Abstract

Dynamics of the US Pulp and Paper Industry

     The US pulp and paper industry (SIC 26) is one of the more energy intensive manufacturing industries. The industry consumes 12 percent of total manufacturing energy use, 95 percent of which is used by pulp, paper and paperboard mills. Energy efficiency improved 22 percent over the last two decades. At the same time, the demand for pulp and paper products rose to the highest per capita rates in the world. Further industry expansion is expected for the next two decades. Will the expected expansion mean higher energy use and carbon emissions from the industry? What will be the effect of climate change policies on the industryıs rate of technological improvement?

     To answer these questions, we developed a computer model of technology choice, energy use and carbon emissions by the industry. A key feature of the model is its ability to track changes in the industryıs energy efficiency through time, and to explore the dynamic implications of alternative policy scenarios. The model focuses on implications of increases in the cost of carbon and investment incentives for the industryıs energy and carbon emission profiles until the year 2020. The model uses forecasts of production rates of four paper categories (newsprint, tissue, printing and writing, packaging and industrial paper) and four paperboard categories (bleached and unbleached kraft, recycled, and semichemical).