New Report: The Pulp and Paper Industry Can Save Jobs by Becoming More Energy Efficient

http://inthesetimes.com   Saturday Jul 20, 2013 10:00 am

By Kari Lydersen

The pulp and paper mill industry may be able to avoid large cuts in jobs by reducing energy costs.   (Ann Baekken/ Flickr / Creative Commons).

The complex relationship between efficiency, productivity and employment has been debated at great length by academics and policymakers, who often come to widely differing conclusions about whether jobs will inherently be sacrificed as industry gets more efficient. A prime example is occurring in the U.S. pulp and paper industry, which, over the last decade, has seen productivity and exports grow, even as hundreds of mills closed and 100,000 workers—30 percent of the industry’s workforce—lost their jobs.

But a new report released last week by the environmental think tank World Resources Institute (WRI) proposes that by investing in overhauls that increase energy efficiency, thereby cutting costs on electricity and improving productivity, the country’s paper and pulp mills—and specifically the aging mills in the Midwest—can save jobs that might otherwise be lost, while at the same time reducing greenhouse gas emissions.

Nate Aden, a climate and energy program research fellow at WRI, noted that while there is often a complicated and delicate balance between achieving environmental benefits and retaining or creating jobs, most of the reforms laid out in the report are “agnostic” in terms of job impact at any given plant, and may even create jobs in such cases where they involve specialized technology that needs a skilled operator.

Despite seeing an 8 percent increase in value-added productivity between 2002 and 2011, the pulp and paper industry is struggling due to changing paper demand—especially as people use less printing paper and newsprint—as well as impending environmental regulations that will require new investments in their on-site boilers.

The pulp and paper industry is the third most energy-intensive manufacturing sector, behind only fossil fuels and chemicals, the WRI report notes, making the mills especially vulnerable to spikes in energy prices. That’s why, WRI argues, reducing energy use can help paper and pulp mills survive. Its study and recommendations are targeted specifically at the 93 pulp and paper mills in the Midwest, which are on average more than 90 years old—15 years older than the average for the nation’s fleet as a whole. Within the Midwest, Wisconsin and Ohio have the most mills, many of which are located in rural areas without many other sources of employment.

In 2006, Butch Johnson purchased a paper mill in north central Wisconsin that had recently closed and gone bankrupt in large part because of a recent rise in the cost of energy. About 300 people lost their jobs when the mill closed, causing great distress across the surrounding community of about 2,500 people, including a decrease in tax revenues.

“We see way too many paper mills closing down all across the country,” said Johnson during a webinar about the report, noting that in recent years, seven mills have closed just in his region alone.

A special report in the Milwaukee Journal-Sentinel described the impact of mill closures on Wisconsin:

Each shutdown means a loss of 300 to 600 jobs, in turn draining hundreds of millions of dollars from the region and creating an economic drag that rivals the days of automaker shutdowns in Michigan. An industry that thrived for generations on a tight, homegrown loop—from the forest to the mill to the printer and often back to the mill for recycling—finds itself at the mercy of Wall Street hedge funds and equally unforgiving global economic and political forces.

Johnson was able to reopen the mill, which he named Flambeau River Papers, and rehire more than 300 people thanks in part to government loans and grants, and dropping energy prices. But it still has not been a smooth road, as some loans fell through and plans for a biodiesel refinery didn’t work out.

“When it comes to selling paper, it’s all about dollars and cents, because a lot of the products we sell are commodity-driven,” Johnson said. “Conservation is our easiest dollar.”

Flambeau workers are represented by the United Steelworkers (USW), and a union pulp and paper sector expert provided peer review and feedback on the WRI report.

One way paper and pulp mills can cut energy costs is through increased use of recycling. The report notes that increased use of recycled paper has “by far the greatest energy saving potential” compared to other solutions, like different ways of drying and bleaching paper and better maintenance of steam traps. But recycling is a controversial topic in the industry, in part because it could mean fewer jobs, as less total paper and pulp is needed. It can also impact the quality of paper and complicate the production process. On the other hand, while a shift to recycling could mean fewer workers are needed in the short term, if it helps a mill’s bottom line enough it could mean the difference between the mill surviving for years to come, or shutting down.

Aden noted that increased use of recycling also has important environmental benefits that can’t be ignored, especially given the threat of climate change.

“The alternative for the paper is that it ends up in a landfill, where it will create methane emissions as it degrades—obviously a problem in light of global climate change,” he told Working In These Times.

Investment in new equipment that increases productivity can also often yield environmental benefits. Depending on the situation, such investments could create new jobs, or they could mean job cuts. In May, the International Monetary Fund released a working paper called “Productivity or Employment: Is it a Choice?” that suggested that increased productivity is correlated with employment losses. Yale University economist William Nordhaus took the opposite view in a 2005 paper, finding that “more rapid productivity growth leads to increased rather than decreased employment in manufacturing. The results here suggest that productivity is not to be feared—at  least not in manufacturing, where the largest recent employment declines have occurred.”

Aden said that given the complexities of the industry and the trade-offs involved in any major technological shifts, WRI was not advocating specific solutions for mills, but rather laying out information to help them make their own choices. "The situation for mills can be seen as symbolic of larger questions and opportunities in American manufacturing," says Aden, framing it as a question of “how U.S. manufacturers can adjust to emerging environmental and economic realities, and allow the communities who are dependent on these manufacturers to survive economically and socially.”

“That’s part of bigger question we’re trying to grapple with now,” says Aden. “There’s no single easy answer. There are starting to be solutions to focus on, and hopefully energy efficiency is one of them.”

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