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#344 - Industries Can Benefit From Regulation, 30-Jun-1993

It is fashionable these days to claim that environmental regulations
harm American industry, damaging its competitive position in world
markets. However, this is not necessarily true. In some instances,
strong regulation can help industries innovate and prosper.

Take the American paper industry. The paper industry has traditionally
used chlorine-based chemicals to bleach wood pulp, the raw material for
making paper. Chlorine bleaching of paper in the U.S. gives rise to
about 150,000 tons of persistent toxic pollutants each year, including
substantial quantities of dioxin. All of this is dumped directly into
the environment near the mills. (A good-sized paper mill uses 10 to 70
million gallons of water EACH DAY, so they always locate on rivers or
lakes.)

In 1983 the state of Wisconsin documented the presence of high levels
of dioxins in fish downstream from paper mills and began closing
affected commercial fisheries.[1] Similar findings of dioxins in fish
below paper mills had already begun to appear in Europe. In Europe,
regulatory officials reacted by clamping down on the paper industry,
pressing for an end to the use of chlorine. The phrase TCF (totally
chlorine free) began to come into use.

In the U.S., however, regulatory officials took a different approach.
U.S. EPA [Environmental Protection Agency] immediately fell into line
with the wishes of the pulp and paper industry, refusing to set a firm
federal standard for dioxin in waters below pulp and paper mills.
Throughout the '80s, EPA encouraged states with pulp and paper mills to
set their own water quality standards for dioxins near the mills. This
created a decade-long brawl with the paper industry pushing
aggressively for loose dioxin regulations in 21 states.[2]

While the American paper industry mounted a state-by-state campaign to
weaken dioxin regulations, European regulators and paper industry
officials worked together to phase out the source of the problem--
chlorine. By the early 1990s, for example, the German paper industry
had achieved totally chlorine free paper production. Today the rest of
Europe is not far behind.

While these divergent responses were developing in the U.S. and Europe,
the environmental community on both continents was relentlessly
documenting the damage caused by chlorine, and was getting the word
out, so consumers began to demand chlorine-free paper products. (For
example, RACHEL'S HAZARDOUS WASTE NEWS has been printed on non-
chlorine-bleached paper since 1988.)

Here again, we see a contrast between the European response and the
U.S. response to changing market demand:

In its promotional literature, Soedra Cell, a Swedish manufacturer of
chlorine-free pulp, writes:

"Soedra Cell produces pulp, and pulp alone. We are in fact the largest
producer of market pulp in Europe. This, of course, gives us certain
responsibilities, and we were one of the few producers of sulphate pulp
who immediately took up the TCF (totally chlorine-free) challenge.

"As we see it, the right approach to the problem of chlorine is very
simple: there is considerable pressure on the market against bleaching
with chlorine-based chemicals. We as a producer accept this. Our aim is
to supply the products the market demands.

"For us, TCF means that we use no chlorine derivatives whatsoever in
our production. No chlorine gas. No chlorine dioxide. In other words 0
percent chlorine."

By way of contrast, in February, 1992, PULP AND PAPER WEEK reported
that A.D. "Pete" Correll, then-chief operating officer, now chief
executive officer, of Georgia-Pacific wrote to customers saying that
the firm "can find no scientific evidence to indicate measurable health
impacts linked to the release of properly treated mill effluents from
our pulp and paper mills that use chlorine in the United States... The
scientific evidence clearly indicates that our level of use of chlorine
is environmentally safe." Later in the letter he wrote, "If you feel
you must have 'chlorine-free' bleached pulps which cannot have used
even chlorine dioxide and your markets will accept the difference in
quality and performance, then Georgia-Pacific can no longer be a supply
source."

The plain fact is that the world is beginning to demand chlorine-free
paper. If Georgia-Pacific won't supply it, then some European
manufacturer will. It is worth noting that U.S. firms (Scott Paper and
International Paper, and perhaps others) have held patents on chlorine-
free processes since the 1970s, but they have not developed them.
Instead, they have insisted on their right to use chlorine and create
"negligible" amounts of dioxin, no matter what the customer may want.
As a result, every year control of the intellectual property of
papermaking --designs, patents, royalties --worth millions of dollars,
and the key to competition in the next century, is being lost to
European companies.[3]

The dioxin/chlorine problem came upon the American paper industry at a
bad time, just when the disastrous effects of Ronald Reagan's "supply
side economics" (which George Bush called "voodoo economics," then
embraced) had hit. Like many U.S. businesses, the paper industry got
caught up in the merger mania of the 1980s. The Tax Reform Act of 1981
had made it attractive to get rid of tangible assets and to go into
debt. As a result, many paper companies took on a load of debt in the
1980s that they now cannot sustain. Partly to service this debt, and
partly to liquidate assets, some paper companies have been cutting
trees (the raw material for paper) faster than natural growth can
replace them. Both old growth trees and plantation trees are being cut
faster than they grow back. For example, the former chief forester for
Louisiana-Pacific estimates that his company cuts trees at 225 percent
of the expected growth rate.[4] Reasonable regulation on the use of
old-growth forests would prevent this self-destructive (and eco-
destructive) behavior by paper companies. Furthermore, sensible
financial regulation of mergers and acquisitions would have prevented
the massive slide into debt that characterized the '80s and which is
now working to the advantage of foreign competition.

The American pulp and paper industry is also guilty of plain bad
management. For example, it has failed to integrate recycling
technology into its mills. The ability to make paper from recycled
stock could keep mills open as tree cutting is reduced to sustainable
levels.

The industry has also failed to recognize that phasing out chlorine
would bring important additional benefits:

** Obviously, by eliminating chlorine-based chemistry, the pulp and
paper industry, could eliminate the production of thousands of pounds
of persistent, toxic, organochlorine pollutants. These pollutants,
which include dioxin, pose a serious threat to the environment and
human health downstream from pulp mills using chlorine-based bleaches.
In many places, the fishing industry is threatened as whole species are
being depleted by organochlorines.[5]

** In addition to preventing organochlorine pollution, eliminating
chlorinated chemicals from the pulp and paper industry would allow pulp
mills to close the loop and reuse their process water. (Currently, pulp
mills are forced to dump their process water because the chlorine-based
chemicals prevent reuse; the corrosive nature of chlorine would destroy
equipment if the water were reused.)

** If pulp mills eliminate chlorine and close the loop, they can cut
their use of fresh water by as much as 88 percent (cutting water use
from 4000 gallons per air-dried metric ton [ADMT] of pulp to 500
gallons per ADMT). Based on 1991 bleached-pulp production figures, if
U.S. mills closed the loop, they could save 94 billion gallons of water
each year.

** Although treatment of pulp mill effluent will still be necessary to
remove solids and adjust BOD [biological oxygen demand], COD [chemical
oxygen demand] and pH [acidity], companies should realize significant
cost savings by not having to meet increasingly stringent limits on
dioxins, furans and AOX [chlorinated chemicals] discharges. Further,
sludge from settling ponds is now considered a hazardous waste because
of the chlo-rine content. If chlorine is eliminated, the sludge would
consist of woody residues and could probably be sold as a mulch and
become a value-added product of the mill.

** As mentioned above, many of the chlorine-free alternatives allow for
the recovery of the bleaching chemicals. If all chlorine-based
chemicals are eliminated and the loop is closed, pulp mills can also
recover significant percentages of caustic soda (sodium hydroxide).
Estimates place the recovery rate well above 50 percent, in some cases
as high as 90 percent.

** Currently, chlorine and caustic soda are produced from brine via
electrolysis, one of the most energy-intensive manufacturing processes
known. If chlorine is eliminated from the pulp and paper industry and
caustic soda is recovered, the need for electrolysis will drop sharply.
During 1992, the industry used 4.8 billion kiloWatt-hours of energy
producing chlorine, much of which could have been saved by going
chlorine-free.

** If pulp mills can close the loop, they can produce paper at lower
cost. Industry analysts estimate that chlorine-free, closed loop mills
can produce paper products for 30 percent less than their chlorinated
counterparts.

Strict regulation wouldn't solve all of this industry's ills, some of
which were brought on by an imprudent faith in voodoo economics. But
strict regulation could provide a guiding hand toward a sustainable
future.

--Mark Floegel and Peter Montague

=====

[1] Carol von Strum and Paul Merrell, NO MARGIN OF SAFETY (Washington,
D.C.: Greenpeace, 1987). Wisconsin findings discussed on pgs. V-6 and
V-7 but the entire report is worth reading. Still available for $10.00
from Greenpeace, 1436 U Street, N.W., Washington, DC 20009; phone
Sanjay Mishra at (202) 319-2444.

[2] EPA's failure to set national dioxin standards is documented in
"Testimony of Ellen K. Silbergeld, Ph.D., Before the Human Resources
and Intergovernmental Relations Subcommittee, House Committee on
Government Operations on The Human Health Effects of Dioxin and Ongoing
Scientific Assessment of Risk, June 10, 1992."

[3] For example, PULP AND PAPER (March, 1993, pg. 104) lists suppliers
of of oxygen delignification equipment. Sunds, a Finnish company, owns
44 percent of the market; Kamyr, a Swedish company, owns 35 percent of
the market; Impco, an American firm, has 13 percent and the remaining 8
percent belongs to "others."

[4] See John Ross, "Timber Giant Eyes Siberia to Save Mexican
Operations." EL FINANCIERO INTERNATIONAL [an English-language business
newspaper published in Mexico City] August 17, 1992, pg. 14.

[5] See Bette Hileman, "Concerns Broaden over Chlorine and Chlorinated
Hydrocarbons," C&EN [Chemical & Engineering News] April 19, 1993, pgs.
11-20.

Descriptor terms: regulation; regulations; costs; economics; pulp and
paper industry; chlorine; wildlife; fish; epa; europe; wi; water
quality regulations; soedra cell; sweden; tcf; georgia-pacific; scott
paper; international paper; supply side economics; voodoo economics;
tax reform act of 1981; taxation; debt; louisiana-pacific; recycling;
electrolysis;