Paper and paper productsTOTAL UK EMPLOYMENT25,000 direct and more than 100,000 indirect employees. 84There are over 65 companies represented by specialist tradebodies in the UK. 85THE STATE OF THE SECTORThe industry currently has an annual turnover of £5 billion. 86While production fell from a high of 6.5 million tonnes in2000, the period since 2009 has seen uninterrupted growthin the sector, although it remains significantly below itshigh point in 2000. 87 The last few years have, again, seen aconcerning decline in output (as shown in Figure 14).The last few years have also seen employment and thenumber of UK paper mills fall as well.PROBLEMS FACING THE SECTORThere are a number of factors that are challenging thepaper industry. In addition to high energy prices, thereare other pressures on the industry, including changinginternational standards on quality and concerns aboutwater abstraction regulation. 88 The EU’s REACH directive hasalso had an effect on the paper industry, regulating the useand supply of certain chemicals. Faced with higher pricesand ever-more regulation the number of jobs in paper millshas, unsurprisingly, declined from 25,000 in 1993 to under10,000 in 2013. See Figure 15.THE IMPACT OF HIGH ENERGY BILLSFor a paper mill producing on average 500 ADt/day usingtypical energy costs the annual energy spend would be£15.5 million per year. 89 This is despite the fact that between1990 and 2010 the UK papermaking industry reduced totalenergy use by 34 per cent per tonne of paper made. 90There have been warnings that energy and climate changepolicies risk job losses in the paper industry. 91 This has notbeen confined to the UK but in paper mills across Europe inrecent years, with various facilities marked for closure acrossthe EU. 92 These concerns have been exacerbated by fearsthat paper mills will not be allowed to retain a ‘carbonThe EU andEnergy Policyleakage’ status, which means that they may not receiveenough carbon allowances to cover their emissions underthe EU ETS. It has been estimated that, were the paperindustry to lose their status then it would cost the UK paperindustry £94 million between 2015 and 2020. However, evenwith this protection, the Confederation of European PaperIndustries has already warned that problems are mounting:“The European Industry needs affordable energy.CEPI calls upon on the European Commission andmember states to urgently address the increasingcost differences in energy costs compared to NorthAmerica resulting from the shale gas boom. Thissituation is unsustainable. The competitivenessof industry is seriously at risk. Even for singlecompanies, the costs differences are tens of millionsof euros a year, compared to competitors buying gasin the USA. If nothing is done, the growing price gapwill soon make most of the investments in Europe– including low-carbon technologies – simplyeconomically unattractive.”- Confederation of European Paper Industries 9384 Confederation of Paper Industries, found at 85 Confederation of Paper Industries, Industry Facts, found at 86 A. Reece, “Government policies bad news for UK paper industry”, 16November 2012, found at 87 CPI, Industry Facts, found at 88 CPI, UK Paper, found at 89 Carbon Trust, Industrial Efficiency Accelerator – Guide to the paper sector,found at 90 Confederation of Paper Industries, “Myth: Paper production uses toomuch energy”, found at 91 G. Pitcher, “Paper industry chief warns of ‘many closures”, MaterialsRecycling World, found at 92 European industrial relations observatory online, “Workers react tothreat of closure of paper mills”, found at 93 Confederation of European Paper Industries, The difference we cannotafford: CEPI position to the costs of Natural Gas in Europe, foundat 30
INDUSTRY CASE STUDY 3.1.3Figure 14: Output - Paper & pulp index (2010=100) 94Figure 15: Paper and board mills/employees 9594 ONS, “Detailed Index of Production”, 95 CPI, Industry Facts, found at 31
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