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2012: Paper: David Workman

For decades there has been a view within government that manufacturing was doomed anyway so why try to nurture it when greater rewards could be achieved by supporting other sectors of the economy. This was particularly true if the manufacturing sector that you represented was energy intensive.

What a transformation we have witnessed with Minister after Minister having come out to actively champion not just a few favoured industries, but manufacturing in general and the energy intensive sectors in particular.

This change of heart is very welcome and we should give credit to the Chancellor in recognising the difficulties faced by Paper and other such sectors in his Autumn statement, which contained a package of measures aimed at helping energy intensive sectors through the transition phase of decarbonising our economy.

CPI and other bodies representing the Energy Intensive Industries (EIIs)  campaigned during 2011 to draw government attention to the very real danger of carbon leakage, in light of the measures needed to meet the UK’s very exacting renewables targets.  So credit where credit is due.

However, we must not get carried away as this support package only amounted to £250m. This needs to be measured against the level of subsidy offered to German EIIs which amounts to some £5bn in tax rebates alone.

Negotiations will continue during 2012 on the finer details of the package of measures, and we also need to ensure that future government energy and environmental legislation meets an essential criteria – that being that UK manufacturing is not put at a competitive disadvantage through the actions of UK government itself.

Allied to this, CPI will be pressing government to develop sustainability criteria for energy generation from biomass and waste. For the Paper Industry it is vital that we can source our basic raw materials from managed plantations and from the waste stream (paper’s current recycling rate is 78%) The demand for wood for use as a fuel for energy generation is expected to grow enormously over the coming years, which not only threatens our source of raw materials but could lead to further deforestation, which could in itself have disastrous environmental consequences.

CPI would also contend that in an era of resource constraint, we should be recycling all recyclable paper waste into new paper products and not burning it to generate energy. However, current government policy seems to have led to an expansion in the development of energy from waste facilities which we fear will divert material away from the closed-loop recycling route.

If we are to maintain or even increase the levels of closed-loop paper recycling we need a quality product to be delivered to mills from the waste stream. This has not always been the case and it is encouraging to see that Defra and the Devolved Administrations are taking this issue seriously. In 2012 CPI will continue to work with governments and their agencies in developing a Materials Recycling Facility (MRF) code of practice and in Europe on the revision to the EN643 quality standard.

We will also be seeking agreement to global sustainability criteria for biomass.

All of these concerns are of course dwarfed by the current eurozone debt crisis and if we are to avoid a double dip recession in 2012 solutions need to be found – and quickly. The paper industry serves consumer markets – newsprint, packaging, hygiene and speciality papers. If the economic situation deteriorates demand for these products will fall, with the consequence that the industry could face further facility closures and loss of jobs.  The greatest challenge for our leaders in the coming months must be to ensure that we do not face that scenario.

David Workman, director general, Confederation of Paper Industries (CPI)

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