Pulp & Paper Industry: Prospects For Decarbonisation

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Mark Chadwick Managing Director, Sustainability Solutions – EMEAI, ENGIE Impact
Joelle Thomas Senior Manager, Sustainability Solutions – EMEAI, ENGIE Impact
Malgosia Rybak Climate Change and Energy Director, Cepi

ENGIE Impact sits down with Cepi (Confederation of European Paper Industries) to discuss the dilemma facing energy-intensive businesses on their pathway to achieving decarbonisation. Listen to the discussion below.

 

The pulp and paper industry is the fifth most energy-intensive in Europe and demand for its products is only growing, driven by the exponential rise in e-commerce. The current European energy crisis and the rapid rise in energy prices is having a disruptive impact across the pulp and paper industry, forcing temporary mill closures, reduced production levels and even bankruptcies. All indications are that electricity prices will not normalise before 2024, with gas taking even longer.

Mark Chadwick, Managing Director, Sustainability Solutions – EMEA at ENGIE Impact led the discussion between ENGIE Impact and Cepi (Confederation of European Paper Industries), regarding the impact this crisis is having on the pulp and paper industry from an energy and decarbonisation perspective. At the core of this conversation is the dilemma facing energy-intensive businesses: how to navigate the delicate balance between maintaining the continuity of operations and continuing to pursue long-term sustainability targets.

Malgosia Rybak, Climate Change and Energy Director at Cepi, argues that the current energy crisis is not a short-term issue but is going to irreversibly change the way we produce paper and paper products in Europe. The goal of climate neutrality has not changed, but the journey to get there suddenly looks bumpier. The focus now is on surviving the crisis and continuing to invest in green innovation, as what will ultimately make the difference in decarbonising the industry in the long-term is breakthrough technologies that reimagine the way paper products are produced. And the way this will be achieved is to work on legislation to drive investment.

ENGIE Impact’s Joelle Thomas, Senior Manager, Sustainability Solutions – EMEA, concurs, emphasising that legislation to enable a huge increase in the availability of green energy is the key to a successful transition. Companies must be able to obtain renewable electricity, an important pillar of decarbonisation. The next step would be to develop the markets for bioenergy solutions, such as biogas and biomethane. These solutions are mature and available today, but their markets tend to be localised and fragmented. Here as well, policy must align with industry and send a clear signal that these fuels will be available to meet future demand, giving companies the confidence to invest in sustainable technologies. Thomas firmly believes that government policy holds the key to the success or failure of the energy transition.

Over the course of this discussion, the three panelists discuss the feasibility and importance of sustainable biomass as a heat source for the pulp and paper industry, the biogases and the further electrification of heat, the technology of heat pumps, integrating renewables into production sites, the potential for paper mills to be turned into energy hubs, community solar electricity programmes and the capacity for mills to supply waste heat to district heating systems.


Transcript snippet edited for clarity

Mark: I'm very pleased to be joined today by Malgosia Rybak, the Climate Change and Energy Director from Cepi. I'm also joined by my colleague, Joelle Thomas, and together we're going to explore what is happening in Europe from an energy and decarbonisation perspective, and how that’s impacting the paper and pulp industry in Europe.

The question I would ask to kick us off and set the scene is, how are these price increases impacting the pulp and paper industry? How are we expecting Cepi members to react? And what advice Cepi is offering?

Malgosia: I think that the first thing that we need to mention is that for our industry and other energy-intensive industries, the prices have been rising since September of last year. So, the first signals from our members and the first movement in the regulatory sphere that we saw was a year ago. We started to see prices that we haven't seen before, especially for natural gas. And, the Russian aggression on Ukraine didn't make the situation easier. What we see right now, and the information that we gather from our members is similar across the board. When it comes to energy-intensive industries, actions include temporary closures, reducing production levels, and renegotiating contracts. But there are more severe cases like filing for bankruptcy. So, when we think about energy prices, it's not only about one day at a time, it's really about irreversible changes to the way that we produce in Europe. And the longer this situation persists, the longer we don't have a particular solution for the industry, and the more threatened we are.

Mark: So the changes that we're seeing now are expected to be structural in some cases. The point about bankruptcies is, of course, the most fundamental structural change in that we may lose some industry participants in the face of this energy crisis. Is that something we're currently seeing? Or is it something that we are expecting to see?

Malgosia: We’re seeing it in certain countries, and that’s without support from policymakers. We can plan on seeing it more and more across Europe.

Mark: Quite sobering.

Listen to the recording above for the full conversation

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