This document discusses the state of the European paper industry and policy issues affecting it. It makes the following key points: 1) The paper industry has faced an adverse economic context in recent years but has still invested in new technologies and mills across Europe. 2) The industry has a vision for becoming more sustainable outlined in the CEPI 2050 roadmap, aiming for 80% reduction in CO2 emissions and 50% increase in value. 3) Several major EU regulations and policy areas impact the competitiveness of the industry, such as environmental permitting, emissions trading, and renewable energy policies. CEPI is advocating for regulatory relief and fitness checks to support the industry.

2. An adverse
context The paper industry
Still moving
forward
EU
regulation:
Enough!
2

5. The European business environment
6
Source: EU Commission
March 2013
An adverse context

6. Production trends in related industry sectors
7
Industry production index – Source: Eurostat, March 2013
An adverse context
70
80
90
100
110
120
130
140
2008 2009 2010 2011 2012 2013M01
Total Manufacturing
Pulp, paper and paperboard
Glass and glass products
Ceramic tiles and flags
Cement
Basic metals
Aluminium
Electric power generation, transmission and
distribution

7. CEPI members in figures
European pulp
& paper industry
European
paper value
chain
81
Turnover
(Bn euro)
Added value
(Bn euro)
18
39
95
222
60%
Pulp
production
(Bn euro)
Employment
(thousand jobs)
Paper production
(million tonnes)
of direct &
indirect jobs in
rural areas
Added value
(Bn euro)
100
1,600
Employment
(thousand
jobs)
8
An adverse context

8. 9
Made in Europe
Raw material
base in
Europe
4% turnover
reinvested in
Europe
Exporting 20%
of production
Production
equipment
from
European
companies
An adverse context

10. The paper industry: an ebullient sector – InvestmentsChanges in the industry
Within the industry
• Change of Graphic versus packaging
• Larger market share of specialties and sanitary/hygiene
• Increase share of recycling and recycled paper
• Companies restructuring: more European, different profiles, new interests
• Transformation of the industry, Diversification into new areas, new expertises, new alliances
• Changes in the value chain
• Companies investing and companies not investing
• Higher priority for innovation, cash generation from papermaking
…within a mature market in economic and financial crisis…

11. Investments in Europe
Saïca: Partington mill in UK (400 Kt)
– new paper mill, 2012
Billerud: Pietarsaari mill in Finland (200 Kt)
– new paper machine, 2012
Stora Enso: Ostroleka mill in Poland
– new pulp line, 2013
Billerud: Tervasaari mill in Finland (100 Kt)
– new paper machine, 2012
SCA: Mainz-Kostheim mill in Germany (60 Kt)
– new tissue machine, 2013
Mondi: mill in Poland
The Paper industry: Still moving forward

12. Focus: the case of Austria
• 250 million Euros of investment in 2012
(record since ten years)
• New paper machine in Zellstoff Pöls AG
• New boiler in Mondi Frantschach
• Move to viscose pulp at Schweighofer Fiber in
Hallein
• Mayr-Melnhof bought a company from Norway
• Heinzel bought SCA plant in Austria
The Paper industry: Still moving forward

13. CEPI 2050 roadmap
A vision for
the industry
(Not just for
the bookshelves!)
The Paper industry: Still moving forward

14. Our target
Two key objectives
- 80 %
CO2
+ 50%
value
Towards the Forest Fibre sector
The Paper industry: Still moving forward

15. The cuckoo strategy
The egg The nest
Paper making without
water
Water European
Innovation Partnership
The future of paper
recycling
Raw material European
Innovation Partnership
New products and value
chains
Bio based industries
Public Private
Partnership
Breakthrough technologies Two Team Project
CEPI putting eggs in other peoples’ nests !
The Paper industry: Still moving forward

16. The European Innovation Partnership
Increasing
competition
for wood
Paper for
recycling
increasingly
exported to
Asia
Wood and
paper
potential
for recycling
is not yet
exploited
Three challenges for the paper industry:
→ Wood, paper and natural rubber have been included in
the Commission Communication on Raw Materials in 2010
What’s next?
Strategic Implementation Plan (SIP) (first half of 2013).
→ CEPI will contribute to the SIP with its priorities.
1 2 3
The Paper industry: Still moving forward

17. Bridge 2020 objectives
Bridge 2020 =
new products and
value chains
• Enabling rural development and
re-industrialisation
• Connecting farmers and foresters with
consumers through locally sourced and
produced goods and products
• Accelerating the transition towards
smart and efficient use of resources
• Securing European competitiveness in
the global biobased economy race
The Paper industry: Still moving forward

18. Bridge 2020 practical goals
The paper industry: an ebullient sector – CEPI 2050 roadmapBridge 2020
Develop the
potential of waste
Replace at least
30% of oil-based
chemicals and
materials with
biobased and
biodegradable
ones (2030 target)
Diversify and grow
farmers’ incomes
Meet 25% of
Europe’s transport
energy needs with
advanced biofuels
(2030 target)
Create a competitive
biobased infrastructure
in Europe and boosting
job creation
Deliver biobased
products that are
comparable, if not
superior to non biobased
products
New products will
on average reduce
CO2 emissions by at
least 50% compared
to fossil alternatives

19. The paper industry: an ebullient sector – CEPI 2050 roadmapBridge 2020
Bridge 2020 participants

20. The Two Team Project The Paper industry: Still moving forward

21. The Two Team Project
The mechanisms
• Competition, challenge, fun
• Out of the box, into the future
• Innovative method for innovative results
• Mutual inspiration
• Announcement at European Paper Week
Next meetings: Fortum, Helsinki (electricity)
and BASF, Germany (chemicals)
Tata in The Netherlands
Repsol in Spain
Atomium in Belgium
Lenzing in Austria
22
The Paper industry: Still moving forward

22. The Two Team Project
The Two team project:
an open campaign
Anyone can submit ideas on the website !
www.unfoldthefuture.eu
The Paper industry: Still moving forward

24. A changing context: the EU
The EU and the world
have changed
 10 new member states, more staff,
split services, more Commissioners
 Stronger European Parliament
 New priorities, new issues, more complexity
 Wider variety of actors; increased influence
of civil society
 A plethora of national interests
 Globalistion: “smaller” Europe, influence on
competitiveness and legislation
European regulation: Enough!

25. Regulatory risk
Our research suggests that regulation and
compliance continues to be the biggest overall
risk. In fact, four out of the seven sectors we
surveyed ranked this as number one.
Ernst & Young report, “Exploring the top 10 risks and
opportunities for global organizations”
European regulation: Enough!

26. A changing context – the political scene
Competitiveness
finally on the
agenda
The current political
scene
Policy
shadowed by
debt crisis
Sustainability and
competitiveness:
not either or
Change in
players
– maybe
not all
The future political scene
Change
or no
change in
the treaty
Elections
and
referends
Leverage
of power
Europe, no
Europe, less
Europe
European regulation: Enough!

27. Enabling trends
Regulation plays
a key role in
industrial policy
Foster
innovation by
developing skills
in academia and
business
Organizing
cooperation in
supply chain
Helping keep
the value of
innovation and
competitive
advantage
EU Industrial policy
European regulation: Enough!

28. CEPI’s agenda
 BREFs: environmental permit
to operate
 Resource efficiency
 EU Timber Regulation
 ILUC – Indirect Land Use Change
Directive: energy factor for
different types of wood
 Wood availability
 Emission Trading System
Directive: backloading, reform
 Carbon neutrality of biomass
 Energy we cannot afford
 Revision of Waste Policy
 Single market for green
products
 Brazil
 EU-US Transatlantic Trade
& Investment Partnership
 Implementation of Sulphur
Directive
 Nox limits
 Mineral oils
 Endocrine disruptors: revised
strategy
Environment
Forestry/wood/biomass
Recycling and waste
Energy and climate change
Prodcut policy
Trade
Transport
Food contact
European regulation: Enough!

29. Enabling trends
Electricity
(EUR/MWh)
Natural Gas
(EUR/MW)
European regulation: Enough!

31. The Basta! campaign
 No more cost increasing legislation for
next 2 years
 Fitness check for forest based sector
 Impact assessent
 «REFIT»: EU Regulatory Fitness
 CEPI «manifesto» for competitiveness
 Industry’s own version of an EU
Industrial/Energy Policy
Goals
European regulation: Enough!