/writings at 37.8%, a substantial increase from 1998 when it was 34.8%.

Recovery of old newspapers increased to 68.9% in 1999, up from 67.7% in 1998. Recovery of old corrugated, while still the largest recovered fiber grade, was reported at 70.1% in 1999, down from a high of 73% in 1996. This adjustment partly reflects mill closings over the past two years.

The fastest growing use for U.S. recovered paper in nontraditional markets is cellulose insulation. About 550,000 tons of recovered paper were used for this product in 1998 and approximately 700,000 tons in 1999. Use of recovered paper for molded pulp products--especially as a cushioning material for shipping--is also up, says the AF&PA, with approximately 450,000 tons used in 1999. Since 1997 there has been about a 40% increase in businesses that make molded pulp products.

In 1998, well over 150,000 tons of recovered paper were used in the production of a paper mulch--up from 98,000 tons in 1990. In 1999, more than 300,000 tons of fiber-up from 200,000 tons in 1998 were recovered as compost and used in landscaping, agriculture, and home gardens.

GLOBAL PERSPECTIVE

Asia, too, is a leading producer and consumer of recycled paper (see related article on page 37). while growth in the global paper recycling chain has been slowed somewhat by the recent worldwide economic slowdown, it is clear that recycled fiber, over time, will displace more virgin fiber in the overall fiber mix, and help nations of the world reach their recycling goals.

PAPER RECYCLING IN EUROPE: KEY FIGURES

                    Utilization  Utilization   Collection  Recycling
1999                000 metric   rate          rate        rate
                    tons         %             %           %

Austria             1787          43.2         66.4        90.9
Belgium             570           34.2         54.5        19.6
Denmark             420          121.0         51.7        34.5
Finland             696            5.4         64.6        47.2
France              5277          55.0         45.5        46.1
Germany             10213         61.0         73.1        57.7
Greece              320          100.6         31.1        35.5
Ireland             46           107.0         18.3        10.0
Italy               4207          49.1         35.2        40.8
Netherlands         2375          73.0         56.7        53.3
Portugal            364           31.3         45.5        38.3
Spain               3609          81.4         46.0        56.1
Sweden              1834          18.2         60.9        80.8
UK                  4753          72.3         40.4        37.4
TOTAL EU            36471         45.7         49.2        48.5
Czech Republic      325           42.2         39.3        37.6
Norway              293           13.1         65.3        35.5
Slovak Republic     249           41.3         40.5        73.7
Switzerland         1112          63.4         63.7        64.7
TOTAL W. EUROPE     38450         45.1         51.6        48.7

Source: CEPI

EUROPE: RECOVERED PAPER
USAGE BY SECTOR IN 1999

Case materials             43%
Newsprint                16.7%
Folding boxboard          9.6%
Wrappings, other pack     8.9%
Household & sanitary      8.1%
Other                     7.1%
Other graphic             5.7%

U.S. RECOVERY OF PAPER AND PAPERBOARD BY GRADE

        Old          Old          Mixed
        corrugated   newspapers   papers
        (000 tons)   (000 tons)   (000 tons)

1988    12,379       4,755        2,908
1989    12,885       4,991        3,539
1990    13,407       5,556        4,075
1991    13,986       6,201        4,285
1992    15,219       6,840        4,585
1993    15,900       7,295        5,284
1994    18,249       7,881        6,195
1995    20,407       7,789        6,723
1996    21,579       7,798        6,773
1997    22,022       8,333        6,595
1998    22,112       8,667        7,434
1999    22,802       9,022        8,442

        Pulp         High Grade
        substitutes  deinking     Total
        (000 tons)   (000 tons)

1988    3,583        2,554        26,179
1989    2,974        2,688        27,076
1990    3,120        2,955        29,112
1991    3,548        3,180        31,201
1992    3,616        3,691        33,954
1993    3,252        3,725        35,460
1994    3,338        4,029        39,691
1995    3,236        4,034        42,189
1996    3,016        3,909        43,076
1997    3,228        3,816        43,989
1998    2,822        4,045        45,076
1999    2,866        4,180        47,307

"Total" is the total amount of paper recovered for domestic use and
export. Export related groundwood recovery reclassified from old news
to mixed papers beginning in 1989. Source: AF&PA

Note: AF&PA defines "recovery" as paper that is recycled at domestic
mills, exported, or used to make new products that are not paper.
Paper that is recovered but does not find a market is not counted in
the calculation. The annual recovery rate is derived by dividing the
amount of paper recovered by the amount of paper used in a given year.
The paper recovery rate--total paper recovered for recycling as a
percent of paper consumption--rose to 45% in 1999. This compares with
44.6% in 1998, demonstrating a consistently upward trend for over a
decade.

RELATED ARTICLE: UK newspapers plan to reach 60% goal.

In April 2000, the UK newspaper publishers and British newsprint producers agreed with the UK government that newspapers should contain 60% recycled content by the end of 2001, rising to 65% by the end of 2002 and 70% by the end of 2006. These targets are subject to review at the end of this year and in two years' time. According to Forest Industries Intelligence, the reviewers will take into account the availability of additional re-processing capacity (which is dependent on whether a decision to increase investment is reached this year); the growth in consumption of newsprint, which is currently about 2.5%/year; the quality of the recycled newsprint available; determining if poor quality fiber significantly hindered the production process and damaged the end product; and any uncompetitive pricing of recycled newsprint by newsprint suppliers.

An audit by Forest Industries Intelligence covering July-December 2000 revealed that the gross amount of wastepaper used in UK newspapers (as a percentage of total newsprint consumed) was 62.6%. The amount of wastepaper consumed by UK newsprint producers as a proportion of their production was 109%.

The report adds that, while publishers are encouraged by the achievement, "they are also cautious about the sustainability of the figure reached last year."

RELATED ARTICLE: Scottish papermaker launches New grade.

In response to the UK and European Union's demand for greater recycling, Scotland-based papermaker Inveresk teamed up with Spectra Packaging Display to launch what it claims is the first packaging substrate that is fully recyclable and biodegradable. Branded Clancoat, the new product is being marketed as the natural alternative to packaging film and PE coated papers. It is designed to appeal to environmentally-conscious papermakers, wholesalers and end-user companies, as well as individuals in the growing market for copier and laser-quality paper. Inveresk says the new product will also help companies meet new EU and UK government targets for recyclable packaging and reducing landfill.

Clancoat works by employing a moisture vapor barrier coating on the inside of the wrapping material, leaving the outer surface suitable for high-quality print while also incorporating an anti-slip element to aid handling. Mark Smith, technical manager of Inveresk, explains, "We set out to create a product that would fill a gap in the market and we are Confident that it will assist companies in meeting the new obligations for recycling and waste reduction being driven by the UK government and on an international scale."

Britain currently produces more than 400 million metric tons per year of waste, most of which is sent to landfill. British business has a recycling rate of 35%, compared to a household recycling rate of only 10%, but that is still poor compared to Germany, Austria, and the Netherlands, where recovery rates are as high as 50%.

The Waste Resources Action Programme (WRAP) was launched by the Government last year to promote Waste Strategy 2000, a plan to help the UK comply with EU environmental regulations, including the Landfill Directive. WRAP's target is to increase the average recycling rate for British business from 35% to at least 60%.

RELATED ARTICLE: Recycling trends in Asia.

By Bill Moore, Moore & Associates

While total exports of recovered paper to the Asia/Pacific Rim region from the United States have been down in 2001, if it wasn't for China the U.S. export market would probably be in complete disarray. Using the largest recovered paper grade--old corrugated containers (OCC)--as a benchmark, U.S. prices for the first half of the year 2001 have been the lowest for a six-month period since the first half of 1999.

While the U.S. paper industry (and particularly the containerboard sector, the most important user of 0CC) has been in the doldrums, China's usage of OCC has exploded. The following graph shows a long-range history of U.S. 0CC exports to three of the United State's most important recovered paper trading partners--Canada, Korea, and now China.

As the chart shows, Canada and Korea, which are traditionally major users of U.S. 0CC, have reduced their consumption this year compared with last year. But China--which was a small OCC consumer in the early 1990s--has dramatically increased its usage over the last three years.

While the containerboard business has been sluggish in China, its use of American 0CC (and European 0CC) has been increasingly rapidly. Based on new project announcements, usage will continue to increase. India--a smaller but still significant user of U.S. OCC--increased its imports from the U.S. sharply in the first half of 2001 compared with 2000.

Due to very low prices in the first half of 2001, the U.S. 0CC supply has contracted due to the loss of the highest cost incremental collected tons. When the domestic containerboard sector picks up, OCC prices should rise rapidly. This could also be caused by almost any increase in Asia/Pacific Rim demand.

Bill Moore is president of Moore & Associates, a paper recycling consulting firm based in Atlanta, Georgia, USA. He can be reached at [phone] or through the company's website at www.MARecycle.com.