World Resources Institute

Sustainable Enterprise Program A program of the World Resources Institute

CHLORINE AND THE PAPER INDUSTRY

Chlorine And The Paper Industry is an exercise prepared by Alan R. Beckenstein and Brad Webb,the Darden School, University of Virginia, and Frederick J. Long and Barbra L. Marcus, the Sustainable Enterprise Program (SEP). It is intended for educational purposes only. Copyright O1994 by the Sustainable Enterprise Program and Darden.

This exercise is a chapter in the book Stakeholder Negotiations: Exercises in Sustainable Development (1995) edited by Alan R. Beckenstein, Frederick J. Long, Matthew B. Arnold and Thomas N. Gladwin. The book contains six exercises that illustrate how different institutions place competing demands on the natural environment, how they attempt to incorporate these demands on the natural environment, and how they attempt to incorporate these demands into a sustainable development strategy.

For more than a decade, WRI's Sustainable Enterprise Program (SEP) has harnessed the power of business to create profitable solutions to environment and development challenges. BELL, a project of SEP, is focused on working with managers and academics to make companies more competitive by approaching social and environmental challenges as unmet market needs that provide business growth opportunities through entrepreneurship, innovation, and organizational change.

Permission to reprint this case is available at the BELL case store. Additional information on the Case Series, BELL, and WRI is available at: www.BELLinnovation.org. CHLORINE AND THE P!ERINDUSTRY

uring the 1990s, the pulp and paper Agency had initiated a new regulatory industry was fesponding to pressure process, commonly known as the “cluster D over a number of environmental and rule,” to develop regulations based on better natural resource issues, including information and science. The eventual form deforestation, recycling, and pollution. of the cluster rule was not known to pulp and Foremost among the problems facing the paper companies in late 1994. However, industry was dioxin, an extremely toxic companies and environmentalists sensed that substance produced by paper companies in the cluster rule was, at best, a first step in their chlorine bleaching processes. Many developing better communication and more environmental and community groups, effective outcomes. concerned about damaging health effects of exposure to dioxin, were calling for a All stakeholders were interested in complete elimination of chlorine from all developing an outline for the future course of industrial processes. Companies, viewing the the industry’s environmental actions. While scientific analysis as inconclusive, were candid discussion would entail risks for all considering modifications to chlorine stakeholders, the participants believed that bleaching to reduce dioxin emissions, but new solutions could benefit their individual were unwilling to spend billions of dollars to organizations, the paper industry, and society put in place new equipment that could as a whole. produce “totally chlorine-W’ paper. Forward-thinking leaders have proposed a Business people, environmentalists, and dialogue session on the environmental agency leaders were beginning to identify the future of the pulp and paper industry. You shortcomings of rancorous debates over will represent one of three pulp and paper environmental issues like chlorine use and companies, the U.S. EPA, or a leading dioxin. The U.S. Environmental Protection environmental group in this dialogue. waste disposal (including chlorine byproducts) had intensified. The issue of PAPER INDUSTRY mandating waste paper content for new paper products was also being debated. Many of Note: Although this exercise is based on these debates were similar in form - actual stakeholders and actual indurtry data, environmentalists and business people the following meeting scenario is entirely attacked each others’ widely divergent fictional, and the positions of each group have scientific, health, and economic data. been modijied for educational purposes. Outcomes were usually unsatisfying to all stakeholders, a reflection of mistrust and During the summer of 1994, an informal misundmtanding. luncheon was manged in a private room at Duke Zeibert’s Restaurant in Washington, Of the various environmental issues that they D.C. The chief executive officers (CEOs) of had faced in recent years, CEOs of pulp and several pulp and paper companies had invited paper companies were most vexed by the the Administrator of the U.S. Environmental public attacks on their use of chlorine to Protection Agency (EPA) and the Executive bleach paper. Chlorine use produced waste Director of Greenpeace USA to a “power products called organochlorines, which lunch” at which some “visioning about the included a particular class of compounds future environmental strategy of the paper called dioxins. The industry produced less industry” would take place. Although the than one pound of dioxin per year; still, event was an unusual way of doing business scientific evidence suggested links between for EPA and Greenpeace, their leaders could even minute levels of dioxins and cancer. not resist their curiosity about such an While the evidence was not conclusive, intriguing topic. The EPA Administrator had environmentalists argued that such evidence been promised by the CEOs that this lunch should provide sufficient cause for EPA to would not be an attempt to lobby the EPA. ban the use of chlorine, requiring companies Moreover, the presence of Greenpeace’s to adopt totally chlorine-free (TCF) Executive Director guaranteed that the agenda processes. Others felt that conversion to a would be novel. less toxic process, called elemental chlorine- free (ECF), that replaced chlorine gas with The pulp and paper industry (and the broader chlorine dioxide would suffice to reduce forest products industry) faced a large number public risk. Still others felt that the of environmental issues in the 1990s. Forest considerable economic impacts that would management issues - endangered species result from such conversions were protection and harvesting practices - had unwarranted, given the inconclusive data. All received sufficient attention that President stakeholders viewed chlorine as a Clinton held a conference on the topic in the “centerpiece” issue; significant risk and Pacific Northwest in early 1993. Public opporhmty were at stake. pressure and governmental regulation on

This exercise was prepared by Alan R Beckenstein and Brad Webb, the Darden School, University of Virginia, and Frederick J. Long and Barbra L. Marcus, the Management Institute for Environment and Business (MEB). It b intended for instructional use only. Copyright 0 1994 by MEB and Darden.

S&h& Negotiations: Ekcrckes in SUrtaiMbLe Dewlopment A primary motivation for a broader, more of Greenpeace, other environmentalists, and open discussion of chlorine and other federal agencies. A decisionto ban chlorine eawironmental issues was a regulatoryprocess and chlorine compounds would shake the called the ‘‘cluster rule.” In 1990, the EPA financial foundations of many U.S. pulp and had proposed to structure regulations on an paper producers. EPA estimated that the high industry basis, rather than the traditional ECF standard would cost $30-$45 million per single-media approach of regulating water, air facility, and $4 billion in total (for 90 U.S. and solid waste issues separately. The paper bleached kraft mill facilities). Several industry had been the first cluster selected by industry estimates placed the total costs closer EPA to test its new policy approach. This to $10 billion. Tbe costs of ECF, if mandated, approach promised that EPA would become could be three times higher. Such investment better informed about the realities of pressures could not have come at a worse competition and the costs and benefits of time for the industry, as the recession of the environmental investments in the pulp and late 1980s had reduced companies’ profits paper industry. It also held out the possibility and increased their debt-equity ratios. of EPA understanding the cross-media [Appendix A contains some estimates of the tradeoffs of regulation (e.g. a decrease in air costs to industry of the proposed regulations.] emissions might be accomplished by increasing water emissions). Both the Rather than turn away from public pressures, corporate leaders and environmentalists had some industry leaders resolved to face EPA, been somewhat disappointed with the Greenpeace and other stakeholders directly. preliminary results of the cluster process. By sharing interests and ideas, they might EPA was expected to adopt a set of standards create a more certain path for their at a “high” ECF level (more than simple companies. While questioning the need for chlorine dioxide substitution, but less than ECF in their production facilities, they feared TCF). Still, they saw hope in the an even worse option. EPA could force methodology - dialogue - that the cluster conversion to ECF now and require TCF later. rule had applied. Knowing the future directions of regulation now would help promote efficient investment Some companies preferred a minimum ECF policies. Perhaps EPA would consider standard (chlorine dioxide substitution). This voluntary compliance goals based on an would lower, but not completely eliminate, informal “covenant” While the CEOs were emissions of organochlorines including far from unanimous in supporting proactive dioxin. Environmentalists, led by measures, a number of them agreed to Greenpeace, argued that this approach was participate in the discussions with EPA and insufficient. While using the rather Greenpeace. inflammatory phrase “The Product is the Poison” as its motto, Greenpeace had At the lunch at Duke Zeibert’s, cordial marshalled significant scientific support for discussions led to a specific proposal. The its position that chlorine should be phased out corporations, EPA, and Greenpeace would of all industries over a period of time. The sponsor a “Forum on the Environmental pulp and paper industry should be the first to Future of the Pulp and Paper Industry.” Each adopt TCF technologies, Greenpeace argued, organization would select a team of senior because these technologies had been proven executives to attempt to define collectively a feasible and economic in marketplaces such “green” path for the industry. To simplify the as Sweden, Germany and Austria. process and to entice Greenpeace to participate, the focus of this initial forum Paper industry executives questioned the would be “Chlorine.” scientific and economic bases of the analyses

Erwcise 4: Chlorine and the Paper Industry The forum would entail presentations by all methods of pulping were used at these mills. stakeholder teams and attempts to induce In haft pulping, the wood chips were boiled voluntary collaboration among diverse teams. with caustic soda, which efficiently removed One objective would be to propose a the lignin and resins from softwoods and voluntary program of long-term goals that produced a dark-brown, strong pulp. [See companies would attempt to meet, with the Appendix B for a description of the assistance of EPA, Greenpeace, and other papermaking process.] stakeholders. The quid pro quo for the companies would be an informal Pulp and paper mills consumed large amounts understanding (the covenant) by the non- of wood and generated great amounts of company stakeholders to shape future waste products, including over 1.5 trillion regulation in the direction of the voluntary gallons of waste water in 1992. In general, program, supplemented by the knowledge the quality of waste discharges was gained during the program. The burning improving, but pulp and paper production still question was whether even the companies resulted in large amounts of pollutants participating in the forum had sufficiently discharged to surface waters and to the air. similar circumstances and objectives to build The industry also generated large amounts of consensus on a long-term environmental industrial sludge, which had to be landfilled strategy for the industry. or otherwise disposed of, as a waste treatment byproductZ Each senior executive team would later report to its governing body. For the paper In gentral, the U.S. pulp and paper industry companies, the teams would report to the was very cyclical and closely followed the environment committee of the board of performance of the U.S. economy. The directors. The EPA team would report to the recession experienced in the United States Administrator and her senior staff. The during the early 1990s was severely felt by Greenpeace team would report to the the industry. In fact, 1993 represented the Executive Director and the policy committee fourth consecutive year of declining profits, of the board of dimtors. resulting primarily from severely depressed prices for the industry's products. It was THE INDUSTRY believed that prices in the industry had The pulp and paper industry was one of bottomed out by 1994 and would soon rise, America's largest with more than 500 which would improve profitability. manufacturing facilities owned by over 200 companies located in 42 states. Amding to The pulp and paper industry was a business the American Forest and Paper Association that required significant capital investment, (AF&PA), paper and allied products sales about $1.4 billion per year. Investment in totaled $129 billion (4.5% of U.S. new mills would often be recouped over a ten manufacturing output) in 1993.' to twenty year time period. Most companies in the industry funded capital expansion There were two types of facilities in the through the use of long-term debt if funds for industry. Integrated pulp and paper mills such expansion could not be generated produced pulp on-site from virgin wood fiber, internally, When building facilities overseas, secondary fiber, or non-wood fiber, which American pulp and paper companies was then made into paper or paperboard generally built plants to meet U.S. health, products. Non-integrated paper mills safety, and environmental standards in order manufactured paper or paperboard products to avoid potential litigation in the event of an from pulp produced elsewhere. Various accident or environmental release.

S&h& Negotiations: Exercises in Swm'nable Development The pulp and paper industry was truly global, Approximately 15,000 chlorinated and U.S. companies faced competitors from compounds are currently in industrial use, Scandinavia, Canada, Japan, China, and including pharmaceuticals, plastics, and Brazil in a worldwide market. End products disinfectants for drinking water: The largest included printing and writing papers, tissue single use of chlorine is in plastics such as papers, and packaging and containing polyvinyl chloride (PVC). The pie chart materials. Consumer demand for the below represents industry percentages of total brightness, strength, and softness of these chlorine use. products varied widely. For example, Gennan consumers were generally well-educated about environmental issues and had created a welldeveloped market for both TCF and ECF manufacture 35.0% paper products. German regulation was also supporting the reduction or elimination of PI chlorine bleaching. ter purification 5.0% In contrast, the market for TCF products in the United States and other major countries was rather small, less than 1% of the total market. TCF products were viewed as beiig Pulp & paper 14 0% of generally inferior quality in terms of Solvents 18.0% brightness, feel, and look. Awareness of environmental issues in the United States generally lagged those in Empe; still, it was possible that the market for TCF products The chlorine used by the paper industry could “take off once some threshold level of during the bleaching process combines with awareness was reached. This argument was organic molecules from the wood to form made by Greenpeace as it attempted to create organochlorine compounds, which are then markets for environmentally friendly paper discharged in the mill’s effluent. Waste is products. typically processed in a secondary treatment plant before release to surface waters or to Environmental pressures had previously industrial sewers leading to municipal sewage influenced demand for paper products. treatment plants. Organochlorine compounds During the 1980s and early 1990s, have been found in fish and sediments government regulation and increased downstream from paper mills. consumer awareness led to a significant rise in the demand for recycled products. As a In 1994, the average kraft mill produced resuit, the percentage of the fiber supply used between 600 and 1,OOO tons of pulp per day, to produce paper that was recycled grew from which translated into a daily production of 23% in 1978 to 30% in 1991. This percentage between 30 and 80 tons of organochlorines. was expected to rise.’ As of 1994, over 300 chlorinated organic compounds had been identified in paper mill Organochlorine/Toxics Overview effluent. The presence of organochlorines in Chlorine is a highly reactive gas at room mill effluent was typically determined temperature and appears only in combined through an indicator test which measured the form (e.g. sodium chloride) in nature.4 It is an presence of adsorbable organic halogens essential precursor of many industrial (AOX). compounds, and few other chemicals are produced worldwide in larger quantities.’

Erercisc 4: Chlorine and tbe Paper Industry organochlorines have been associated with a that dioxin probably causes cancer, as well number of animal and human health risks. as a range of honnone and immune system They have been liito cancer in humans, disorders, in humans. The study provoked as well as non-cancer problems including more disagreement. Environmentalists endocrine, immune, and raeurological system found the evidence to be compelling. dysfunction.’ Many organochlorines have Industrial leaders found it inconclusive.1o been identified as carcinogenic (cancer- causing), mutagenic (chromosome- In addition to dioxin and other damaging), or teratogenic (causing birth organochlorines, regulators were concerned defects). Environmental groups claim that about other measllzes of paper mill effluent, organochlorines are uncommon in nature, including biochemical oxygen demand while industry groups claim they are abundant (BOD) and color. BOD measured the in marine ecosystems.* Some are bio- quantity of oxygen required for biological accumulative, in that they remain in the flesh degradation of the organic matter in the of animals that ingest them for extended effluent, including cellulose fibers. If the periods of time, and become more BOD of the mill effluent was high, there concentrated as they pass through the food was less oxygen available for aquatic life in chain. Bioconcentration of organochlorines the waters downstream of the paper mill, has been observed in salmon, marine mammals, resulting in “dead zones.” Millions of and birds of prey. Well-known organochlorines gallons of proms water were used daily by include DDT, PCBs and chloroform. the average kraft mill, and the bleach plant Chloroform, which is known to cause liver effluent carried with it the dark brown color disease and is a suspected human carcinogen, is of the pre-bleached pulp, resulting in severe contained in paper mill effluent The average and unsightly discoloration of surface U.S. kraft paper mill releases from 400 to 660 waters into which the effluent was pounds of chloroform per day. discharged. Total suspended solids, or TSS, was a measurement of the total quantity of Dioxin, a name attached to an entire family of solids present in a specified discharge chemicals, is the best known of all volume. organochlorines associated with effluent discharges from paper mills. Furans are a ’hen& in Environmental Regulation close chemical relative of dioxins. A joint In November 1993, the EPA proposed an study conducted by EPA and the pulp and integrated rule, known informally as “the paper industry found dioxin in “treated cluster rule,” for the pulp and paper effluent, wastewater sludges, and bleached industry. The proposed cluster rule pulp from mills that use chlorine-based combiied elements of the Clean Water Act proces~es.”~Although the U.S. pulp and and the Clean Air Act and was intended to paper industry produced very small quantities reduce significantly releases of air and of dioxin (total annual production of less than water pollutants from pulp and paper 1 pound for all U.S. pulp and paper industry facilities. [To simplify this exercise, companies in 1994), even these small the e)rnphasis is on the wafer regulations of quantities were seen as a significant threat to the proposed rule, and the discussion the environment and human health. focuses on the impact on the 90 US. krafr pulp mills.] During the mid-1980s and early 1990s. EPA undertook several major studies to examine [Appendix A contains detailed information the impact of dioxin on human health and the about the effluent guidelines contained in environment. In September 1994, the agency the proposed cluster rule.] released a 2,000 page study which concluded

i Organochlorines and dioxin were primary industry - at least twice as long a period targets of the water section of EpAs proposed would be required to come into compliance cluster rule. Tbe draft cluster rule establiihed with proposed levels. allowable limits on a number of “conventional” pollutants, including BOD Furthermore, iodustry estimates of the costs and TSS. The rule also established allowable of compliance differed greatly from EPA’s. limits on nonconventid pollutants such as Executives from International Paper had put AOX, the proxy used for measuring the cost of converting to 100% substitution organochlotines. me proposed standards for with oxygen &lignification at approximately AOX indicated that the regulations would be $104 million per mill, or over $9 billion for pushing companies to rectuce organochlorines the industry as a whole.I1 Industry leaders by an average of 50%. also questioned EPA’s estimates of the benefits of such a regulation. They were EPA based these emission limits on the top overstated significantly, allegedly due to performing ~WOof facilities in the industry. mathematical errors that EPA officials had About one-third of all bleached haft mills made in their calculations. Executives had already implemented a “high” version of pointed to Executive Order 12866, signed on ECF (100% substitution of chlorine dioxide September 30, 1993, which required that for elemental chlorine plus extended cooking regulation be designed to protect the or oxygen delignification); the rest of the environment “without imposing unacceptable facilities would be required to implement a or unreasonable costs on society.” Based on proms change in addition to chlorine dioxide these estimates, industry leaders argued that substitution. Extended cooking lengthened the cluster rule imposed unnecessary costs on the period in which chips were cooked before the industry as a whole, while generating only bleaching, significantly reducing organ- minimal emironmental benefit. ochlorine and BOD levels, although dioxin could still remain above detectable levels. Industry leaders predicted major economic Oxygen delignification introduced a step impacts if the proposed regulation were between pulp washing and bleaching, which implemented. Facilities with out-of-date reduced the need for bleaching. When operations would likely close rather than meet combined with 100% substitution of chlorine the stringent AOX requirements. More than dioxide, oxygen delignification would 30,000 jobs might be lost. And prices to significantly reduce organochlorine and BOD consumers would surely rise, possibly by levels, as well as dioxin formation. lo%, if companies were to receive an adequate return on the new investments. Industry representatives disagreed with the AF&PA, with support from its leading cluster rule’s goals and its estimated costs. companies, had proposed 100% chlorine Many companies had voluntarily reduced dioxide substitution as the solution to AOX to current levels. Now it seemed as if organochlofines and dioxin problems. Dioxin theii voluntary efforts had only bought them a could be reduoed below currently detectable lower “baseline” against which they would levels, and AOX could be reduced by 30% or have to reduce further. Industry executives more. The cost of this solution to the industry believed that the costs of this additional was estimated at from $2 million to $25 reduction greatly outweighed the benefits. million per facility, or about $1.2 billion. Regulations would force them to reduce to proposed AOX levels within 36 months. This Future Directions was unrealistic given the long capital By the time the forum would be convened, equipment depreciation schedules in the EPA would have moved well down the path

fi& 4: Ch&rinc and the Paper Industry

i toward a final form for the cluster rule. It Development of bleaching alternatives to would take compelling arguments to affect chlorine: Even as the cluster rule was Wig the outcome. On the other hand, the EPA finalized, alternatives to substitution and Administrator faced some tough decisions oxygen delignification were emerging. Fmt, about what to implement in the rule. We there was ozone bleaching. Ozone bleaching the purpose of the forum was not to rehash substituted ozone for chlorine or chlorine the cluster rule debate, company executives dioxide in the first bleaching step of the haft saw an opportunity to extend the time pulping process. The use of ozone could horizons of all stakeholders. Perhaps EPA reduce but not completely replace chlorine could be swayed to consider creative compounds for bleaching. Since only one alternatives to a tough rule. mill was operating a proprietary ozone bleaching process in 1994, most industry Regardless of the impact on the cluster rule, experts considered the technology unproven. the forum could broaden the debate about Ozone bleaching reportedly raised capital future environmental regulation. There were costs while reducing operating costs several issues that would certainly drive the significantly. future direction of U.S. chlorine regulation and environmental performance of U.S. pulp Second, there was TCF. TCF processes and paper companies: required the use of either oxygen or ozone deligrlification (highest level ECF), and the Evolution of scientific assessment of conversion of the final bleaching step from organochlorines, including dioxin: Given chlorine dioxide to hydrogen peroxide. significant resources dedicated to the study of Choosing TCF not only reduced total effluent, chlorine, scientific understanding would it also reduced water usage. ?he final product surely evolve. How would this new from TCF was clearly less bright than levels knowledge likely change regulatory and achieved through chlorine bleaching, but corporate strategy? If new scientific markets might change to support the use of information was presented about chlorine or such a product. Further technological other environmental issues, how swiftly advances would likely shrink the brightness would companies and regulators be expected gap as well. The total investment cost for a to change behavior? If companies were TCF line was estimated at $75 million. In forced to invest in technologies that quickly 1994, there were about 35 facilities operating became outdated by new scientific with TCF worldwide; only one of these information, how would the blows to their facilities was based in the United States. The competitive positions be softened? difference in wood supply was one reason that European producers had more readily Evolution of chlorine strategies in converted to TCF, claimed U.S. industry international markets: Since U.S. expe:rts. companies were effective competitors internationally, they saw regulation as one Finally, there was totalry effluent-free (TEF). source of competitive advantage or TEE: processes were not a reality in 1994. disadvantage. To date, they had invested Still, some industry leaders envisioned a significantly in environmental controls. If system in which materials could continue to major changes were made to performance be recovered and used in a closed-loop standards, companies argued, previous process. At what pace would these new environmental investments would be technologies emerge? Who would pay for “forsaken” and relative competitiveness such development? Would such research be hampered.I2 How would other countries undertaken individually or collaboratively? regulate chlorine, and when?

S&h& N’otiations: Evrrciser in Sustainable Devebpment Development of markets for non-bleached recent years, Greenpeace’s position, once paper pduds: it was unclear whether and considered radical even within the when co~sumerswould drive the expansion environmental community, was becoming of an ECF or TCF market. Most research more accepted. The Natural Resources indicated that US. collsumers were unwilling Defense Council (NRDC), the Environmental (perhaps even less willing than five years ago) Defense Fund (EDF),and numerous other to pay mote for a product considered to have well-respected environmental groups had environmental attributes superior to begun to support similar positions on chlorine competitors. If market demand forces were during 1994. expected to outpace regulatory forces, how would this market be developed? The pulp and paper industry had attacked Greenpeace’s position on the grounds that both scientific proof for chlorine elimination STAKEHOLDERS and market demand for TCF products were lacking. Greenpeace unhesitatingly pointed to Greenpeace Europe and clauned that an American market Greenpeace was a grass-roots non-profit would develop once U.S. paper makers began organization established in 1971 that had to manufacture chlorine-free paper products. been involved in many areas of environmental In July 1994, (fieenpeace activists scaled the advocacy, including protests against whaling, Ti-Life building in New York City. They harp seal hunting, rainforest logging, French called attention to the reluctance of Eme nuclear testing in the South Pacific, and magazine to use TCF paper in its product. industrial pollution. ‘lime had allegedly argued that they could not obtain a satisfactory supply of highquality Greenpeace had been a major force in TCF paper. The public protest afforded an shaping public debate on chlorine. In 1987, opportunity for Greenpeace to circulate a Greenpeace learned that the EPA had found mock edition of Time produced on TCF dioxin in fish collected downstream from Paper- paper mills in Maine and Wisconsin two years earlier. In response, Greenpeace While not entirely unwilling to consider novel published a report entitled “No Margin of collaborations with traditional enemies, Safety” which alleged that both the paper Greenpeace was concerned about how their industry and the EPA had engaged in a cover- traditional constituents might perceive any up of the dioxin releases. Upon further cooperation with businesses or agency investigation, Greenpeace learned that dioxins leaders. were associated with bleached pulp, and were likely present in numerous household US. Ewironmental Protection Agency @PA) products, including tissues, coffee filters, EPA, charged with the protection of human kitchen towels, and diapers. health and the environment, was the federal agency responsible for developing and Since 1987, Greenpeace had pressured the implementjng the proposed cluster rule. EPA EPA to stop releases of dioxins to the was basing the proposed rule on extensive environment. Its approach on dioxin was part study of the pulp and paper industry’s of a broader campaign to eliminate chlorine processes, manufacturing and pollution from all industrial production. Staff members control technologies, and economics. A draft suggested that they would not compromise of the cluster rule was made public in with the pulp and paper industry on the use of November 1993. EPA sought public chlorine or chlorine-based compounds. In comment from any and all interested parties

EmciK 4: Cbbrine and tbe Paper Indutry from November 1993 until April 1994. EPA at one of its plants. Alpha was often slngled would have to reconcile the public comrnents out by environmental groups and regulatory with the proposed rule and make any agencies as proof that the cluster rule was necessary changes before publishing the final both feasible and affordable. Significantly, rule in 1995. the plant in which Alpha used its ozone technology produced fine writing papers, EPA had been experiencing pressure from which needed to meet the most demanding almost all sides. Paper companies had quality standards in the paper industry. This attacked EPA for establishing an allowable plant was considered to be one of the most limit for dioxin emissions below 10 parts per profitable plants in the industry, and had been quadrillon (ppq), a level they claimed was for 20 years. unmeasurable using current technologies. To respond to business, EPA was considering Alpha management had been pleased with the technology guidelines rather than technology results of switching to the ozone process, standards so that companies could choose although it had taken longer than expected to their own optimal technology response. implement the technology. Alpha had Politicians had attacked EPA for its realized operational cost savings as a result of bureaucratic tendencies and unnecessary the change to the ozone process. ?he process burdening of productive industries. Such was essentially a closed loop that reused pressure had resulted in the new Executive many of the chemicals involved in the Order mandating that the agency consider pulping process. Alpha had formed a separate costs and benefits in developing regulations. division to market its ozone technology to the Not surprisingly, the pulp and paper industry industry as a whole, and the technology was believed that EPA had grossly overstated the available for a substantial licensing fee. benefits of chlorine reductions while severely Alpha operated a second bleached kraft plant understating the costs. Environmental groups that did not yet employ the ozone process. It were chasing EPA as well. Sitting atop a did use extended cooking, oxygen preponderance of scientific data about delignification, and chlorine dioxide chlorine, EPA was hesitating to use its substitution. It had been deemed the second authority under the Clean Water Act to ban best plant in environmental performance in chlorine bleaching in the interests of public the industry, amrding to one environmental health. Beleaguered by these pressures, yet award received: the plant with ozone constrained by legislative mandates, EPA was bleaching was rated as the best. open to new ideas that would help it to mve forward. Since Alpha’s ozone bleaching process still used chlorine dioxide in the final phase, it Pulp and Paper Companies was not considered to be TCF. If other ?be companies involved in the forum could companies chose to acquire Alpha’s be placed into three company types. described technology, they would incur a substantial below as Alpha Company, Beta Company and initial investment cost and would easily Gamma Company. exceecl the standards in the proposed cluster rule. ‘This system could be upgraded later to Alpha Company: This company was create a TCF process with relatively minor recognized as an industry leader in the modifications and at a low cost. Only the environmental arena. Alpha had invested portion of the investment expended for heavily in researching alternatives to chlorine chlorine dioxide production would be wasted bleaching and had developed an ozone if a company later decided to move up to a bleaching process which it was demonstrating TCF standard.

StaRcholdk. Negorsimrc b&s in Sustainable Devehpmmt Beta Company: Beta operated three facilities. None of Gamma’splants were at or bleached kraft plants m the southeastem U.S. near the end of their useful lives. that were of average profitability when compared to the industry as a whole. ’Ihe Four of the plants used traditional chemical plants, which produced a range of paper pulping methods (no oxygen delignification; products, were medium-sized. One plant was no extended cooking), while the other seven new, while the other two were beyond their plants had been adapted by substituting economic life and required upgrading for chlorine dioxide for elemental chlorine, a competitive purposes. The company had change that significantly reduced the committed to upgrading production lines at formation of dioxins to concentrations near these two plants to a standard that would meet currently available detection limits, but not to the proposed cluster rule. the levels expected in the proposed cluster rule. Gamma had challenged the scientific If stringent AOX standards were imposed, as basis of the cluster rule, specifically EPA’s expected, management’s first choice was to ability to measure accurately dioxin employ oxygen delignification and two discharges on the parts per quintillion level. chlorine dioxide stages (like Plant Two of Gamma believed there was a middle ground Alpha Company). Alternatively, Beta could - ECF using chlorine dioxide substitution license the ozone technology from Alpha for chlorine - that would help the Company; doing so would position it for TCF environment without crippling the industry. capability in the future but it would require greater capital costs. In its newest mill, Beta had already substituted a chlorine dioxide THE TASK. stage for elemental chlorine, in addition to using extended cooking. This plant would You are a senior executive of one of the meet the proposed cluster rule, but would stakeholder teams that will attend the “Forum require substantial modification and on the Environmental Future of the Pulp and investment to become XF. Paper Industry” You will receive a schedule outlining the tasks assigned to your team. Gamma Company: Gamma was an industry They will include the following types of leader in sales and pmduced a wide range of activities: products, including fine papers. Gamma was viewed by many in the industry as an development of a strategy regarding the extremist, a position adopted primarily future regulation of chlorine in the because of their paper division’s extremely industry poor financial condition. Gamma had been preparation of information you would acquired in a leveraged buy-out in the 1980s like to share with other stakeholders and was saddled with an extremely high debt identification of information you would burden. Gamma was facing extensive like to receive from other stakeholders litigation relating to alleged releases of development of a presentation you will dioxins from three of its bleached paper make to the other barns, including plants. Although none of the cases had yet proposals for compromise andor gone to trial, suits totaling over $9 billion collective action dollars in damages had been filed by 1994. preparation of a briefing you will make to Gamma was also involved in the investigation your board of directors and senior and cleanup of environmental contamination executives - umler the supervision of federal and state regulatory agencies - at several of its If you are on a company team, you will be assigned to either Alpha, Beta, or Gamma company. The forum might include more Haw might you facilitate a positive than one group representing Alpha, Beta, or outcome at the Forum? Gamma, depending on class size. Teams of Can you collaborate with the other teams tbe same type may adopt different positions. and still maintain your strong voice for change? Paper company executives should think What will you offer in return for cardidly about the following: concessions by paper companies?

What are the best short-term and long- This was an exciting time for senior managers term chlorine strategies for your in the companies, Greenpeace, and EPA. A ampany? cluster rule would be issued within nine What are desirable strategies for the months. More important, the various companies collectively? stakeholders stood on the threshold of a new What is the best approach to learn from era in e.nvironmental management. This new and inffuence Greenpeace and EPA? era invited collaboration and consultation Where, if at all, is there possible among stakeholders. while chlorine was just cooperation? one environmental issue in the paper industry, it was an important issue, and it offered a EPA executives should consider: window of opportunity to improve the environment in ways that were responsible What outcome would you like the for all stakeholders. companies to achieve at the forum and what can the EPA do to facilitate that outcome? How might this process inform the cluster rule and future regulatory initiatives? indusuy companies, and other interested parties. EPA also solicited public comment on the proposed regulations. The integrated discharge regulations for the pulp and paper industry, known informally as “the cluster Regulatory Mission and Authority rule,” were formally proposed in November Congress requires the United States 1993. A public comment period ended in Environmental Protection Agency (EPA) to April 1994. EPA has, since April 1994, regulate discharges to the air and watea and reviewed the pmposed regulations in light of has provided EPA with specific legislation to the public comnlents received. In 1995, EPA do so. Under the Clean Water Act, EPA is will issue the final version of the cluster rule, tasked to develop effluent guidelines for and the industry will have three years to come major industries. These guidelines, which are into compliance with the new regulations. subject to periodic review and revision as technology improves, are then used to The cluster rule repents the first time EPA establish discharge limits for specific facilities has proposed a comprehensive regulation for that discharge to surface wata or municipal one industry that includes guidelines and sewage treatment systems (Publicly Owned standards controlling the release of pollutants Treatment Works, or POTWs). Under the to water and air. EPA believes an integrated Clean Air Act, EPA is tasked to develop approach will provide greater protection of emission standards for major sources of human health and the environment and will specified airpollutants. also reduce pollution control compliance costs by increasing the pulp and paper Development of the Integrated Regulations industry’s ability to plan more effective In March 1985, the Environmental Defense compliance strategies. EPA believes the Fund and the National Wildlife Federation proposed rule will significantly reduce the sued the EPA regarding the regulation of amount of pollution entering the environment. dioxins and furans produced by paper mills. This reduction will be achieved by using: (1) In settlement of this lawsuit, the EPA entered technologies that prevent the creation of into a consent decree with the parties in July certain pollutants; (2) technologies that better 1988. The consent decree required EPA to: control the discharge of pollutants that are (1) address discharges of dioxin and furans, created; and (3) by imposing facility-specific which are known carcinogens, by proposing “housekeeping” requirements. effluent limitations for 104 bleaching pulp and paper mills by October 31, 1993; (2) There has been great debate about and much develop regulations governing discharges of disagreement with the proposed regulations. dioxins and furans from these mills within 18 Greenpeace believes that the proposed cluster months of the date of the integrated rule’s rule does not go far enough in addressing and proposal; and (3) conduct a multiple pathway correcting environmental contamination. risk assessment of sludges, water effluent, and AFBrPA and many of its member firms products made from pulp produced at the 104 believe that the regulations will impose an mills studied in the USEPA/Industry extreme financial burden on them at a time Cooperative Dioxin Study. when the industry is in a slump.

From September 1992 to June 1993, EPA Some companies are Concerned about the developed integrated regulations through an time element of the cluster rule, believing that open process involving meetings with EPA’S three-year compliance window is environmental groups, pulp and paper SqlY Industry advocates argue

Ermeiw 4: Chlorine and the Papn Indwtry that there are simply not enough vendors to ?he Clean Water Act uses technology-based supply all of the companiek in the industry effluent guidelines and waterquality-based with the appropriate technology to meet the controls to protect water resources. The proposed rule. Industry is also concerned that technology-based effluent guidelines establish technology vendors will take advantage of the nationwide, industry-specific limits on demand for their products and services by conventional, toxic, and non-conventional raising prices, which will further hurt the pollutants discharged by the pulp and paper industry financially. Some company industry. The pollutant levels contained in executives believe that they will be faced with the technology guidelines are based on the either going along with price-gouging or best technology that is economically shutting down their plants (and losing achievable by the industry being regulated. substantial revenues) until some future date EPA developed the technology-based when the supply of technology has increased guidelines after performing an extensive and prim have dropped Given the current study of the industry and the available availability of technology, industry estimates technologies, conducting extensive waste- that at least six years are required for the water sampling to determine the types and industry to come into compliance with the quantities of pollutants discharged, and proposed rule. Their estimated costs of calculating the financial impact of the complying with the current version of the proposed guideline. In the event that more proposed cluster rule are triple the estimates stringent measures are needed to protect of EPA. Executives believe that tax water quality in specific areas, individual incentives are needed to mitigate the financial states can develop water-quality-based impact of compliance. controls for specific watersheds.

Water Releases The changes in the effluent limitation One of the primary aims of the integrated rule guidelines resulting from the adoption of the is to have the pulp and paper industry employ integrated rule can be categorized by technologies that either prevent or reduce the pollutant type as summarized below: formation of dioxins and furans in effluent. In the integrated rule, EPA proposed effluent Effluent Guidelines: limitations, under the authority of the Clean Conventional Pollutants Water Act, intended to control discharges of For all 12 subcategories of the industry, toxic, conventional, and nonconventional limitations are set on conventional pollutants, pollutants from existing or new facilities. The including biochemical oxygen demand and regulations apply to facilities that discharge total suspended solids. All mills are required waste water either directly to surface water or to limit conventional pollutants such as BOD to a municipal sewage treatment system. All and TSS to levels that are equal to the best 50 mills in the United States that produce pulp, percent of the mills (in each subcategory). paper, or paperboard as a final product are governed by this section of the regulation. Effluent Guidelines: Toxics and For purposes of classification and regulation, Nonconventional Pollutants EPA had previously divided the industry into Limitations based on the best technology over 20 subcategories based on the process economically achievable are set on toxic and used and the product produced; the number of nonconventional pollutants for the 12 subcategories has been redud to 12 in the industry subcategories. Limitations on proposed regulation. nonconventional pollutants (adsorbable organic halides [AOX], chemical oxygen demand, and color) will apply at the point

StaREholrkr Negotiatians: kcises in Susiainabk Devehprnrnt I

where the effluent is discharged from the mill for elemental chlorine with other chlorinated property. Limitations on toxic pollutants chemicals, which would reduce the amount of (chloroform, methylene chloride, and some dioxins, furans, chlorinated phenolics, and chlorinated phenolic compounds) will be set other compounds in effluent discharges. in the bleach plants, which are located inside mill areas. Effluent limitations for Costs and Benefits of Integrated Rule chlorinated dioxins and furans, which are EPA believes most companies will find it both toxic pollutants, are included in the possible and affordable to comply with the regulations for four of the subcategories; the proposed rule. EPA estimates the total limitations for these two pollutants are on the annualized cost to industry will be $600 end-of-pipe effluent at the point where it is million, and the total capital investment cost discharged from the property. Mills that use (including the purchase price of the capital chemicals in the pulping area will also be equipment and installation services) needed required to implement spill prevention and to meet the proposed standards will be containment procedures. approximately $4 billion. (Operation and maintenance costs for the installed capital Some industry representatives have equipment are estimated by EPA at $400 challenged EPA's ability to measure reliably million per year). However, EPA dioxin concentrations at the parts per acknowledges that compliance costs could quadrillion level, the standard specified in the result in closure of 11 to 13 plants (5% of proposed rule. In calculating the total quantity total plants) and the loss of between 2,800 to of dioxin discharged from U.S. mills, which 10,700 (<1%4% of total jobs). Consumers in 1993 was estimated at 11 ounces, these will not be influenced greatly, with the industry analysts routinely assume that non- greatest market price change (3% increase) detect samples contained dioxin at a Occurring in uncoated free sheet papr (copy concentration equal to 50% of the detection and tablet paper). limit. Many of the nondetect samples may have, in fad, contained no dioxin at all, and The industry disputes EPA's calculation of the these analysts believe that their calculations financial impact of the proposed cluster rule. of total annual dioxin discharge are extremely AF&PA estimates that the total cost of conservative and err greatly on the side of compliance with the proposed rule will be human health and the environment. They closer to $10 billion. They believe the rule also point out that, as an industry, they are far will result in the closure of more than 33 mills from the largest discharger of dioxins and and a total of 107,500 job losses, including furans in the United States. 21,500 direct mill jobs and 86,000 indirect jobs. Efliuent Guidelines: Pollution Prevention Toxic compound effluent limitations are based on process changes in the bleaching and pulping areas of the mills. Pulping area changes include greater uniformity of wood chip and better pre-bleaching pulp washing. These changes will reduce the amount of bleaching chemicals required. Changes in the bleaching area will also occur, including oxygen-based removal of lignin from the washed pulp (oxygen delignification) and partial or total substitution of chlorine dioxide

EraciK 4: Chbtinc and the Paper Induq used to make cardboard, printing paper, tissues, food additives, cellophane, and rayon.

C h e m o- T h e r m o Mech a n i ca 1 P u I p i n g (CTMP): This process involves chemical Trees, in the form of wood chips, serve as the pretreatment (with sulfur-based chemicals) raw material for papermaking and can be and vapor/steam heating of the wood chips categorized into softwoods (coniferous trees, prior to grinding. This produces pulp suitable including pine, fir, and spruce) and for use in both low-grade (hygiene products) hardwoods (deciduous trees, including maple and high-grade (coated and writing-grade and birch), both of which exhibit different papers) products. CTMP is used both for characteristics in the papermaking process. softwoods and hardwoods. Environmental In general, wood is composed of 20 percent releases from this process include the sulfur extractable substances, 30 percent lignin, and compounds used to pretreat the wood chips. 50 percent cellulose, the substance used to These sulfur compounds, combined with make paper. Lignin is essentially a glue which releases of natural wood chemicals, make provides structural support to the tree. CTh4P effluent highly toxic to fish and slow Hardwoods generally have shorter and more to degrade in the environment. abundant cellulose fibers, while softwoods had longer and less plentiful cellulose fibers. The two primary chemical pulping methods are kraft pulping and sulfite pulping. In haft To make paper, cellulose must be isolated pulping, wood chips are boiled with caustic from the other wood components through a soda, which efficiently removes lignin and pulping process. All of these processes resins from softwoods and produces a dark- require high inputs of energy and result in the brown, strong pulp. Kraft pulping is a closed discharge of natural wood chemicals to the loop system, since nearly all of the pulping environment. Pulping processes include: chemicals are recovered. Wood wastes are incinerated, providing energy to run the Mechanical Pulping: This involves pulping operation. Some waste materials - physically grinding the wood chips to including sulfur dioxide (to the air) and separate the cellulose from the lignin. cellulose fibers (in the water) - are released Mechanical pulp is generally considered to be to the environment. If the kraft pulp were to low quality and is used for products, such as be used to produce white paper, it is bleached phone books and newsprint, that require using one of many methods. It is the lower strength and quality standards. bleaching step that produces the contaminants of concern -including dioxins, furans, and Thermo-Mechanical Pulping: In this other organochlorines - to environmental process, wood chips are softened with steam groups and the EPA. vapor prior to grinding. This process is used only for softwoods. Sulfite pulping, the other primary chemical pulping process, involves boiling wood chips Chemical Pulping: Wood chips are boiled in in sulfuric acid. Suliite pulp, often used in a chemical solution, resulting in the extraction making tissue products, is lighter-colored, of the cellulose fibers. Chemical pulping also weaker, and softer than haft pulp. Sulfite extracts other constituents from the wood, pulping can also be a closed loop, but which are then combusted to provide energy chemical recovery is less efficient than in to run the pulping operation. Chemical pulp haft pulping. Sulfite pulping also releases is much stronger than mechanical pulp and is sulfur dioxide to the air. Typically, sulfite pulping requires 35.000-40,000gallons of water per ton of bleached pulp whereas eanical pllpins uws only 10,000-15,000 gallom per ton. Conventional bleaching technology for chemical pulp typically used chlorine gas to degrade and remove the lignin, 5 to 10 percent of which remained in the pulp after the chemical pulping phase. Hypochlorite or chlorine dioxide gas was then used to bleach the pulp white in a several stage pfocess. The average ton of conventionally bleached kraft pulp required anywhere from 110 to 176 pounds of chlorine per ton. A portion (10%) of this chlorine combined with the organic molecules to form compounds known as organochlorines. These compounds were tben discharged as part of the mill effluent.

After the pulp had been bleached, it was ready to be used in papetmaking. The pulp could be dried and shipped to a paper mill, or sent wet directly to a paper machine in an integrated plant.

Ewr& 4: Chlorine and the Paper Industry lo Gary Lee, “Dioxin SMy Spurs Plea for Restrictions,” Wmhington Post, September American Forest & Paper Association, 14.1994. Paper Task Force Presentation, April 5,1994. l1 Richard B. Phillips, Jean J. Renard, and 2 united states Environmental Protection Lindsay M. Lancaster, “The Economic Agency, Vo1. ZUQ. Impact of Implementing Chlorine-Free and Chlorine Compound-Free Bleaching Processes.” International Paper presentation 63 and;United States to Non-chlorine Bleaching Seminar, Hilton Government printing Office, December 17, Head, SC, March 2,1992. 1993. l2Clifford T. Howlett, Jr., ‘meRight In fact, by the signing of Executive Order Balance-Environmental Responsibility and 12873, the U.S. government had established a the Competitive Edge,” U.S. EPA new standard of 50% waste paper content, P -i n including 20% postconsumer material for its Pollution Prevention in the Manufacture of paper purchases by 1995, with a goal of 30% Pub and PaDer, EPA-R-93-002. February postconsumer content by 1999. While 1993, pp. 155-160. government procurement did not force other buyers to change behavior, it was considered 13 B& on united states Environmental an indicator that others often voluntarily Protection Agency, “Fact Sheet: Proposed followed. Effluent Limitations Guidelines and National Emission Standards for Hazardous Air Michael Baram, Patricia Dillon, and Betsy Pollutants for the Production of pulp, Paper, RuWe, and Paperboard-Overview,” EPA document . number: EPA-821-F-93404, November, Cater for Environmental Management, Ti~fts 1993; and United States Environmental University, May 1990. Protection Agency, The Federal Reg-, Vol. 58. No. 241. Fridav. December 17, Michael Allaby, of the 1993. Environmental Protection Agencv, -, -, Third Edition, 1989. Part 11.40 CFR Parts 63 and 43Q; United States Government Printing Office, December Bette Hillman, “Concerns Broaden over 17,1993. Chlorine and Chlorinated Hydrocarbons,” Chemical and Engineering News, April 19, 14 B~SXIon Competitive Implications of 1993. Environmental Regulation of Chlorinated mnicReleaes in the PulD and Paper Bette Hillman, op cit. Industry, (Washington, DC: the Management Institute for Environment and 8 ple c- to p- Business, 1994); and The GreenDeace Greenpeace, 1990. Guide to Paper, Greenpeace, 1990.

“Petition to Prohibit the Discharge of 2,3,7,8-Tetrachlorodibem-pdioxinby Pulp and Paper Mills,” filed by the Natural Resources Defense Council and the Natural Resources Council of Maine, September 14, 1993.

S*rReho& Negotiations: Emrises m SuctainabIe Devehpment Pulp and Paper

he pulp and paper im is tha world's second largest consumer T of chlorine and the greatest source of toxic organochlorine dip- charges directly into watrrways. Although scores of mills acroes the world are now producing high.quality, hright papa uring totally ddainbfr# technology, many of the wd's plo ducscs have yet to switch. With safe and effectiva alternatives now availabk for this industry, the phsswut of chk

pwrmilk should begin immedii, IWsoma DI tho uorld's .,rgest and mo5t darnandng Vntpts At first glanw, a sheet of paper might seam harmless. especially comperal to ths many chemical pestiddcs, plastics, and other products on the market today. But a closer look at paper production reveels toxic chlorine bleaching and recklass logging pradi~esthat are devastating our forests, our rhmm and lakes, and ow health. Of particular concern are dm huge quantltler of tmdc oqenochbrinm - by products from the use of &brine bleaches - that the wodcrs peper industry rdsases into the eir, the water, and paper products them&. These chmk cab, including dioxin and thousands of other substances, are buildins up in the global enuironment, the fuod chain, and the bodies of the human population organochlorines cat wuw severe effects on the hemlth of people and wildf. and are implicated in local and glow wtbredts of cancer, Impaired npraduo tim and development, immmwppression, and other diseases

This information is printed with the permission of Greenpeace. Copyright 0 Greenpeace.

&er&e 4: Cbhine and the Paper Industry TOXIC ORGANOCHLORINE Pub mills also release wqanochbrnes into the a% pamdady alo&orm. a can- cnLoR#Io- cer-causing substance Worldwide emis- sons of chlorofam from the oamr inhs- avHALFWAY Thepaper ndusby 6 the worids second try are estimated at 30,aX)'tdnns per 1 largest chlorine consumer. using about yew I61 3 donmnes ead.1 year to bleach wood Organochbrines are also found in the pulp bnght white. [I1 Chbme is used a n sludge producad at pulp mik Accounting number of different forms: as elemental for as much as 4 percent of the total chlonne gas chlonne dioxide [c12). [UMJ weight of the material, contaminated or sodim i-rypocNonte (NaocI]. All resutt in sludge is spread on the land, buried in land- the discherga of toxic organochlonie by fins. or inunerated. releasing chlorinated Pd. byPoduck into the a&.ixludng FCBs and Became chlorine is extremely reactive. dioxins (7) In forests where pulp mill iL mhms quickly wth the organic matter sludge has been disposed. diuxiiis have in the pulp to produce thousaids of new accumulated in the tissues of 4eld animals chemicals called wgenochlorines. An auer- and mused biochemical effects in oirds. [8] agkedFDnwntlOnal pulp mill ddarges Finally, organochlorines are found in around 35 tonnes of organochlorines paper pmducts themsalwas. Ewmnrnant every day, while that use chlorine those Canada estimates that 2 percent of the diode dsd-targe to 20 tonnes per 10 cky. organochlorines forrneo in the bleaching The paper industry is the largest process remain in the pulp. [51 Basad on source 3f orgenochhrine releases directly ths figure. abolh S0,aU tnnnes of these into the worlds watarways. dlschargng 2 chemicals and up in paper products each million tonnes of orgenochlorines each year Dioxins and furans hwe been identi- ymr: 121 Pulp mills m Sweden and Canada fied il cigarette paper, tampons. diapers. appear to be responsible for as much as tissues, coffee filters and bleached milk 90 percent of all organochlorines dis- cartons.(91 Ble&hed writairiers and fil. charged directly intu the Baltic Sea and the ters can leach didns into mik coffee, and Grest LBkes (341 dher foods with which they mme in mn- tad (10) kr3W organochlorines have been identified in the discharges of bleached pulp mik, including dioxhs. furans. chlom natd phenols. ads. benzenes, and meny HARMING HEALTH AND THE others. [51 These identified compounds ERMRONMENT amntfor less than 10 percent of all the organochlorines in the sffluent the malo- ty remain "mystery" chemicals that have here is extersive evidence that m'fluem not been SpeCibUy identjfied OT assessed. Tfrom chiorine-bbaaching pulp mills Many of these are large, complex harms fish and aquatic ecosystems. Pulp organochlorines that ore transformed in mill dschwges - and crganochlorines in the envimnment inco more oersistent and particular - have been linked to physical todc compounds. I51 defmmiiies in f&. reduced gmad growth. hormonal changes and reproductive Many organochlorines resist natural impairmert. liver disorders. disruption of breakdown procssas. cell lunction, changes in blood composition, so they build up over dimage to skin and gdk changes in shoal- time in the environ- ng beheviour and changes in the Srructure ment Organochlorines of fish populations. Orgariochlorine dis- from pulp mills have charges from pulp mills have also dam. been foucd in the aged lih habitats injured aquatic plant watep. sediment, and mlcnies. end ceused harm to benthic and food chain as far as bivatve organisms [11 I 14CO kilometers I868 miles] from their Effes; on fish ham been recorded as sourca. (41 Further. far as 40 kjlometers [25miles] away from my orgenochlwines concentrate in the the pulp mills discharge point (I',l An tissues of living things and are mqifted extensive study by the Swdish €PA was as they mom up the foodchain Redator unable to determine any safe exposure fish and aher species near pulp mills have level to organochlorine discharges from been found to accumulate dioxins and pulp mills. concluding that 'regional and other organochlorines at concentrations possibly large-scale' damage to fish and thousands or even millions of times the aquatic foodchain may be mcurring greater than the levels found m the water throughout the Baltic ecosystem. I1 11 M.[41 Drganochlorine contamination of the Peat Lakes food chain has also bean linked to

StakehohNegotiations: fiercises in Sustainable Deuelopment regionwde epdmics d repoductk and and dmlopnent 1161 and the baniers both techndcgical and developmental impairmmt h 14 species eammnc are dirjnishig daily The qualhy Each Val: the wdds paper ndustq of fkh and wikllife in that ecosystem (121 ofchlaine-free pulp and paper is already discherges from 650 to 3200 grams d on per with chlorine-bleached products Organochlorines found in pulp mill 'dimnequvalents" into mtec slume and and S mnCiung to improve. [see bm] efflumt can harm hmhealth. as wek paper produas. based on US€PA fig causing cancec repmdudive end deVe(0p ures. (171 This quantity is equal to the Mopring mWychlorinefree bleading manzal impairment, birth defects. and amwnt of dioxin that can cause 57.m is a first step n the transition to an envl- other health problems. 15) The US. to 285.W cases of canw each yew, ramentaYy sound paper industry. Over- Environmental Protection Agency. for acwrdiig to PAtoricky estimates. (18) mpdond paper and reliance on for- imce. has estimated that peollle est dearclhtng are also essential issues. eat- Alrsady. dioxin contamination has ing contaminated fish caught down- The paper in&my can be transformed forced the closure of fishing grounds Stream from chlorinebleachng pulp mills into a model of Clean Production. if it around elmn of the pulp phts bear merrisks ~I@I as 1 in (131 fwrteen adopts sustainable for-estiy, non-toxic as 50. on British Columbian coast. where Several SDJdii have folnd elevated risks the processes. irrplant recycling of effluent exlrernely high dioxh conce- were of mer mgworkers in the pulp and end chemicals, maximum recycling of fand in mu5581s and the im paper industry. I141 crabs, ts- paper products. and a substantial of fish In 1994. the Maine sue decrease in consumption. particularly in Pulp and paper mills are malor Department of Health recommended the indvsnidized natjons. soums of dioxins and rehdcompounds that children and pregnant wmen not - the most toxic. persistent and bioaccu- eat lomer livers due to dn~cmtamb mulatire compounds known to science. tion caused primarily by the state's 7 According to recent U.S E?vironmental chlonnebleachingpulp milk. PmonAgemy research. tiny doses of dioxin can disrupt the body's hormones and cause infertiliy, impaired develop TOWARDS A CLEAN PULP met% immune suppression. and cancer. tCTION TOWARDS A CLEAN According to EPA sd&sts the levels of AND PAPER INDUSTRY PAPER INDUSTRY dmn currently found in the bmeS d the general humm popuUm dmatjy heh are hlorin-e technologies for pulp and enough to cause mese effas. (151 Rh Some paper companies: 55 now pro- paper already m comrricrdal ust! mills and marine mammals. are very C ae too. sus- at dozens of milk across the wwld. The ducing totally chlorine free, high-quality ceptible to dioxin's effeds on repnductian markt for chlorine free pub is growing bleached pulp. Rwinca d Ontario: Pulp mills must elimi- .. nate organochlorine discharges by 2002. HrhColumbia: Pulp mills must eliminate nganochlorine discharges by 2002. Sweden National: Goal to end toxic dis- charges from pulp mills by 2000. International Joint Commission on the Orcut Lake.: Calls on U.S. and Canada to phaseout uses of chlorine es an industrial feedstock Paris Commission: 13 nations on the North Atlantic and the EU agree to elimi- nate persistent, toxic discharges of bioec- cumulative substances, particularly organochlorines. Barcelona Commtion: 21 Mediterranean nations agree to eliminate persistent, toxic discharges of bioaccumulative sub- stances, particularly organochlorines. American Public Health Associatim: Calls for "measurable and progressive reduc- tions toward the elimination of the use of chlorine-based bleaches in the pulp and paper industry."

fiercise 4: Chhine and the Paper Industry REFERENCES also. Sodergran. A et al. (19891. Bidogical P~FmXI.J. TCF theres no holding beck the bde Effects cf Blcachcd Pulp Effluent. Swedish P~Pand Paper Intmmd +I 1992. p. 72. Envimnmerrtd Pmtedmn Agsnnl, r3558. See 1. Martin. I?.md J. €hWd (1993l The elso bhwm?entCanada (41. 21. Singh. R. ;19931. in K Patrick Non- ffie d chbrine n the pup and paper indusay chlorine bleadrng opens daors to nav me&- Oimensions of Managing Chlorine in the 12 IrternetioMI Joint Comrnlssion on the fluent dosure q3hn-s. Pulp end Pepel: March Environment: Report of the MIT/Ncrwegian Great Lakes (19911. 1991 Science Ahrisory 1993. Chlorine Policy Study. Cambridp: Baard Report Wndsor: hrin 22. Aben R (19931 Technical and econom- t&fsa&matiz in- dTechndagy. 13 US. Environmentd Prdectim Agency tc feasbillty of the effluentdm bleached kraft 2. Assuming 1.8 kg of organicaikbouid II 9901. w Assessrrent fa 2.3.7.~~~and puip null. pmceedn' gs of Ihe non.chlorine Meah halagens (AOX)per ton of pulp, d. U.S. EPA. 2.3.7.8-TCDF contarninetad receMng waters tng conference, March 14.1 8. 1993. Hilton Effluent Limmtions Guidelines. Pretreatment from U.S. Chlwine-Bleaching Pulp and Spar HE&. SC. See dsa.The dcsed cjde the ruhe Standards and New Source Performerce Milk Wrshingm O.C.: US EPA Office of Waer to closed mills Psper 217.3640. 3 March Standards: Pulp. Paper and Paperboard Rqhms andStsMs 1992. 1993; wrld poddon d I mllii W 14. Hogstedt, C. (1990). Camr epidemiole 23. Assumng a minunurn pmduaion d 0.7 t- d tleached pub peryegr: and 10 kQ d 9y in the paper end pdp mdusvy h Wno. M kg Aox pcr ton d pub 2 kg of wganochiumes for each ljlogram of hdimeit. -ens ut. aL Cuiipkx Mulires aid Cancw Risk Lyun. for each kg N;D( and wnid bleached pulp prm See Bmor 1989 [51 sved as 1Iw. lntfrnatlonal Agency for Research on Cancer: dmof akut Im milim tonnes per year. 3. Erell, M. (19921 AOX loadings m sea 382398. Solomon. K, et al. I19931 A Review and erms surrmnding Sweden quaMes ard Assessment of the Ecological Risks - or+ 15. Birnbeum L et al.[l993] Update: T~E gks of loadings. Ernrmnmentsl fats end effects Assodated wrtfi the Use of Chlorine Dioxide EPAk Scidic Rassessment d the Risks at bleached pulp mill ettluents. Swedish for the Bleaching of Pulp. Alliance for af Exposure to cIiGKin Dioxin '9.7 Environmental Protection Agency. EnvimnmentalTechnology, Cktober 1993. @ganoh&gen Cornpwnds 14:14. Rw4031 pp. 5767. 24. Assuming a .01 14 ratin of 16 Cook F! R al. 11991I Eioaccxlmulmn 4. Enviient Canada (1991 1 Canadian extractable organically-bound chlorine and tnlpahl c4 Tcm and rebted corrpounds in Environmental Protection Act: Priority FOCI) to tnml orgeniceliybound halide (AW) aqua* ecosystems Biological Basis lor Risk Substances List Assassmant Report No. 2. in effkmnts frun milk using 10090chlorine Assessment f Do6ns and Related Comwmds. Effluents from Pulp Mills Using Bleaching. diadde. SeeSdornon (231. Banbury Report 35:143-167 See also, ~GovermenLofcarada Subamian. N.. et al. [I9871. Re&abn KI the 25. Solm(19931, note 23. testostemne lev& by PCBs and DOE in Dall's 5.8mw N. eta. I19891 Waft MY Efiberhs 26. M. Ward (19941. Eka Nobel dmC RepatdtJlern&&W8ld!m Po-poises of Northwestern North Pacific. ilmmril ops closed-loop bleaching method. Marha Pdlrfion Mletin. 18:643646 See also Envirnmnt aharia See ah. Suntiq L, S-ia Chemical Wcdc 16 March 1994. p. 16. W.. and Mackay, 0. 119BBL A review of the Eibmm I151 name and properries nf chemlcsk presen-. m 17. Based on U.S. PAestimate5 of dioxin pulp mill elfluert. Chemosphere 17 (71. releases from the U.E. paper industry of 12491290. 2351180. and assuming U.S. bleached pulp 6. ~IUImCmtonnesperyearof promiis 36 pgcm d %add tual Cleverly. WHATYOUCANDO wui&i& Meached pulp pmdudlan and dim D. [I9931 Uaxln Reassessmant Update. for form farnetron at the rate 0.3 kg/h d plp. presentation at the EPA Regional Waste Sea K-. R. (1 991I The Greenpeace to Combusion permit v\hiterr WorCgmup MeBng Greffpeace~ml1991. Washington O.C.: US EPA Office of He& and ErMmnmental Assessment. See ako. AMUEI 7 Mem$mU. K. a al. (19891. Cunbvstcm Re+, World Trwds ana Trade Pulp and Paper products of biosiudga from pulp mill. I-. JuV 1993. Chanosphere 194134416. 18. 3eaed on US. EPh current c~ncer 9 EM, A Resarrce Etyjneeriqg Company pot- estimate for 2.3.7.8-TCOD 01 0.156 (19871. Land Treatment Effects on Wilditfa (ng/kg/daybl. -iq a 70 kg person Hmh a PoprllUons in Red Pine Plentetions Nekoosa 70 year lifetie. cf. US EPA [1985). Health papsn. lmL Assessnent Document fcr Pdychlonnatcd dben 9. m.C 119901 Envirmencalty stable zopdtmdns Office of Heakh and Erriimmencd chbrinated contaminants fron the pulp and ~ssemntEPA/~OD/~-~~/OI~~. or CWF~. papr urdustry. in Vaina H.. et al. Complex nm al dmdn released wll inmedatsly resuk h Mh-a and Cencar Riintematmal human mug this $urn 6 nct a nsk charat; for Fk6ea%h MI Can- p 341353. tarizabm Mpa quanbtaw discharges m tox- icdagcal perspecfive. 10 Furst,P,etal[l991L EodykrdW,r-& Pcco end PGW frum fccd Biologicsl Basis for 19. Slackford, L. (19921 hm&l imple- Risk Assessment of Dioxins and Relazed mentation of 9zone bleaching tezhnology. Gmpovnda Ombuy Repat 35:13>142. Resated at NonOllorin Bleaching Emerging Technologiffi Today And In The FJture. Hiitun 11. %&9glWl. & R A. (19931. &dlKl Head. 32 March 2-5 1992. PUP cwnpas*lOn f%R and Effects in the Baltic Sea. Report of ;he 20. Alben R. 7cF Mk." PamMain, dis. Environment/Cellulose iI Project Swedish wbmd at NonChlaine Bleaching Conference. bimma-td Pmectim 4ency 14047. See Amelia Island, FL, March 1994. Sea also ,.r

Stakeholder Negotiations: Erercises in Sustainable Devehpment SUMMARY The purpose of this document is to show that society can re& si-enificant economic gains in the transition to a chlorine-&ee economy, if the process is guided by carefuI pl&g to minimiz costs, maximizz benefits, and insure that both are distributed equitably. The chlorine industry has argued that phasing-out chlorine will result in exorbitant costs to the U.S. and Canadian economies and massive job losses. The indusw’s scenario, however, is based upon invalid assumptions that drashcdy overestimate the costs and underestimate the benefits of a well-plamed transition. The industry’s cdculacons are based upon a methodolog thar assumes the chlorine phase-cut wi.2 be lrcplemented instantaneously, without thought, plannin_e, or prioritization. The inciutry assumes that the alternatives that will replace chlorine will be processes that perform poorly, arc unreasonably expensive, or are not the cost-effective substitutes the market wodd select: in fact, chlorine-fiet altcmatives are fkquently more efficient and productive than the chlorine-based processes they replace. Finally, the industry’s scenario looks~odyat costs and burdens and fails to explore the benefits and savings associated with the transition to a chlorine-fiee economy. The actual costs of phasing-out chlorine are likely to be only a small hction of those calculated by the industry, and the benefits of the transition are expected to outweigh these costs. Implemented with careful planning, the transition to a chlorine-fiee economy can be economically beneficial and socially just. It can saw money and create new jobs. Further, it can provide a model for how to undertake major economic change - especially that driven by ‘an environmental imperative - in a way that is humane and equitable for those most directly aEecttd. A complete estimate of the economic benefits of the transition is beyond the scope of this document Even the following prelunmaxy information, however, makes clear that the net savines associated With a chlorine uhase-out would outweieh the costs of a WelI-Dkinned transidon.

+ By prioritizing major chlorine use-sectors, the cost of the phase-out can be substantidy reduced. Even according to the industry’s own inflated cost estimates, 97 percent of cblorine use could be phased-out for just S22 billion per year. These costs are much lower than the savings associated with phasing-out chlorine, with initial estimates beginning at S80 to S160 billion annually, as detailed below; Current health care costs associated with the effects of persistent organochlorines in the U.S. and Ontario have been estimated at $50 to SlOO billion per year, according to the International Joint Commission on the Gre3t Lakes. These costs to societies would be saved if chlorine were phased-out.

This information is printed with the permission of Greenpeace and is excerpted fiom “Transition Planning for the Chlorine Phaseout Economic Benefits, Costs, and Opportunities.” Copynght 0 Greenpeace 1994.

fiercise 4: Chlorine and the Paper Industry 4 Ln the pulp and paper industry, converting to totally-chiorine free bleaching process would save the industry S185 - 370 million per year in chemical costs; $108 to 189 million per year in energy costs, according to industxy estimates; and additional millions or billions in reduced e..cpendimes for water use, effluent treatment, disposai of contaminated sludge; and reducid costs for lawsuits, remediation, and liability. bfiils that adopt chlorine-&et bleaching process can rcalize additional cost savings by instailing a closed-loop system for chemicals and effluents. Such a system can be built for SOmillion less capital than a conventional mill; if all U.S. and Canadian mills built such systems, savings on water, energy, and chemical costs would total S1.4 billion per yea. As the international paper market increasingly demands chlorine-free paper, European producers are convening their production processes to meet this demand. Industq analysts have noted that if the North American industry condnues to refuse to change to meet a changing markec it will be lefi permanently behind with lower market share; revenues and jobs wiIl be jeopardized. In dry cleaning, a recent U.S. EPX report shows that chlorine-based solvents can be replaced with a water-based system that is equally effective and results in a 42 percent lower capital investment to inszaU, a 78 percent better rcntm on investment a 5 percent increase in profits, and a 21 perc:nt increase in jobs. Implemented throughout the US., this system would create 33,170 new jobs with wages of S606 million per year.

6 Manufacturing industries can replace chlorinated solvents with cleaner production processes that have been shown to resuit in Iarge savings - as much as several million dollars per company - due to reduced costs for chemical procurement control, and disposal. Often these processes dso subst-iture new jobs for chemicals. Even in the pharmaceutical industry, the majority of organochlorines couid be easily eliminated in favor of existing safer alternatives. In this sector, most organochlorines arc used as manufacmring process aids - i.e., solvents, extractants, and intcrmcdiates - that do not appear in the final medicine. Studies by industry and by the Metropolitan Water District of Southern California have found that effective alternatives are available now to replace these organochlorines. - Alternative agriculnrrai systems that reduce or elkninate pesticide use have been shown to increase crop yields, lower farmers' costs, increase financial returns, and create new jobs by substituting Iabor for chemicals, according to the National Academy of Sciences. Estimated cost savings associated with the chlorine phase-out in this sector arc up to S8 billion per year in the US. and Canada. About half of the jobs associated with chlorine are in the fabrication of PVC plastic products. Because floorins toys, pipes, and other such products wiIl conrinue to be

Stukehldrr Negotiations: Exercises in Surtainabh Development made when chlorine is phased-out - but simply with traditional materials or non-chlorinated plastics - no net reduction in jobs is expected in this large sector. For workers producing the feedstocks or resins for these plastics, godin production of the alternative materials - fkquently in the same facilities or regions - are expected to ofEset reductions in the PVC sector- Because there may be some job displacement in this are& however, careful transition planning is necessary to insure that new investmen< job creation, and assistance hdsare targeted specifically to minimize the dislocatioIL Phasing-out chlorine and organochlorines will substantially reduce industry's costs for poIlution control and disposaL, which can represent a major drag on the economy. Estimated savings fiom the chlorine phase-out in this sector are estimated at $22 billion to E13 billion per year, based on U.S. EPA fipes, using a very conservative estimate. Phasing-out chlorine will prevent the continuation of a legacy of contaminated sites with clean-up costs estimated at up to $1 trillion. Preventing organochlorine discharges that would occur over a 20-year period are estimated to result in S20 to 3100 billion in obviated mediation costs.

6 The transition to a chlorine-fret economy would require an investment in new construction and new technoIogies that would provide a powerfid economic stimulus. Based on the chemical industry's estimate of this investment at S67 billion, the transition would create about 925,000 job-years of new employment or 92,500 permanent jobs over a ten-year period.

h order to insure an effective transition, the chlorine phase-out thodd include the following steps: . 1. Priority phare-out sectors. Timelines shodd be immediately set for the phase-out of chlorine in the following large sectors for which alternatives have been proven effective and affordable: pulp and paper, solvents and dry cleaning, PVC, and pesticides. These sectors account for about 55 percent of all chlorine used in the U.S. and Canada. 2. Secondary sectors. Timelines to sunset other uses should be established based on the quantity of chlorine used and the availability of alternatives. Special attention should be paid to the following sizable sectors for which alternatives are feasible: chlorinated intennediates used to produce isocyanates and propylene oxide; chlorine used to produce titanium dioxide; and chIorine used in wastewater disinfection. Together with the priority sectors, these uses consume 68 percent of all chlorine now produced. 3. Chlorine tar-The U.S. and Canada should institute a tax on the chlor-alkali process and on off-shore imports of chlorine-containing products and alkdi produced

fimcise 4: Chlorine and the Paper Industry through the chlor-alkali process. Chlor-alkali plants should no longer be allowed to purchase govcrnment subsidized electric power, to purchase regdated electric power at less than average market rates. 4. Transition Fund to protect workers and commrtnaies Revenues equal to those generated by the chlorine tax should be held in a fimd to aid the transition to a chlorine-free indusmd society. In particular, the fund should be used for exploring and demonstrating economically viable altcmatives and for easing dislocations among affected workers and communities - particularly those associated with the chemical manufacturing industry itself. Funds &odd be targeted so that investment in cleaner production processes is concentrated in locations where chlorine-based processes have been phased-out, so that new jobs are created where old jobs are eiiminated. Funds should also be used to insure income protectioq health care coverage, and educational opportunities for workers whose jobs are eliminated in the transition. A board should be estabiished to help set the policy of the fund and should include representatives of the various stakeholder groups. By admitting that alternatives are available for all major chlorine uses, the chemical industry validates the feasibility of a society without chlorine. By raising the specter of job loss and economic dislocation, the industq declares itself concerned with the interests of chlorine workers, users, and communities where facilities are located. With this declaration of concern, the chlorine industry opens up a new debate about the most effective and equitable way to implement the tramition. With a carefid planning process, the transition to a chlorine-free future can provide a model for truly sustainable development, and all the environmental, economic, and socid benefits that accompany it.

Stakcholrier Negotiations: Exercises in Sustainable Devehpment The Right Balance - Environmental Responsibility and the Competitive Edge

Clifford 1. Howlett, Jr. Vice President, Government Affairs GeorgiaPeciffc Corporetion Arianta, Georgla

he pulp and paper industry in the United and energy consumption per ton of paper have States has invested billions of dollars over the been reduced by almost 50 percent. To put that in Tlast 20 years to meet standards set by the perspective, because our industry cugenerates Clean Air and Clean Water acts as well as hazard- more than 50 percent of its electricity needs, we ous waste laws. Our air, water, and land are cleaner save 24 million barrels of oil annually. Industry air now as a result. But groups outside the industry are pollution control technologies now remove more pushing us to implement ever more drastic environ- than 97 percent of the particles generated in the mental actions that provide little or no benefit to pulp and papermaking process. Virtually every new human health or the environment beyond the sig- solid fuel boiler and piece of process equipment nificant benefits we have already achieved. Newr- achieve a particle removal rate of almost 100 per- thdess, these ideas have the capacity to funda- cent. mentally affect the competitive structure of the in- The U.S. pulp and paper industry is the world's dustry worldwide. Three key issues dominate: first, largest paper recycler, recovering almost 31 million what do we mean by chlorine-free?Second, what is tons of paper for reuse last year. We have set a goal the industry being asked to reduce, and what of 40 percent recovery by 1995. benefits will be gained?Third, and finally, what are On the resource side, last year the US. forest i the economic impacts of these changes? products industry planted nearly 1.7 billion seed- lings. Twenty percent more forested timberland ex- Pollution Prevention Progress ists today than 20 years ago. Georgia-Pacific and Let's consider the progress this industry has made in other U.S. pulp and paper manufacturers are also pollution prevention. Today, U.S. mills are already participating in U.S. Environmental Protection meeting effluent pollutant discharge levels that are Agency's voluntary 33/50pollution prevention pro- targeted for 1995 by other paper-producing na- gram. in fact, the industry has already realized tions. Our industry uses 60 percent less water per EPA's goal for lowering dioxin dischaga, reducing ton of product than it did just Over two decades them by 80 percent. Georgia-Pacific's efforts here ago. Since the Clean Water Act's implementation, have resulted in nonmeasurable levels of dioxin in the total biological oxygen demand (BOD) of in- 9 of our 10 bleached mill effluents. We have com- dustry wastewater has been reduced by 70 percent, mitted the capital to achieve this nonmeasurable while paper production has increased by 50 per- result at the remaining mill, which even now meets cent. The pulp and paper industry is among the its state's dioxin water quality standard. We are world's most efficient users of fuel. Through use of well on the way to meeting the other pollution waste by-products, our industry produces more reduction goals for the 33/50program (see Fig. 1). than 56 percent of its own energy needs. Over the The US. industry recently adopted its own bet last two decades, oil consumption has been of environmental, health and safety, and forestry reduced by more than 60 percent, and fossil fuel principles that formalize our commitment to a

Reprinted from: Promedm' gs, International Symposium on Pollution Prevention in the Manufacture of Pulp and Paper - Oppoaunities and Barriers. U.S. Environmental Protection Agency, February 1993. fiercise 4: Chhrine and the Paper Industry Grams Par Year Deflning Chlorinefree Does chlorine-free mean reducing or eliminating 30 the use of chlorlne gas with chlorlne dioxide sub- stitution?Do we measure success in the reduction of chlorinated organics of concern?Or do we mean the we of no molecular or elemental chlorine anywhere in the manufacturing process? The answer is that trying to make the world chlorine free, as some organizations would like, is impos- sible because nature is replete with chlorinated oganics. As reported by the Swedish Environmen- tal Protection Agency, more than 220 million tons of chlorinated organic compounds - nearly 3,000 times the amount discharged by the U.S. paper in- dustry - are pduced naturally by marine or- ganisms in the Atlantic Ocean each year. The next question we must answer is, “What is the industry being asked to reduce, and what benefits will be gained?” Most environmental groups are stressing the elimination of bioac- healthy environment. With these accomplishments cumulative chlorinated organics. Are they talking and ongoing initiatives, I believe the US. pulp and about dichlorodiphenyltrichloroethane (DDT)?It’s paper industry is meeting the pollution prevention not produced by the pulp and paper industry. chat 1enge. Polychlorinated biphenyls (PCBS)? Not us, either. let‘s put these efforts into perspective. As Fig- Dioxin?The US. pulp and paper industry has vir- ure 2 illustrates, the industry contributes about .25 tually eliminated the problem. In fact, pollution percent to this country‘s Gross National Product, control measures in the United States have already and yet, we account for nearly 2.5 percent of total led to substantial reductions in all chlorinated or- U.S. industry expenditures on pollution control. ganics. All chlorinated organics are not created Certain environmental factions, however, do not equal. Most are benign, although a few may be believe that this is enough. They believe that toxic, including some of those produced naturally. whatever industry does, it will never be enough to Only a tiny fraction of all chlorinated organics are safeguard public health and the environment. That generated by human activity, At a typical pulp mill, attitude has led us to a critical juncture in the his- 90 percent of the chlorine used in the bleaching tory of the pulp and paper industry - specifically process ends up as common salt, while the remain- the heated debate about the use of chlorine com- ing 10 percent combines with the various con- pounds to bleach pulp and paper products. stituents to form chlorinated organics - 99.96 percent of which are benign. To put expourre levels into meperspective: based on current available scientific information used to determine the “no observable adwne ef- fect level” (NOAEL), the concentrations of each chlorinated organic, when present in mill effluent, are below the NOML for these compounds. The €PA effluent guideline program focuses on 28 chlorinated organics that it considers of con- cern. Only 10 of the 28 are found in bleached pulp mill effluent, and those only occasionally. So using the level of adsorbable organic halogens (AOX) in

poluonGm~c.ply~prcKI*n V*nQSNpnrm the effluent as an environmental measure requires caution. AOX is not a reliable indicator of environ- Fbum t.-lSUto loo0 pulp mllls &rro of US. Indumtry mental effects because it doesn’t pinpoint the or- pollWan aomrol oapl(.l oxpondltum (Ivr tlmrr tholr lo is iuoor vriuo o( a~pmonta. ganics of interest. It a relatively inerpensive analytic chemistry indicator of the presence of all chlorinated organics in the waste stream. AOX also .. fails to consider issues of equal impoRance to the

Stakeholder Negotiations: Exercises in Sustuinubk Development environment, such as what environmental benefits Figure 3 shows the amount of money pulp mills will be gained?All indicators today say that the en- have spent or will spend to go to ever higher levels vironmental benefits to be gained from eliminating of chlorine dioxide substitution to achieve the use of chlorine compounds in the pulp bleach- specified reduced levels of AOX. The industry ing process are insignificant. today is already in the 1.5 kg AOX per ton of pulp Advanced methods in aquatic biology and range. Companies have achieved success by chemical analysis are being used to examine the foregoing increased production from current potential environmental impacts of current and capacity. Mills have been forced to use excess new technologies. To date, there are no indications recovery boiler capacity to recover solids rather that totally chlorine-free UCFI technology is en- than expand pulp capacity as had been planned. At vironmentally safer than chlorine-based processes. "no AOX" levels, which means absolutely no Bleaching per se may not be the relevant issue. In molecular or elemental chlorine or chlorine fact, at a 1989 Technical Association of the Pulp dioxide is used, capital and operating costs are sig- and Paper Industry conference, an international nificant factors, but the opportunity cost is equal to panel of scientists concluded that no marked dif- the other two combined. The issue is not whether ference exists in toxicity between properly treated AOX can be removed. It can be if enough theand chlorine-bleached and nonchlorine-bleached ef- money are expended. But we have to ask how fluents. In addition, effluents from any new bleach- much is enough when we're siphoning off scarce ing technologies will need to be carefully capital to install technologies that have little or no monitored to determine their environmental ef- environmental benefit -capital that could be used fects. to make our mills more competitive. Advocates of totally chlorine-free bleaching are In human terms, the impact of AOX reduction quick to argue that the technology and Its costs on potential jobs is negative. Jobs are displaced be- would be phased in over time. They say innova- cause capital that was employed with the expecta- tions will appear, increasing both TCF pulp produc- tion that it would yield economic benefit through tion and quality, and bringing product prices down. expansion has now been used for AOX controls. This situation has led some countries to pursue a For example, Natianal Economic Research commercial agenda mandating TCF production, Associates' figures show that when AOX levels are which would make today's high-cost TCF mills the reduced to 1.5 kg per ton, fewer than 1,500 low-cost producers, while turning currently low- workers are displaced. At 0.5 kg per Ion reductions, cost mills into high-cost producers. up to 5,000 worken lose their jobs; at "no AOX" levels, the number of displaced workers rises to more than 36,000. Comparing U.S. and Other Secondary employment is also affected. Jobs in Countries' Industries related industries are displaced because of lost ac- tual capacity potential capacity at local mills For the last 20 years, the U.S. pulp and paper in- or - victims of the multiplier effect industry has on the dustry has made substantial capital investments surrounding community. This analysis does not and incurred higher operating costs to meet the en- reflect mills operating under high variable cost vironmental challenge. countries have not Other stmctures, where adding more environmental con- made similar demands on their pulp and paper in- trol costs to these mills might force them to close. dustry. US. environmental investments have We don't have any data on the magnitude of such achieved a performance level that shows no an but it stands to reason that if you run a marked difference between properly treated effect, relatively hightost mill, it will be noneconomic chlorinebleached and nonchlorine-bleached ef- sooner with additional environmental costs. While fluents. Pulp and paper industries that have not other mills will make up the capacity that is lost, a made such investments should not able to create be resulting loss in relative worldwide competitive- a dimate in which the U.S. industry has to abandon ness will diminish likelihood that these offset- what it has done, in the name of being new and dif- the ting capacity additions will occur in the United ferent or politically correct. These new tech- states. nologies must pass the test of time; they must prove whatever bendits they may offer as the existing technology has done. This leads to my final ques- Dlmlnlshlng the U.S. tion - what are the economic impacts of these Competitlve Posltion changes? To put it simply, the economic costs of changing processes are significant - for industry Competitive strength is the final component in our and society. considerationof the economics of these changes -

fier&e 4: Chlorine and the Paper Induty Billions Of 199 1 Dollars 20

15

10

1.5 kgKon 0.5 kgiTon No AOX Proposed AOX Control Level Present Value Present Value Of Of ...... ::;;:;%...... Present Value Of...... :.:::::::: Annual Operating C=ts Opportunity Costs Fbwo 3.40.W lmunrd by pulp mlllo to ruch vrrlow AOX Rductlon lowfa.

their effects on the U.S. pulp and paper industrys cent on the mill's rate of retum. A 10 percent drop competitive position. Fortune magazine recently in the price of pulp results in a more than 40 per- identified this induttry as one of the few U.S. In- cent reduction in rate of return at the mill that has dustries that is competitive worldwide. achieved AOX reduction through high chlorine If we have to make process changes that are not dioxide substitution versus a drop of 90 percent on warranted by sound scientific evidence, while our rate of return for the mill trying to achieve total competitors in other countries don't, our competi- AOX removal. At a 13 percent drop in market pulp tive position will erode. Table 1 shows how much prices, the total AOX removal mill has no return on our Competitive advantage will decline relative to investment. some of our key competitors should U.S. pulp and Prices for commodity products such as market paper manufacturers be required to install tech- pulp have fluctuated within these percentage nologies to eliminate AOX completely. It's impor- ranges in recent years, adding to the risk factor for tant to remember that the United States also such substantial capital investments. Throughout imports pulp. As costs of U.S. pulp and paper in- this debate, we must remember that the market- crease, our domestic markets are more vulnerable place is the key. Traditionally in our market to imports. economy, demand determines the product mix in A cash flow analysis shows the impact on the marketplace. This supply and demand equation return on investment for a mill with AOX reduction makes the market efficient. Some interested parties achieved through high chlorine dioxide substitu- see "explosive" growth in markets for TCF pulp. tion compared with a mill trying to achieve total The facts suggest otherwise. AOX removal (see Fig. 4). At the baseline, at a given According to Hnwkinr Wright, an independent pulp price, installing equipment to make totally international consulting firm, TCF pulp currently chlorine-free pulp results in a reduction of 60 per- accounts for less than 1 percent of the world's total

Stakeholder Negotiations: Ererrises in Sus&inable Devebpmmt 191.7 1s.0 83.6 52.9 36.5

pulp production. Several high-cost European sulfite Look at what the U.S. pulp and paper industry pulp mills have seized the opportunity to establish has done. We’ve had decades of expenditures for niche markets in this pulp. These pulp grades are, environmental controls with corresponding en- however, inferior in quality and more expensive vironmental benefits. We’ve recently reduced than those presently manufactured by the majority dioxin to nonmeasurable levels in virtually all mills, of world pulp producers, who utilize kraft pulping with significant additional capital and operating technology. costs. Other chlorinated organics of interest have Therefore, we must be wary of attempts by spe- also been reduced correspondingly. We have been cial interest groups to mandate demand for one successful in the area of environmental control product over another. This kind of intervention while maintaining our competitive advantage. We throws the market off and often results in con- simply ask that the investments we’ve made not be sumers not getting the kind of products they want forsaken, that costs incurred have a commensurate as well as forcing the market into a high-cost mode. measurable benefit, and that our relative world if the goal is for an industry to have minimal en- competitive position be maintained. vironmental impact, the most efficient and cost-ef- The pulp and paper industry is among the first fective way to achieve that is for government to agree that government has an obligation to environmental policymakers to set standards and safeguard the public and set standards for environ- guidelines - for product quality and safety, and mental performance by industry. What industry is environmental and health effects - let industry fig- saying, however, is that we need the flexibility to ure out the best way to meet those standards, and meet performance standards in the most efficient, let the market run its course. cost-effective way. In addition, the market must be

I I I I I I I I I I I s 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 % Loss In Selling Price Flpure 4.4.h flow onrlyola: 10- ol ROI with pulp price faduetlono.

Erercise 4: Chhrine and the Paper Inductry allowed to dictate changes in product mix rather momentum by working in partnership with regula- than have changes mandated for it. The pulp and tory and environmental organizations to ensure paper industry is meeting the environmental chal- that environmental expectations continue to be met lenge. The important thing now is to maintain this in the most effective way possible.

Stakeholder Negotiations: fiercises in SurrainubLe Devehprnent