With time fast ticking away, the AF&PA's aim of recovering 50% of the USA's paper by the year 2000 is unlikely to be met

by Kirk Finchem

USA looks to be off-target for its 50% recovery goal

In 1989, the US paper industry in the form of the American Forest & Paper Association set itself a "stretch goal" - recover 40% of the paper used in the USA by 1995 for recycling. By 1993 the industry had almost reached that goal, so it undertook to raise the target to 50% recovery by 2000. However, some observers now believe that reaching such a goal across all paper grades is unlikely.

According to the president of Andover International Associates, Fred Iannazzi, the 1993 analysis projected an annual paper recovery rate of 51 million tons by 2000. Of this total, 39.5 million tons were expected to be used in US paper and paperboard mills, 7.6 million tons were to be exported and 3.9 million tons were expected to go for "other end uses".

Iannazzi explains that there are several reasons why the 50% recovery goal is unlikely to be met by 2000. Firstly, US paper consumption rose more rapidly than expected during the 1990s and more quickly than the nation's capacity to collect and process certain grades of recovered paper. Secondly, the cost difference between recovered fiber grades (most notably deinked market pulp) and virgin fiber have been insufficient to drive any widespread addition of recovered fiber capacity by integrated paper mills. Finally, two million tons of "other end uses" (for example, as a composting ingredient) failed to materialize. "On the other hand, the other projections regarding consumption of recovered fiber at domestic mills and export sales were reasonably accurate," says Iannazzi.

Paper recovery in the US rose from 29% in 1987 to about 45% in 1997, a growth rate of 7.4% from 1987 to 1995 and 3% from 1995 through 1997 (Figure 1). As Iannazzi points out, "The recovery rate in 1996 continued to increase even though the tons of recovered paper actually declined."

The recovery rate is the result of dividing the amount recovered by the total consumption of paper and paperboard during the target year. "If you begin by assuming that US paper consumption in 1997 (99.7 million tons) will increase by 2.2% annually, consumption reaches 106 million tons in 2000. So 50% of that is 53 million tons," Iannazzi explains.

The AF&PA Capacity Survey report and Andover's own models predict a recovered paper demand of 39.1 million tons for domestic mills in 2000, 8.4 million tons of exports and 1.7 million tons of "other end uses". So in total, 49.2 million tons of paper will be recovered in 2000 (Figure 2). "Industry-wide, we expect the rate to be closer to 46% (49.2 million tons of the total estimated 106 million tons of US paper consumption) by 2000, reaching 50% several years later," Iannazzi says.

Incentives to build

"It's clear that the potential drivers are there," Iannazzi explains. "For instance, when the cost of kraft market pulp rises, there is an incentive for paper mills to build deinking capacity on-site." The question becomes whether the influence will be sustained or short-lived.

In the case of newsprint, consumption tends to be understated by not counting coated and uncoated groundwood printing/writing papers used for inserts and flyers, while the recovery rate tends to be overstated by counting the inserts and flyers typically collected with ONP, according to Iannazzi.

"The largest inhibitor to increased use of ONP has been the flat market for newsprint - ie the unprofitability of the grade," he says. "For many companies, the market has just not provided sufficient returns to support new capital investments. When producers have enough capital reserves to replace their old mechanical pulping facilities with processes that use recovered fiber as a furnish, they will do it. The technology and economics of using ONP, both as a blending fiber and as a sole fiber, are well established. From a capital investment standpoint, the comparison is between TMP (thermomechanical pulp) and deinked ONP (old newspapers). Once the investment is in place, the issue becomes the difference between wood and power costs for TMP, compared with the delivered cost of ONP for deinking."

Similarly, the technology and economics of using old corrugated containers (OCC) for making containerboard and folding boxboard are well established. Given a 1996 US consumption figure of 29.6 million, Andover estimates that the domestic consumption of corrugated containers could increase to 33 million tons by 2000. Assuming an economical recovery rate of 75%, the potential supply of OCC could be as high as 25 million tons by 2000. Iannazzi estimates that the recovery rate in 1996 was 73%, and expects the rate to increase to 74% in 2000.

He also notes that these recovery rates are OCC price dependent. When OCC prices reached $200/ton in 1995 and 1996, some OCC users developed the ability to substitute lower cost paper stock grades (eg residential mixed paper and mixed office paper) and that flexibility remains in place should OCC prices rise relative to substitute materials.

Office quagmire

The uncertainty these days is the degree to which office wastepaper (OWP) can be used in printing/writing grades. "While the technology for converting ONP into saleable newsprint is well established, there has been a lot of 'learning' at deinking facilities that process OWP," Iannazzi says. "They are still learning to deal with the 'trash' in that waste stream." He estimates that of the 12.8 million tons of OWP (65% of all US OWP) available for recovery by 2000, about 5.4 million tons can be considered "high-quality feedstock". An additional 2.9 million tons would be available for "lower-end uses".

With 5.1 million tons of recovered paper used for the manufacture of printing/writing grades and tissue in 1996, about 2.5 million tons was 'high-quality' OWP. The balance was pre-consumer waste, low quality OWP, or printing/writing papers from other sources. "Furthermore, our analysis of the AF&PA statistics leads us to believe that the use of high quality OWP in these applications will increase to three million tons by 2000. Theoretically, there is a potential to recover 2.4 million tons/yr of high quality OWP by 2000, beyond that which is presently estimated."

Of course, the principal use for OWP is as a substitute for bleached hardwood kraft pulp, and this is one of the biggest hurdles in the way of expanded recovery. The prices of hardwood pulp during the past three years have been depressed, so the economic incentive has been very small. The "economic incentive" being the difference between the cost of hardwood market pulp delivered to the paper machine, and the fully allocated cost of adding on-site deinked capacity and delivering the deinked pulp to the paper machine.

Most producers calculated, or learned the hard way, that operating deinked market pulp facilities as a stand-alone enterprise is uneconomical for supplying deinked fiber. "We estimate that making deinked market pulp at a stand-alone facility costs $100-150/ton more than if that facility was co-located with the paper machine (ie incremental capacity within an integrated mill)," explains Iannazzi. "That difference arises from facility charges that are not shared (allocated) across a broader, integrated mill," he adds. "They include costs of steam generation, water and effluent treatment, maintenance and rail transportation capacity. The costs of drying, baling and warehousing the deinked pulp are also avoided. And with the integrated setting, the deinking plant also has the opportunity to cost-optimize its deinked operation for a mill's specific paper machine needs, rather than making a broadly higher-quality, market pulp product.

Kirk Finchem is technical editor of Pulp & Paper in the USA