INTERNET EDITIONINTERNET EDITION

PULP & PAPER PRODUCTION

CHAPTER V

ZEROING OUT DIOXIN IN THE GREAT LAKES:WITHIN OUR REACH

June 1996

CBNSCENTER FOR THE BIOLOGY OF NATURAL SYSTEMSQUEENS COLLEGE, CUNY FLUSHING, NEW YORKhttp://www.qc.edu/CBNS

PULP & PAPER PRODUCTION

CHAPTER V

ZEROING OUT DIOXIN IN THE GREAT LAKES: WITHIN OUR REACH

Barry CommonerMark Cohen

Paul Woods BartlettAlan DickarHolger Eisl

Catherine HillJoyce Rosenthal

June 1996

This report is the result of the second year’s work on a two-year project, “Economically ConstructiveConversion of the Sources Contributing to the Chemical Pollution of the Great Lakes,” supported by The

Joyce Foundation.

Printed on 100% post-consumer recycled paper processed without chlorine.

TABLE OF CONTENTS

I. Introduction

II. Strategic ApproachReferences

III. Medical Waste Incineration

A. IntroductionB. Technical BackgroundC. Economic Analysis of the Alternative Means of Medical

Waste DisposalD. ConclusionsReferences

IV. Municipal Solid Waste (MSW) Incinerators

A. Introduction B. The Regulatory Situation C. Implementation of An Intensive Recycling System In the

Great Lakes RegionD. Direct Economic Impact of the Intensive Recycling Programs E. Other Economic Impacts of Implementing the Intensive

Recycling Programs F. Conclusions and Recommendations References Appendix

V. Paper and Pulp

A. Introduction B. Technical Background C. The Environmental Effects of Chlorine Dioxide-ECF

and TCF Technology D. Economic AnalysisE. Product Marketing and Demand References Appendix

VI. Iron Sintering

A. Introduction B. Technical Background C. Economic Analysis D. Conclusions and Recommendations References

VII. Cement Kilns Burning Hazardous Waste

A. IntroductionB. The Regulatory SituationC. Technical BackgroundD. The Economic Consequences of Preventing Dioxin EmissionsE. Conclusions and RecommendationsReferences

VIII. Conclusions

References

V-1

As is the general case throughout this report, and noted earlier, we use the term “dioxin” here1

as it has become commonly used to denote the entire class of toxic polychlorinated dioxins and furans.When discussing empirical measurements or chemical mechanisms however, we will occasionallyspecify particular dioxin and furan congeners.

V. PULP & PAPER PRODUCTION

A. Introduction:

The paper and pulp mills that dispose of their effluent into the Great Lakes andtheir tributary rivers contribute a relatively small part of the total amount of dioxin that1

enters the lakes. Nevertheless, even this effect is important, for however dilute dioxinmay be, it becomes concentrated in its passage through the food chain. Moreover, inpulp mill effluent dioxin is accompanied by a large group of other chlorinated organiccompounds, lumped together under the term “AOX”. Although in recent years theindustry has made a successful effort to reduce the levels of dioxin in pulp mill effluentand the pulp itself, the levels of AOX and other pollutants remain relatively high. Eventhe most modern low effluent mills have toxic effects on aquatic organisms. Because ofthe multiplicity of pollutants produced by paper and pulp production, and the high costof removing them once they are produced, there is a growing recognition that pulp andpaper mills must move toward a design in which effluents, instead of being released,are recycled in a closed loop. As it happens, the technical possibility of achieving sucha “Totally Effluent Free” (TEF) pulp mill is facilitated by the design changes that producea “Totally Chlorine Free” (TCF) system -- which realizes the goal of completelypreventing the formation of dioxin to begin with.

For these reasons, despite the considerable reduction in the pulp and paperindustry’s environmental impact on the Great Lakes, it remains important to considerwhat can be done to completely eliminate the production of dioxin and other chlorinatedpollutants that are now generated by pulp and paper mills.

The response of industry and the regulatory agencies to the problem ofwaterborne dioxin created by pulp mills contrasts sharply with their response to theairborne sources that we have analyzed. The remedial approach to the airbornesources has relied on tacked-on control devices. In contrast, in the last decade the pulpand paper industry, faced with the issue of dioxin pollution, has made changes in theproduction process itself, applying the strategy of pollution prevention rather thancontrol. And, like the most familiar successes of pollution prevention -- the more than95% reduction in airborne lead emissions largely achieved by removing lead from theproduction of gasoline -- the strategy has worked equally well to reduce the dioxincontent of pulp mill effluents. To this extent, the recent effort of the industry to deal withthe dioxin problem can be regarded as a salutary example to other industries -- many ofwhich regard pollution prevention as moreof a slogan than a principle of action.

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The kraft pulping process is the dominant chemical process in the United States as a whole and2

in the Great Lakes region. In another chemical process, the sulfite process, pulp is produced by cookingwood chips in an acidic or neutral solution of bisulfides.

The processing chemicals are recovered for reuse in this process, but not completely: the air3

emission of sulfur compounds produce the distinctive aroma of the kraft pulp mill.

The traditional kraft cooking process removes 80% of the lignin. (Smook, 1992, pg 77).4

Chromophoric groups are particular chemical structures which absorb specific wave lengths of5

light, giving the substance color. Bleaching agents either restructure or break up the chromophoricgroups by oxidation or chlorination reactions, thereby eliminating the color in the pulp.

B. Technical Background:

1. The basic process:

Wood is chiefly composed of two major substances; both are organic, that is,their molecules are built around chains and rings of carbon atoms. Cellulose, whichoccurs in the walls of the plant cells, is the fibrous material that is used to make paper. Lignin is a large, complex molecule; it acts as a kind of glue that holds the cellulosefibers together and stiffens the cell walls, giving wood its mechanical strength. In orderto convert wood into pulp suitable for making paper, the cellulose fibers must be freedfrom the lignin. In mechanical pulping this is done by tearing the wood fibers apartphysically to create groundwood pulp, leaving most of the lignin intact in the pulp. Thehigh lignin content of groundwood pulp leaves the paper products weak and prone todegradation (e.g. yellowing) over time. Mechanical pulp is used principally tomanufacture newsprint and some magazines.

In most pulp production -- for example, the kraft (German for strong) process --lignin is separated from the fibers chemically: wood chips are heated (“cooked”) in asolution of sodium hydroxide and sodium sulfide. The lignin is broken down into2

smaller segments and dissolves into the solution. In the next step, “brownstockwashing,” the breakdown products and chemicals are washed out of the pulp and sentto the recovery boiler. Kraft unbleached pulp has a distinctive dark brown color, due to3

darkened residual lignin, but is nevertheless exceptionally strong and suitable for4

packaging, tissue and toweling.

For brighter and more durable products the pulp must be bleached: the color inthe residual lignin is either neutralized (by destroying the chromophoric groups ) or5

removed with the lignin. This process traditionally has been accomplished for kraft pulpby chlorine bleaching, usually followed by washing and extraction of the chemicals andbreakdown products. This process is not much different than washing clothes: thestains imbedded in cloth fibers are either neutralized by bleach, or broken down andwashed out. Thus, the basic steps in pulp production are: delignification; brownstock washing;

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Conventional kraft pulp mills’ chlorine-based bleaching operations are responsible for 100% of6

the AOX, 30% of the BOD, 50% of the COD, 40% of the color, and 30% of the volume of the totalpollutants produced by the pulp mill as a whole (Johansson & Fletcher, 1994).

bleaching; and extraction. Additional bleaching and extraction stages are added toachieve the desired brightness. As the industry has developed, these basic steps havebeen refined and additional chemicals and sequences introduced. (See Figure V-A inAppendix.)

2. The pollution problem:

Long before the dioxin problem arose, pulp mills were notorious sources ofenvironmental pollution. Although their most obvious environmental effect was foulsulfur odors, the more serious impact was on local rivers and lakes. The spentchemicals and waste products were dumped into the waters. In the 1930's, the industrydeveloped a radical pollution prevention innovation: the brownstock washing wasrecirculated to a recovery boiler where the pulping chemicals were recovered for reuseand the lignin was used to generate energy. The cost savings made kraft mills morecompetitive. In the 70's and 80's end-of-pipe treatment dominated pollution reductionefforts in North America. In the Nordic countries the application of the principle ofpollution prevention has led to a complex and flexible array of production processes,among them ones that have a crucial impact on the dioxin problem.

The most serious pollution problems have arisen from the use of chlorine inbleaching. Emitted into local bodies of water, these pollutants have rendered water6

unfit for drinking, made fish unsuitable for consumption and seriously harmed aquaticlife. Chlorine, in the elemental form of chlorine gas, readily reacts with organicmolecules. As a result, when chlorine enters the pulping process it reacts with lignin, itsbreakdown products, other organic plant components, and chemical contaminants toform numerous chlorinated organic chemicals, many of them toxic. These are referredto, collectively, as “AOX.” By 1993, more than 300 chlorinated organic compounds hadbeen reported in pulp mill bleach plant effluents; but these were estimated to accountfor no more than 10% of the effluent components (Suntio et al., 1988; USEPA, August1993, p. 2-10-11). As of 1994, 415 organic substances had been identified (Paper TaskForce, 1995c, p. 34).

The bulk of the chlorinated organics (75-90%) are high molecular weightcompounds (HMWC’s molecular weight > 1,000), which are difficult to characterize dueto their large size and variable structures. The remaining chlorinated organics can betypified as: relatively water soluble (19%); potentially bioaccumulative, relatively fatsoluble (0.09%); and bioaccumulative, highly fat soluble (0.1%). Identified chlorinatedcompounds include: chlorophenolics (phenols, guaiacols, catachols and vanillins);

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The Pulp and Paper Industry’s Commonly Measured Waterborne Pollutants:

� Adsorbable Organic Halides (AOX):Organic halides are organic compounds containing one or more of the halide atoms (chlorine,

bromine, iodine and fluorine) linked to their carbon atoms. Since chlorine is generally the only halide involvedin pulp processes, AOX is simply a collective measure of all the chlorinated organic compounds in the pulpmill effluent. They are analyzed by mixing crude effluent with active carbon and measuring the amount of totalmaterial and chlorine that is adsorbed on the carbon. Thus, AOX is an aggregate measure and does notreveal the specific chlorinated organics compounds it includes or their toxicities. Specific chlorinated organiccompounds are measured on a less regular basis due to expense (e.g. dioxins, furans, phenols).

� Chloroform:Chloroform is toxic and carcinogenic. The highest emissions of chloroforms from chlorine compound

bleaching are associated with the use of hypochlorite. The Toxic Release Inventory, published annually bythe U.S. EPA, reported that 75% of chloroform releases in the United States in 1989 came from pulp andpaper processes. (U.S. EPA, 1991; Mgmt. Inst. For Envir. & Bus., 1994)

� Total Suspended Solids (TSS): Solids from pulp mills consist of dirt, grit, fiber, lignin and other solid wood constituents. TSS can

become deposited in receiving waters, blanket and destroy the habitat of bottom-living organisms. Many toxicchemicals, including dioxins, adsorb to TSS, which become vehicles for their release to the aquaticenvironment.

� Biological Oxygen Demand (BOD):BOD measures the consumption of oxygen in water (usually over a five-day period), resulting from

the metabolic activity of oxygen-consuming microorganisms. BOD therefore reflects the effluent’s contentof organic compounds, many of which are metabolized and therefore give rise to oxygen consumption.Effluents with high BOD deprive receiving waters of the oxygen necessary to support aquatic life.

� Chemical Oxygen Demand (COD):COD measures the amount of all organic compounds that can be oxidized chemically, for example

by reacting with oxygen. It therefore measures not only the compounds that are responsible for BOD, but alsothe biologically inert oxidizable organics. Thus, COD measurements include compounds that are not readilydegradable by microbiological processes. These are often persistent, and may bioaccumulate, as in the caseof many toxic chlorinated organics, such as dioxin.

� Color:The primary objective of regulating color in paper mill effluent may be aesthetic, but some of the

colored compounds are also responsible for long-term biological oxygen demand (BOD) -- i.e., over 20 to 100days or more (U.S. EPA 1993, p. 2-6). For example, lignin and lignin derivatives are colored, take a relativelylong time to break down, and become then capable of being metabolized, therefore contributing to long-termBOD.

� Aquatic Life Toxicity:Serious effects on aquatic life, especially fish, are often seen as the first signal of pollution: habitats

are destroyed, populations decrease. However, this is not always the case: many chlorinated organics’toxicities may bioaccumulate (e.g., dioxins, PCBs, mercury) and travel up the food chain into humanconsumption, or find their way into drinking water without necessarily affecting fish or other forms of aquaticlife. Acute and sublethal effects on specific marine organisms are measured to assess effluent toxicity, butare difficult to generalize to other species. Model ecosystem studies supplement these efforts, but take alonger time to complete.

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Non-phenolic chloro-aromatics (e.g. hexachlorobenzene) are not thought to be formed during7

chlorine bleaching, since they require pressure or combustion to chlorinate; the small amounts found inpulp effluent must ultimately be attributed to products of the chemical industry which inadvertentlyaccompany pulp inputs.

cymenes; chloroforms; chlorinated dioxins and furans; chloro-acetones, aldehydes,acetic acids (McCubbin, et al., 1992; pp. 123-137). The toxicity of some of these7

chlorinated organics is well known; others have yet to be studied.

The problem of dioxin formation arises because some of the molecular structurescharacteristic of lignin coincide with the basic dioxin structure but lack dioxin’s chlorineatoms. Consequently, dioxin is almost certain to occur among the chlorinated organiccompounds that are formed when chlorine is used in pulp production. Measures ofAOX do not reveal the precise quantity of dioxin, but are indicators of its formation inthe bleaching process. The Paper Task Force (1995a, pg. 206) concluded that, “Theonly way mills can ensure that no dioxins are generated during the bleaching process isto eliminate the use of all chlorine compounds.”

3. Modifications in the technology of pulp production that reduce or eliminate dioxin formation: the ECF/TCF issue:

With the recognition that dioxin and other chlorinated organic compounds areimportant sources of environmental pollution, in recent years the pulp and paperindustry has instituted a series of changes in production technology that are intended todiminish their occurrence in pulp mill effluent. Strategically there are two ways in whichthis can be done. First, since elemental chlorine is essential to the formation ofchlorinated organic compounds, the less it is used the less such formation will occur. Second, the removal of organic compounds that can react with chlorine, especiallylignin, from the process before chlorine enters it, reduces the formation of chlorinatedorganic compounds. Both approaches, separately and in combination, have been usedin the recent modifications of the pulp industry. They also, not coincidently, reduceother pollutants and often decrease operating costs as well, because costly inputs andtreatment of waste products can be diminished. The chief changes are the following:

� Elimination of Synthetic Dioxin Precursors: Dioxin and/or dioxin precursors havebeen discovered in pentachlorophenol contaminated wood, paint, defoamers,cutting oils, and other inadvertent inputs to pulp-making. The precursors areeasily chlorinated in chlorine-based bleaching, to yield dioxin among othercompounds. Strict control is necessary for complete elimination. Enforcementcan be difficult.

� Modified and/or Extended Cooking (delignification) results in a higher rate ofdelignification in the first processing stage. Since there is less residual ligninwhen the pulp is ready for chlorine bleaching, less chlorine is needed, tending to

V-6

reduce the formation of chlorinated compounds, and the total quantity of bleachplant effluent (brownstock washing is recycled to the recovery boiler). Extendedcooking can be introduced with relatively little capital investment if the existingequipment can be appropriately modified. The addition of anthraquinone canachieve similar results, with no capital expenditure.

� Improved Brownstock Washing: More efficient brownstock washing removesmore of the degraded lignin and other wood by-products from the cookingprocess, thereby sending more of these wastes to the recovery boiler, ratherthan to the bleach plant where they would be available for chlorination andappear in the effluent as pollutants.

� Oxygen Delignification: Treatment with oxygen after cooking can degrade someof the remaining lignin, and also results in some bleaching. Oxygendelignification/bleaching produces no organochlorines. As in the case ofextended cooking, it reduces the quantity of bleaching chemicals subsequentlyneeded and the resulting pollutants. The washing from this stage is recycled tothe recovery boiler; this significantly decreases the quantity of bleach planteffluent. A significant capital expenditure is needed to build the tower used tointroduce oxygen. If the recovery boiler is at maximum capacity, additionalexpenditures may be necessary for modification or replacement.

� Ozone Bleaching/Delignification facilitates the use of smaller amounts ofbleaching chemicals, thereby lowering operating costs. Ozone bleaching, iffollowed by hydrogen peroxide, can produce pulp as bright as chlorineprocesses. Ozone is generally manufactured on-site and therefore requires asubstantial capital investment or leasing of an ozone generator.

� Chlorine Dioxide Delignification and Bleaching: The use of chlorine dioxideinstead of chlorine to bleach pulp produces much smaller quantities ofchlorinated organic compounds. Chlorine dioxide is a more selective delignifierthan chlorine; it degrades less cellulose, but is more expensive. Chlorine dioxideis not believed to directly chlorinate organic molecules. However, reactions ofchlorine dioxide during the delignification and bleaching process produce a smallamount of elemental chlorine, so that some chlorination of organic compoundsdoes occur. Because chlorine dioxide is extremely unstable, it must bemanufactured on-site at the pulp mill, at an appreciable capital investment. Some generators can be upgraded to increase capacity at less cost than others.

� Hydrogen Peroxide bleaches without introducing new chlorinated pollutants. It isnot an effective delignifier but is highly effective in brightening pulp (destroyingchromophoric groups). It is most effective when extended cooking and oxygendelignification precedes bleaching. It can be purchased directly (i.e., it does notneed to be generated on-site) and application to the pulp-making process

V-7

This is peculiar to North America, in the Nordic countries, and modern mills elsewhere, the first8

bleaching stage usually follows extended cooking or an oxygen delignification stage.

requires little or no capital investment.

Additional process improvements are listed in Appendix Table V-A.2.

In the mid-1980's it became known that pulp mill effluents contain sufficientlevels of dioxin to seriously affect the edibility of fish downstream. This was officiallyconfirmed by an EPA study of five mills in 1987, which found that significant levels ofdioxins were present in 60% of the effluents tested, in more than 75% of the pulps, andin 100% of the waste water treatment sludges (MEB, 1994). Based on these findings,the National Wildlife Foundation and the Environmental Defense Fund filed a lawsuitand obtained a consent decree (TetraTech 1990, pg. v). The U.S. EPA and theindustry agreed to undertake a more comprehensive survey, the 1988 “104 Mill Study”and develop integrated regulations of air, water and land pollution, the 1993 “ClusterRules.” It is probably no coincidence that, according to a recent industry publication(AET, 1995), “In the late 1980s the North American pulp and paper industry adopted anambitious strategy to virtually eliminate dioxin.”

The industry’s effort to reduce the entry of dioxin into waterways has producedsignificant results. The U.S. EPA’s 1994 (pg. 3-17) draft dioxin reassessment estimatedthat dioxin effluent emissions were reduced from 356 grams TEQ per year in 1988 to105 grams TEQ (in 1993) (based only on the tetra 2,3,7,8 dioxin and furan congeners). These results were achieved largely by making changes in production that weredesigned to reduce the formation of dioxins at various points in the pulp-makingprocess. The first step was the elimination of possible sources of dioxin precursors thatmay appear in the brownstock pulp before it is bleached: pentachlorophenolcontaminated wood chips, cutting and lubricating oils, defoamers, paints, and otherchemical additives (Chung et al., 1990; Vaness et al., 1990; LaFleur et al., 1990;Dimmel et al., 1993). The use of advanced computerized control systems led toadditional improvement (Bettis 1991, pp. 81-2).

The most significant change in North America in recent years was theprogressive displacement of elemental chlorine with chlorine dioxide, a substancealready used in the industry to some extent for lignin degradation. Typically, somefraction of the elemental chlorine used in the first bleaching stage (i.e., immediatelyfollowing the cooking and brownstock washing stages) is replaced by chlorine dioxide. 8

Chlorine dioxide can break down and (to some extent) bleach lignin, but it does notreadily chlorinate lignin breakdown products (or other organic compounds). Hence, in

V-8

These are pollution prevention technologies, because they produce no chlorinated organics and9

recycle wastes to the recovery boiler.

Environmental Regulations. The Canadian and U.S. governments have recently moved toplace new limits on the amount of organochlorine compounds that the industry is allowed todischarge into the environment. In 1993 the U.S. EPA proposed regulations (FederalRegister, 12/17/93 and 3/17/94) that mandate effluent and air pollutant limitations on pulpand paper mills, based on the “Best Available Technology” (BAT). In 1993, the U.S. EPAdetermined that the BAT for kraft mills was, oxygen delignification or extended cooking withcomplete substitution of elemental chlorine by chlorine dioxide for bleaching. (See Table V-2 below for associated pollutant loadings.) The effect of these proposals was a rapidmovement towards investments in chlorine dioxide substitution -- in effect, the ECFapproach. The industry associations (AF&PA, NCASI, and AET) have been lobbying theU.S. EPA to relax the proposed AOX regulations to only require 100% chlorine dioxidesubstitution and not the extended cooking or oxygen delignification. Some U.S. companiesthat have adopted such technologies have lobbied the U.S. EPA to provide incentives foroxygen delignification (Pulp and Paper Week, April 1, 1996, pg.8-9). Final regulations areplanned to be issued in 1996.

The Ontario rules proposed in 1993 (Ontario Gazette, 11/25/93) set a schedule forreduction of organochlorine loadings from pulp mills, with the goal of completely eliminatingthem by the year 2002. However, the intention of the new government in this regard is notclear. Ontario mills have had continual monitoring of effluent toxicity with direct oversight bythe provincial government. Their mills are to reduce AOX emissions to 0.6 kilograms permetric ton of pulp by 1996.

In the Nordic and other European countries, the impact of environmental concerns on thedevelopment of pulp process technology has taken a different course. While in NorthAmerica the industry responded to conventional pollutant problems with large investmentsin pollution control, primary and secondary treatment of effluent, the Nordic countriesinvested in pollution prevention, extended cooking and oxygen delignification. While these9

technologies have provided the basis for the development of a lower effluent, lowerpolluting ECF process than that being implemented in North America, they also paved theway to an alternative approach. Nordic countries have recognized the general desirabilityof the position developed by the International Joint Commission -- that wherever possible alluses of chlorine should be eliminated from manufacturing processes. In the Nordiccountries this has encouraged the development of “Totally Chlorine Free” or TCF pulp-making. Regulations in the Nordic countries have encouraged these pollution preventiontechnologies and TCF. (See discussion below in section E).

The World Bank (1995, p. 2) identified the most significant environmental issue for thepaper and pulp industry to be the use of chlorine bleaching. They determined that TCF is ademonstrated feasible technology for many pulp and paper products and recommendedTCF bleaching in these instances.

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comparison with chlorine, the use of chlorine dioxide sharply reduces the chlorinatedorganic compounds (AOX) in the pulp mill effluent. However, even when elementalchlorine is entirely replaced with chlorine dioxide, the amount of AOX in the effluent isnot reduced to zero, but by 80%. (See Appendix Table V-A.3) This means that somechlorination of organic compounds occurs even when bleaching is done with 100%chlorine dioxide, and no elemental chlorine is added. This appears to be the result of atendency of chlorine dioxide to produce a small amount of elemental chlorine throughreactions in the bleaching process. Chlorine produced in this way is then capable ofchlorinating lignin breakdown products and other organic compounds. When elementalchlorine and hypochlorite is completely replaced by chlorine dioxide (100%), theprocess is known as Elemental Chlorine-Free (ECF) pulp production. However, asnoted above, this term is not entirely correct, for a small amount of elemental chlorineaccompanies the use of chlorine dioxide.

Table V-1 distinguishes the three major types of pulp-making and bleachingprocesses (see also Appendix Fig. V-A). The older, conventional, process useselemental chlorine for the first delignification and bleaching stage; the chlorine dioxide-ECF process replaces elemental chlorine bleaching with chlorine dioxide; the TCFprocess uses extended cooking and oxygen to accomplish effective delignification andozone and hydrogen peroxide -- in place of chlorine and chlorine compounds -- forbleaching.

The chlorine dioxide-ECF process has developed into three tracks:

� ECF-1: Adaptation of old chlorine and hypochlorite stages to chlorine dioxide,with investments in expanded chlorine dioxide capacity;

� ECF-2: Modernized mills with extended cooking and oxygen delignificationconverted to chlorine dioxide for bleaching (a process encouraged in the 1993U.S. EPA proposals);

� ECF-3: Advanced mills also with extended cooking and oxygen delignification,that use chlorine dioxide only in the last stage of bleaching, after the pulp hasbeen delignified and bleached by non-chlorine compounds, like ozone andhydrogen peroxide.

ECF-3 technology enables the wastes from all pulping and bleaching stagesbefore chlorine dioxide to be recycled, and leaves little residual lignin to chlorinate andpollute. Union Camp has installed this process in a mill in Virginia. E.B. Eddy has beenexperimenting with an ozone pilot plant in Espanola, Ontario. Mills using chlorinedioxide ECF-2 and ECF-3 technologies can be converted to TCF processes, withoutsignificant additional capital expenditures.

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Table V-1 Kraft Chemical Pulping and Bleaching Processes*

Process Stage & Elemental TotallySymbol Description Chlorine Chlorine

Chlorine Dioxide, ECF TCF

Free Adapted Modern Advanced

Traditional (ECF-2) Low(ECF-1) Effluent

(ECF-3)

Conventional Delignification. Cooking with sodiumCooking hydroxide (NaOH) and sodium sulphide Yes Yes No No No

(Na S) liquor.2

Extended Extended delignification withCooking equipment modification or addition of No No Yes Yes Yes

Anthraquinone, Aq.

Brownstock Recovery of cooking liquor and Yes Yes Yes Yes YesWashing removal of lignin

Oxygen (O ) O Extends the delignification process No No Yes Yes2

Delignification started with cooking. O Yes2

Chlorine C Bleaching with further delignification Yes No No No No Bleaching elemental chlorine, Cl2

Hypochlorite H Bleaching with Sodium or Calcium Some- No No No NoBleaching Hypochlorite, NaOCl or Ca(OCl) times2

Chlorine Dioxide D Bleaching with further delignification, Some- Yes Yes Yes NoBleaching ClO times2

Ozone Bleaching Z Further delignification and bleaching for No No No Yes Some-bright pulp. O times3

Peroxide P Bleaches lignin and pulp with hydrogen No Rarely Rarely Some- Yes Bleaching peroxide. H O times2 2

Extraction E Caustic extraction (NaOH) of chlorinated and/or oxidized lignin;follows initial or intermediate C, D, or Z Yes Yes Yes No Nostage.

Enhanced Eo Enhanced caustic extraction with Some- Some- Yes Yes Some-Extraction Ep oxygen and/or peroxide bleaching. times times times

Successive Bleaching stages are typically repeatedBleaching Stages 2 to 4 times for brighter and whiter Yes Yes Yes Some- Some-

pulp. Intermediate stages are usually times timesfollowed by extraction (except forperoxide).

* Kraft pulping is distinguished from soda and sulfite mills by cooking with sodium sulfide. Many of the samebleaching processes can be used for kraft, soda and sulfite mills. Ammonium based sulfite mills may havedifficulties with TCF.

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U.S. EPA (1994, pg. 3-15, citing U.S. EPA, 1990b) has estimated that other dioxin and furan10

congeners add up to 10% of the TEQ values of the tetra congeners. Clement, et al., (1989) from theOntario Ministry of Environment, centrifuged large volumes of effluent (480 L), enabling detection of toxiccongeners in bleached kraft mill effluent not found by traditional methods. Their results demonstrate theimportance of other dioxin congeners and mill-to-mill variance. Additionally, recent research documentsshifting AOX composition in ECF effluent. These results suggest that congener distribution is of suchvariability from mill to mill that any analysis limited to tetra detection is not likely to be an accuratepredictor of total TEQ, as U.S. researchers assume. Ontario survey data reported to CBNS reinforcethese concerns: dioxin/furan congeners other than tetras were detected, and varied unpredictably frommill to mill.

All TCF processes require modern oxygen delignification and typically useanthraquinone or mechanical improvements to the cooking equipment for extended delignification. Production of TCF pulp has taken two tracks:

� The use of hydrogen peroxide instead of chlorine dioxide with basically the samecapital equipment as ECF-2 (except the chlorine dioxide generation equipment);

� Investments in advanced ozone technology as the minimum effluent ECF-3, butwith the use of hydrogen peroxide in the final stage.

The TCF mills can convert to closed loop totally effluent free (TEF) with knowntechnologies. Chlorine dioxide mills that seek to adopt TEF technologies are still in theexperimental stage. These mills have the special difficulty of removing chlorinechemicals from the filtrates so as not to damage equipment, and of disposing of thechlorinated organics produced by chlorine dioxide.

C. The Environmental Effects of Chlorine Dioxide-ECF and TCF Technology:

As noted earlier, the development of chlorine dioxide-ECF and TCF technologieshave been motivated by the environmental importance of reducing the generation ofdioxin and other toxic chlorinated organic compounds. There is evidence that this efforthas succeeded in significantly reducing the amounts of these pollutants entering theGreat Lakes from pulp mill effluents, but not in eliminating them.

This is evident, for example, from the U.S. EPA’s review of it’s own sample millstudies and it’s evaluation of dioxin data collected by the industry trade association, theNational Council of the Paper Industry for Air and Stream Improvement (NCASI). Usingthe direct facility measurements of the 1988 104 mill study as a reference, U.S. EPA(1994) determined that the tetra-chlorinated dioxin in effluents declined in the U.S. from356 g TEQ/ year in 1988 to 105 g TEQ/year in 1993, with a statistical variationestimated to be 74-150 g TEQ/yr. This amounts to a decrease of somewhere10

between 60 to 80%. NCASI has estimated a decrease of 90% to 34 g TEQ/yr in 1992. However, U.S. EPA found that NCASI’s method of aggregating the mill data was

V-12

scientifically unacceptable because of the poor quality of many of the separate dioxinvalues reported to NCASI, and serious methodological deficiencies of the datacollection. U.S. EPA readjusted the NCASI data for its own estimates; unfortunately,the methods used for this purpose are not available to independent researchersbecause they involve confidential mill data and unpublished U.S. EPA studies anddocumentation.

The same difficulties seem to apply to the changes in the dioxin content ofeffluents from the five U.S. kraft and soda mills in the Great Lakes region. The 104 mill1988 study reported that these mills released 2.62 g TEQ of dioxin, of which weestimate that 2.09 g TEQ reached the lakes. The 1993 data available from NCASIexhibit the same sorts of problems that EPA has noted. It is apparent from theliterature that a permanent reduction in the dioxin content of pulp mill effluent can onlybe accomplished by appropriately changing the production technology -- for example,by replacing elemental chlorine bleach with chlorine dioxide or a non-chlorine agentsuch as hydrogen peroxide. Thus, two of the Great Lakes mills (Mead, Escanaba, MI,and International Paper, Erie, PA), which made such changes in production technologybetween 1988 and 1993, report a 90% reduction in effluent discharge of dioxin. However, a number of other U.S. Great Lakes mills report similar reductions in dioxindischarges even though there were no reported changes in production technology thatwould be expected to cause this decrease were introduced during that period of time. Since the 1993 level is generally based on only one measurement, it is quite possiblethat its low value represented a temporary fluctuation in dioxin discharge rather than apermanent improvement.

Although 1988 dioxin discharge levels for the Canadian (Ontario) Great Lakespulp mills are unavailable, their more recent measurements do not suffer from theproblems noted by the U.S. EPA. Indeed, the Ontario data, although like the U.S.measurements are self-reported, have been confirmed by Environment Canada (IJC1995, p. 39-40). It is also of interest that although all four Ontario mills had substitutedchlorine dioxide for chlorine by 1993, the levels of dioxin in their effluents weregenerally higher than those reported by U.S. Great Lakes mills that had not made suchdioxin-reducing changes in production technology during that same period.

The NCASI reporting procedure allows mills to choose what they considersamples of “representative of mill conditions,” so dioxin level variability and statisticalcalculations of means are not necessarily provided. What is chosen by a mill manageras representative conditions may be ideal conditions, yielding a downwardly biasedestimate. When a mill reports a non-detect, NCASI allows this mill to reaffirm the non-detect status without further testing, provided that in their opinion, relevant millconditions have not changed. This results in a structured sampling bias from thesystematic attrition of data points. Consequently, the NCASI data may have a biasdownward. What we see in more rigorous, regular testing with independent oversight,such as the Ontario data, is that samples will be interspersed with detects and non-

V-13

detects.

In view of these uncertainties about the dioxin discharge data, it seems prudentto conclude that overall reductions in dioxin levels in the effluents from the Great Lakespulp mills that can be related to the relevant changes (e.g., substitution of chlorinedioxide for chlorine bleach) in production technology probably reflect about the samereduction reported by U.S. EPA: 60-80%.

These developments have brought the issue of environmental improvement to anew level: should the levels of dioxin and other chlorinated pollutants be furtherreduced -- indeed to zero -- by eliminating the use of all forms of chlorine in pulp andpaper production? The affirmative position is advocated by the International JointCommission and environmental organizations; many, but not all, industryrepresentatives have argued in the negative.

In order to understand the relative merits of these opposing views, it is useful,here, to clarify the operational meaning of pollution prevention. Pollution prevention isbased on the strategy of altering a system of production by eliminating from it thecomponent process that generates the pollutant. The classical example is theprevention of lead emissions from automobiles. This was accomplished by omittingfrom the production of gasoline the step in which tetraethyl lead is added as an anti-knock agent. This completely eliminates the possibility that lead additives will beemitted when the fuel is used. The component process that is responsible for thegeneration of dioxin in pulp production has been identified: it is the reaction ofelemental chlorine with lignin residues to form dioxins and other chlorinated organiccompounds. In this instance pollution prevention means totally eliminating thepresence of elemental chlorine in the production system, thus ending any possibilitythat dioxin will be formed. In pulp production, pollution prevention, as applied to dioxin,means totally chlorine-free production: TCF.

The claim that ECF “virtually eliminates” dioxin in pulp processing also oftenreflects the fact that whereas measurable amounts of dioxin were found in the pulp andeffluent produced by mills using chlorine bleaching, in corresponding measurements atECF mills most of the readings are “not detected.” As pointed out in the accompanyingbox, this reading does not mean “zero,” but only that the amount of dioxin is below thelevel that the particular analytical procedure can detect. Hence, the actual dioxin levelmay be anywhere between zero and just below the detectable limit.

Although there are approximate methods based on statistical probability ofinterpreting the meaning of “non-detects,” these methods are applicable only whenthere is a sufficient mixture of detected measurements with non-detectedmeasurements. In the absence of large sample sets, a good deal of uncertaintyremains. Despite this difficulty there is evidence that dioxin is formed in chlorinedioxide-ECF mills and is not formed in TCF pulp mills.

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What “non-detect” means .

In spite of the fact that the technology for measuring pollutants in the environment hasbeen improved over the years, there are limits to the measuring abilities of even the very bestanalytical equipment. When an environmental sample, e.g. a sample of pulp mill liquid effluent,is analyzed for a particular pollutant, such as 2,3,7,8-tetrachlorinated dioxin, there is a detectionlimit associated with the measurement. If the pollutant is present at an amount less than this limit,then the analytical procedure will not be able to detect it. There are many factors that cancontribute to such a limitation. One common factor is “noise” in the electrical circuitry of themeasuring technology. The detection limit will be different for each pollutant measured and willdepend on the analytical methodology, the equipment utilized, and the nature of the environmentalsample. Thus, there can be a different detection limit for the same compound in the samelaboratory for a set of river water samples as compared to a set of pulp mill effluent samples.

Typical detection limits reported for dioxin congeners (such as 2,3,7,8-tetrachlorinateddioxin and 2,3,7,8-tetrachlorinated furan) measured in pulp mill effluent samples have been in therange of 1-5 picograms of pollutant per liter of water (1-5pg/lit). The U.S. EPA has typicallyrequired pulp mill samples to be analyzed with a detection limit no higher than 10 pg/lit. If thedioxin content of a pulp mill sample is less than the detection limit of the particular analyticalsituation, then it will be reported as “non-detect.” This does not mean that there are no dioxins orfurans in the effluent. It only means that the level is probably less than the stated detection limit.Another confusing reporting practice occurs when dioxin is detected with a sensitive analyticaltechnique, but reported as “below USEPA detection limit 10 pg/lit.” or “non-detect at 10 pg/lit.,USEPA approved method,” leading the reader to believe dioxins were not detected. NCASI hasextended this rational of non-detect to 100pg/lit for 2,3,7,8 tetrachlorinated furans, because theTEQ is 1/10th of 2,3,7,8 tetrachlorinated dioxin.

In using these data, one must consider that the actual level of each non-detectedcompound is somewhere between zero and the detection limit for that compound. A value of one-half the detection limit is generally chosen as a mid-range estimate of the compound’s actualconcentration. Due to their extreme toxicity, the detection limit issue is of particular concern fordioxins. Because they can bioaccumulate, dioxins can be responsible for toxic effects in aquaticsystems even if they are present in water at levels below conventional detection limits. Thus, eventhough 2,3,7,8-tetrachlorinated dioxin has never been measured above the detection limit in GreatLakes water, it is routinely found in the region’s fish and wildlife at toxicologically relevantconcentrations.

Indirect but numerical evidence is available from measurements of AOX in pulpmill effluents. In such effluents AOX represents an unresolved mixture of a variety ofchlorinated organic compounds, and a difference in AOX levels can in many instancesreflect differences in the degree to which such compounds -- including dioxin -- areformed. Table V-2 summarizes several comparisons of the AOX concentrations in thebleach effluents of modified traditional mills, ECF and TCF kraft pulp mills. It isapparent from these reports that the AOX levels from the TCF plants are reduced atleast a thousand-fold in comparison with the ECF plant’s levels -- and are perhapsindistinguishable from background levels.

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Table V-2 Pollutant Effluent Loadings of Different Processes:Elemental Chlorine, Chlorine Dioxide-ECF and TCF

ProcessAOX BOD COD Color

kg/metric kg/metric kg/metric Pt-Coton pulp ton pulp ton pulp

5c

Chlorine Bleaching a

(same mill, different process)(1)

Traditional 7.9 28 100 300(1)

O Deliginification 4.7 22 70 1002(1)

Modified Cooking & 3.6 20 55 80 O Delignification 2

(1)

70%ClO /30%Cl & 1.9 20 55 652 2

Modified Cooking & O Delignification 2

(1)

Chlorine Dioxide ClO 2

Bleaching- ECF b

ECF-1 1.5-2.1 8-13 32-60 23-43 Adapted Traditional (2) no (9) (8,9)

(9)

change(d,2)

ECF-2 .36-69 9.5-10.4 20.1-30.6 19.7-46.8 Modern (3,8) (4)

ECF-3 .04-.08 0.5-5.8 Advanced Low Effluent (3,4,6) (4,11)

2.5-6.5 13.0-22.5(3,7) (3,7)

TCF Chlorine-Freeb

range of technologies

nd -.002 8.4-23.0 16-77.8 2.0-6.6e

(4,5) (3) (3,5) (3,4)

TEF (by definition) 0 0 0 0Notes:a) Chlorine bleaching process combinations are from testing of the same mill.b) ECF and TCF loadings are from commercial mill and pilot mill data.c) Color is measured by chloroplatinate units (Pt-Co) and expressed as kg/metric ton.d) According to McCubbin and Paper Task Force, ECF itself does not have any effect on BOD or COD.e) Detection limits appear to be below .01, but have not been consistently reported.Sources:1) Galloway, 1991, 2) McCubbin, 1992; McCubbin, et al., 1992, 3) deChoudens, et.al, 19954) Bicknell, et.al., 1995, 5) Vice, et.al., 1995, 6) Lancaster, et.al., 1992, 7) Nutt, et al., 19938) Panchapakesan, 1991, 9) Johansson and Fletcher, 1994, 10) Helge, 1995, 11) Trice, 1992.

The relative amounts of carbon atoms (C) bonded to chlorine (Cl) atoms inorganic effluent wastes is an index (expressed as C/Cl ratio) of the degree of ligninchlorination and may be useful to indicate the degree that toxic chlorinated dioxin is

V-16

11Even if the bulk of chlorinated organics produced is the less toxic monochlorinated organics, as long

as the chlorine to carbon ratio is substantially above natural levels, there will be a greater likelihood thata certain percentage of organic molecules will encounter a free chlorine atom a number of times,resulting in polychlorinated compounds, including dioxins. That is, the greater the chlorine to carbonratio, the greater the likelihood of the creation of the toxic polychlorinated compounds, including dioxins.

formed, when quantification of such dioxin is not possible. Thus, a C/Cl ratio of 100011

means that, in the mixture of AOX compounds, on average there is only one carbonatom in every thousand to which a chlorine atom is attached -- that is, a low degree ofchlorination. Studies of high molecular weight materials (HMWMs), the very largecompounds which form the bulk of the chlorinated organics (AOX), yield the followingresults regarding C/Cl ratios in mill effluents:

� Chlorine dioxide ECF-1 processes produce the highest degrees of chlorination(C/Cl ~ 83-90);

� The process with the greatest delignification prior to chlorine dioxide bleaching(ECF-2) produces intermediate chlorination levels (C/Cl ~ 260);

� The TCF process produces the lowest degree of chlorination, which is “fullycomparable to chlorine contents found in naturally occurring humic materials”(C/Cl ~ 590-1400) (Dahlman et al., 1994).

Studies on organic compounds more similar to dioxin, such as phenolics, have

had similar results (Tsai, et al., 1994; Schwantes and McDonough, 1994). Kovacs, etal. (1995) discovered chlorinated phenolics in untreated (157µg/L) and treated ECFeffluent (54.7µg/L) but none in untreated TCF effluent (the detection limit was 0.1µg/L). Phenolics are likely to be formed from lignin by the same process as dioxin, and mayserve as the building blocks for dioxin. The detection of even small amounts ofpolychlorinated phenolics in the best ECF mills led Tsai et al. to conclude that theirfindings “support the hypothesis that elemental chlorine can be formed during the initialreaction of chlorine dioxide with some lignin structural units.” Saunamäki (1995, pg.191), studying chlorinated phenolics and AOX, concluded that “TCF pulping producesno organic chlorine compounds.”

Another indirect method that may reveal the presence of dioxin, and otherdifficult-to-quantify toxic chlorinated organics, is to compare the sublethal effects (e.g.reproduction and growth) on aquatic life of TCF and ECF effluents. The most recentadvanced sublethal toxicity studies have demonstrated that TCF mill effluent is lesstoxic than the modern ECF-2 effluents, which in turn are less toxic than the adaptedECF-1 effluent (Lövblad and Malström, 1995; Kovacs et al., 1995; Cates, et al., 1995;

V-17

12An earlier laboratory study (O’Connor et al., 1994) showed greater toxicity of untreated TCF effluent

and similar toxicity to ECF in treated effluent. Subsequent research has discovered this unusual result toarise from residual peroxide and a laboratory procedure to remove it with sodium meta bi-sulfite.Learning from these and other errors, studies now screen for residual hydrogen peroxide in TCF effluentand chlorate in ECF effluent, conditions easily prevented or removed during regular mill operations.(Nelson et al., 1994; Paper Task Force, 1995c, pg.45; Lövblad and Malstrom, 1995)

Some of the older chlorine dioxide generators can produce this amount of elemental chlorine13

as a by-product. Other mills intentionally bleach in these proportions rather than 100% chlorine dioxideto save on chemical costs or due to limited chlorine dioxide capacity.

The TCDF analyses reported by Rappe and Wagman measure the concentration for a group14

of six TCDF congeners as a whole. The group includes 2,3,7,8-TCDF, which is the only toxic TCDFcongener. In our discussion of this study we will refer to this group of six TCDF congeners as “TCDF.”

Paper Task Force, 1995c pg. 46). The low levels of toxicity observed in TCF effluent12

is thought to be derived from bioactive compounds naturally occurring in the trees (Paper Task Force, 1995c, pg. 44-50). Södra Cell, a producer of ECF and TCF pulp,found these toxicity studies to be so persuasive as to reverse its previous neutralposition on modern ECF vs. TCF with extended cooking and oxygen delignification(often quoted by AET) and advocate TCF’s environmentally superior qualities, leadingthe company to convert all of its ECF mills to TCF (Södra Cell, 1995).

A direct test of the reality of the difference in dioxin formation at a modern(10%chlorine/90% chlorine dioxide ) ECF and TCF mill has very recently been13

provided by Rappe and Wagman, who measured the tetrachlorinated dioxin (TCDD)and tetrachlorinated furan (TCDF) content of pulp from the same mill operating in boththe ECF and TCF configurations (Rappe and Wagman 1995). These measurementswere made on the mill’s pulp, using an analytical technique about 30 times moresensitive than the conventional method. (Earlier studies have shown that the totaloutput of dioxin from pulp bleach plants is approximately equally divided among theeffluent, pulp, and effluent treatment sludge, U.S. EPA, 1994, pg. 3-16.)

Rappe and Wagman found that even with the highly sensitive analytical method,many of the measurements of TCDD in pulp were “non-detect.” However, all of themeasurements of TCDF, which is known to occur at higher levels than TCDD inchlorine bleaching processes, were actual values above the detection limit. The14

TCDF results are summarized in Table V-3. In these computations we have used thenumerical values not only for the final pulp, but also for the brownstock pulp and theanalytical blank, as reported by Rappe and Wagman, to evaluate a specific effect -- thatis, the amount of TCDF that is formed as a result of the bleaching process. For thispurpose, it is important to note that the bleaching process -- which is, of course, thecrucial difference between ECF and TCF -- acts on the brownstock pulp, which isthereby converted to the final pulp. Hence, any formation of TCDF that is caused bythe bleaching process will show up as a difference between the TCDF content of the

V-18

pulp and the brownstock.

In Table V-3 we have corrected the brownstock and final pulp values bysubtracting the values of the analytical blanks -- which represent the apparent TCDFvalue yielded by running the analytical procedure without an actual brownstock or finalpulp sample. Then, in order to record the TCDF actually formed in the bleachingprocess, the corrected brownstock values are subtracted from the corrected pulpvalues. A clear-cut difference between the ECF and the TCF process can then beseen.

Table V-3: Concentration of 2,3,7,8-TCDF and 5 Other TCDF Isomers in ECF and TCF Pulp Samples (pg/g of pulp)

Mill ECF TCFSample # 1 # 2 Average # 1 # 2 Average

Pulp 0.29 0.25 0.270 0.08 0.09 0.085

Blank 0.05 0.05 0.050 0.04 0.04 0.040

Pulp-blank = Corrected 0.24 0.20 0.220 0.04 0.05 0.045pulp

Brownstock 0.06 0.07 0.065 0.07 0.06 0.065

Blank 0.05 0.05 0.050 0.04 0.04 0.040

Brownstock-blank = 0.01 0.02 0.015 0.03 0.02 0.025Corrected brownstock

Corrected pulp-corrected 0.23 0.18 0.205 0.01 0.03 0.020brownstock

Detection limit: 0.02 pg/gSource: Rappe and Wagman (1995)

� In the ECF process, the brownstock contains an average of 0.015 pg/g of TCDFand the pulp contains an average of 0.220 pg/g. Hence, ECF bleachingproduces 0.205 pg/g of TCDF.

� In the TCF process, the brownstock contains an average of 0.025 pg/g of TCDFand the pulp contains an average of 0.045 pg/g of TCDF. The differencebetween these levels, 0.020 pg/g, would presumably represent the amount ofTCDF produced in TCF bleaching. However, this difference, which is equal tothe detection limit, is so small that it does not provide reliable evidence that

V-19

In the same study, ECF pulp from a different modern mill (100% chlorine dioxide) was15

analyzed and also found to produce significant increases in the amount of TCDF and, as represented inTEQ values, in other congeners as well.

TCDF was in fact formed. Hence these data, which are the most sensitiveanalysis of the process, fail to provide evidence that PCDF is formed during TCFbleaching.15

Two major conclusions can be drawn from the available evidence regarding theimpact of conventional (chlorine) bleaching, ECF (chlorine dioxide) bleaching and TCF(totally chlorine free) bleaching on dioxin production. First, the substitution of chlorinedioxide for chlorine in the bleaching of virgin pulp can result in about a 10-fold reductionin the formation of dioxin, but does not eliminate it. Second, there is direct evidence,from the most sensitive comparison of dioxin formation in ECF and TCF pulpproduction, that while a measurable amount of dioxin (specifically, TCDF) is formed inECF bleaching, there is no evidence that TCDF is formed in TCF bleaching, which isaccomplished by the total absence of all forms of chlorine in the bleaching chemicals.

Finally, it should be noted that there is a realistic limit to what can beaccomplished even in a TCF system, in which no chlorine in any form is added to theprocess. It has become literally impossible that any U.S. or Canadian industrial processthat is exposed to the open air can be absolutely free of dioxin. As shown in our initialreport, our analysis of the movement of the airborne emissions of dioxin in the UnitedStates and Canada show that they become widely disseminated in the atmosphere anddeposit everywhere as a kind of chemical fallout. Simply stated, even if absolutely nochlorine or chlorine compounds are used in a pulp mill, the mill operations -- like everyother activity in industrial countries -- and the trees that are made into pulp -- areexposed to the fallout of airborne dioxin, emitted by thousands of separate sources(most of them incinerators) and carried through the air for thousands of miles (seeCohen et al., 1995).

D. Economic Analysis:

1. The economic feasibility of ECF and TCF technology:

As we have seen, the pulp and paper industry’s response to the need forenvironmental improvements in the 1990s has been largely based on changes in thetechnology of production. Earlier, in the 1970s and 1980s their response toenvironmental regulations was largely to improve end-of-the-pipe control systems --usually at high cost. However, since then, rather than attempting to control pollutantsafter they have been produced, the industry has been guided by the strategy ofpollution prevention. In economic terms, this process is, of course, governed byinvestment decisions -- that is, by a company’s willingness and/or ability to undertakethe capital expenditures that are needed in order to modify or replace the production

V-20

equipment. In turn, a major factor that influences the company’s ability to assemble thenecessary investment funds is the expected return on the investment. This depends onthe impact of the new production process on the price that the product can command,which finally depends on how much can be sold -- that is, on the demand for it.

Thus, in industrial practice, the decision to make a change in productiontechnology depends on the balance between the cost of the necessary investment andthe expected returns. Environmental factors can have a powerful effect on both sidesof this equation. Changes in process technology that reduce the amount of pollutantsgenerated during production can decrease expenditures for installing and operatingpollution control systems required by environmental regulations. Often, these changesinvolve more efficient use of material inputs. These savings in capital and operatingcosts can help to compensate for the cost of the capital investment in the new pollutionprevention technology.

The replacement schedule for existing, older capital equipment is another crucialfactor affecting pollution prevention financial decisions. If existing equipment isphysically degraded or obsolete, and therefore needs to be replaced, this can often beaccomplished with equipment that prevents pollution at no more cost than replacing itwith equipment of the original design. Mill expansions provide similar opportunities. Barriers to pollution prevention investment exist when a plant is still burdened with debtfrom its existing technology, or is extracting high economic returns from durableequipment it has already paid off. Another case arises when an entire mill productionline has been under invested for some time. Such mills may be so obsolete that thecompany plans to use them until they fully deteriorate, and tend to resist modernizationor investment in pollution prevention.

On the other side of the equation, environmental concerns can increase thedemand for paper products free of dioxin and other chlorinated pollutants, enhancingthe price that such products can command and creating a new distinct, market for them. Especially in recent years, the industry’s investment pattern has been stronglyinfluenced by such environmentally motivated demand, especially for recycled andchlorine-free paper -- generally under pressure from environmental organizations andan environmentally aware public. Accordingly, in evaluating the feasibility ofinvestments in environmentally motivated changes in production technology, it isimportant to consider as well the impact of environmental factors on both the availabilityof capital, and on the demand for the new products -- and hence the price at which theycan be sold.

The industry has recently made a considerable effort to introduce changes inpulp production that can significantly reduce the levels of dioxin, and more generally oforganochlorine compounds (AOX), in plant effluents. As we have seen, the completesubstitution of chlorine dioxide for chlorine in the bleaching process (ECF) can reduceAOX levels by about 80%. ECF considerably reduces the generation of dioxin, but

V-21

some is still produced during bleaching. In contrast, in the TCF process there is noconvincing evidence that dioxin is produced at all during bleaching. Unlike ECF, theavailable evidence indicates that the TCF process does in fact eliminate the entry ofindustry-generated dioxin into the environment. The practical question is whether thisdifference is worth the effort -- and expenditure -- needed to achieve the more stringent,dioxin-free TCF condition.

The issue in the Great Lakes region, therefore, is to choose between chlorinedioxide-ECF and TCF as the goal to be reached in order to achieve the virtualelimination of dioxin in pulp mill effluents and paper. Such a decision involves acomparison of the relative costs of converting the existing pulp mills to ECF or TCF. But it also involves the relative impact of ECF and TCF on other environmental goals,for example the virtual elimination of organochlorine AOX pollutants other than dioxins,and on the possibility of moving toward totally effluent-free (TEF) production.

Accordingly, in what follows we analyze the economic consequences ofconverting the Great Lakes chemical pulp mills’ present elemental chlorine-based pulpprocesses to ones that conform to the chlorine dioxide-ECF and TCF criteria. Due tothe objective of our study, virtual elimination of dioxins in the Great Lakes, we havelimited our study to pulp and paper mills that release chlorinated effluents directly orindirectly into the Great Lakes. These include eight kraft mills, one soda mill, one sulfitemill, and ten deinking mills.

a. Kraft and soda mills:

Kraft and soda pulp mills need to undergo the most substantial conversion inorder to eliminate dioxin production. There are nine such mills that account for most ofthe waterborne organochlorine pollution entering the Great Lakes from pulp mills. Theyrange in output from 225 to over 1500 metric tons of pulp per day. They ship $2.7billion worth of pulp and paper, employ nearly 9,000 people, and have a payroll ofnearly $400 million dollars (see Table V-4). The mills differ in their product lines andproduction technologies.

As noted earlier, the U.S. EPA is recommending the chlorine dioxide “elementalchlorine free” (ECF) strategy for kraft mills as a means of reducing organochlorinepollution. This strategy was proposed in the 1993 "cluster rules" (to be final in 1996and implemented by 1999) -- a set of alternative process changes that firms can use toreduce air and water pollution, including waterborne dioxin. In particular, the clusterrules call for 100% chlorine dioxide substitution for elemental chlorine and the inclusionof either extended cooking delignification or oxygen delignification (what we call the

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Table V-4: Great Lakes Pulp & Paper Mills Economic Estimates1992 Shipments, Expenditures, ($US millions) and Employment

Source Source Value of Employ- Payroll Value Materials AnnualName Location Shipments ment Added Cost Capital

KRAFT&SODA MILLSCanada Avenor Thunder Bay 540 1400 65 245 296 48

E.B.Eddy Espanola 262 860 36 119 143 23

James River Marathon 114 300 14 53 62 15

Kimberley-Clark Terrace Bay 278 720 33 130 151 37

Canadian Subtotal 1,195 3,280 148 547 652 123

United States Champion Quinnesec 395 1,490 65 185 212 49

International Paper Erie 243 1,070 45 113 131 28

Mead Escanaba 508 1,970 84 224 285 31

Potlatch Cloquet 228 880 38 100 128 14

S.D.Warren (Scott) Muskegon 86 330 14 38 48 5

U.S. Subtotal 1,460 5,740 246 660 804 127

Kraft & Soda Subtotal 2,655 9,020 394 1,206 1,456 251

SULFITE MILL Badger Paper Mills 65 230 9 31 34 4Peshtigo

DEINKING MILLS EcoFibre DePere 12 40 2 6 7 2

Fort Howard Green Bay 658 2,230 93 326 333 62

Fox River Fiber DePere 34 100 4 16 18 5

James River Ashland 19 70 3 10 10 2

James River Green Bay 138 470 20 68 70 13

Kerwin Appleton 39 170 7 18 22 5

Ponderosa Pulp Oshkosh 31 90 4 17 17 4

P.H. Glatfelter Neenah 117 490 20 52 66 14

Scott WorldWide Oconto Falls 13 40 2 7 8 2

Wisconsin Tissue Menasha 263 1160 49 122 142 30

Deinking Subtotal 1,328 4,850 203 638 693 138

TOTAL 4,050 14,090 606 1,876 2,183 393

Notes: The mill data are derived from general industry data and mill specific output and product lines. Actualmill data will vary due to product line concentration specialization, mill integration, technology and productivity.Sums may not always add due to rounding.Data Sources: 1993, 1994, 1995 Lockwood Post; 1992 U.S. Census of Manufacturers; Pulp & Paper 1994North American Fact Book; Direct CBNS Survey; Corporate Annual Reports and SEC 10K Filings.

V-23

“Modern ECF-2" mill in this report). This proposed regulation has already had aconsiderable influence on kraft pulp mills’ investment decisions; they have generallymoved toward converting to 100% chlorine dioxide ECF processes.

Conversion to 100% chlorine dioxide substitution entails large capitalinvestments. Chlorine dioxide is extremely unstable and must be generated on-site inspecialized generators. A mill that invests in chlorine dioxide technology will have an incentive to recoup its investment within about 15 years. In a typical mill that has noexisting chlorine dioxide capacity, the costs include about $15 million for a new chlorinedioxide generator (30 metric tons per day), $13.5 million for a new chlorine dioxidetower and washer (750 air-dried metric tons pulp per day), and $2 million for arecausticizing upgrade (Radian, 1995).

All of the kraft and soda mills in the Great Lakes region have already made someinvestments in equipment for generating chlorine dioxide -- which has been used for along time as a way of achieving higher brightness and minimizing the fiber breakdowncaused by 100% chlorine bleaching. As noted earlier, expanding usage to 100%chlorine dioxide reduces the formation of organochlorines (including dioxins), but doesnot entirely eliminate them from the effluent. This is particularly true when chlorinedioxide is used in the initial delignification stage; there, the relatively highconcentrations of lignin considerably enhances the formation of chlorinated organiccompounds from even the small amount of elemental chlorine generated by the use ofchlorine dioxide.

The production sequences currently used in the nine Great Lakes kraft and sodamills are summarized in Table V-5. For this purpose we used the latest information oneach mill's capacity, technology and bleaching sequence available from the 1996Lockwood Post Directory, from a survey conducted for CBNS by the Ontario ForestIndustries Association, and from the mills themselves. These data show that the GreatLakes kraft and soda mills, in different degrees, have been following the approachdescribed in the proposed U.S. EPA regulations. Of the nine mills, four -- Avenor,James River-Marathon, Champion International, and Potlatch -- have adopted 100%chlorine dioxide bleaching; E.B. Eddy and Kimberly Clark are equipped to do sointermittently. Three mills have made this substitution only partially, and two mills arereported to still use 100% elemental chlorine in the first bleaching stage. Two of themills have adopted oxygen delignification and extended modified cooking, and three areusing hydrogen peroxide bleaching together with chlorine dioxide or chlorine.

As we have pointed out above, it is environmentally preferable to adopt thetotally chlorine free (TCF) bleaching process and move towards a totally effluent freeprocess. Here, we analyze the economic consequences of making the changes inproduction technology needed to convert the existing Great Lakes kraft and soda millsinto either the ECF or TCF configurations. It is useful to start with analyses of the

TABLE V-5: CHARACTERISTICS OF GREAT LAKES KRAFT & SODA PULP MILLS

PULP DELIGNIFICATION AND BLEACHING PROFILE GROUP TYPE

OUTPUT FIBER First Bleaching Stage Hydrogen Elemental Total Paper

METRIC BLEACHING FURNISH Extended or Oxygen Elemental ClO2 Peroxide Hypochlorite Chlorine Chlorine Radian Task

TONS/DAY SEQUENCE S-Softwood Modified Deliginification Chlorine % % P, Free Free Force

FACILITY NAME (1) (2) H-Hardwood Cooking O C D Ep or Eop H ECF TCF (3) (4)

CANADA

Avenor (former CPFP) 755 DREopDEpD S No No 0 100 Yes No Yes No 3 1

755 DEopDEpD H-S No No 0 100 Yes No Yes No 3 1,3

E.B. Eddy 500 O-DcEoDND S Yes Yes 0-50 50-100 No No On Demand No 4 2,4

500 O-DcEDND H Yes Yes 0-50 50-100 No No On Demand No 4 3,4

James River- Marathon 499 DEopDED S No No 0 100 Yes No Yes No 3 2

Kimberly-Clark 880 DcPEoDED S No No 0-40 60-100 Yes No Sometimes No 3 1

380 DcDED H No No 0-40 60-100 No No Sometimes No 3 3

UNITED STATES

Champion International 1,043 O-DEoDD H Yes Yes 0 100 No No Yes No 4 4

International Paper Co 885 C(E/H)PD H No No 100 0 Yes Yes No No 2 1,3

Mead Corp. 794 (D&C)EoDED S No No 60 40 No No No No 3 1

962 (D&C)EoDED H No No 60 40 No No No No 3 1,3

Potlatch Corp. 91 DEDED S No No 0 100 No No Yes No 3 2

399 DEDED H No No 0 100 No No Yes No 3 3

S.D. Warren Co. (Scott) 227 CEHD S-H No No 100 0 No Yes No No 2 2

TOTAL 8,669

NOTES (see appendix for further explanation for classification): (3) Radian Base Case Group Types (1) Metric ton refers to air dried metric ton of pulp. Radian Type Typical bleaching sequence Representative mill defining characteristicU.S. Mills '93(2) The defining characteristics of the bleaching sequences are as follows: 1 CEH Traditional, no ClO2 on-site 8

D Chlorine Dioxide bleaching/delignification 3 DcEoDED High ClO2 substitution; no hypoclorite 11E Extraction (caustic soda-NaOH) 4 ODEoDD O2 deliginification high ClO2 subst. 6

Eop Oxidative and peroxide extraction 5 CdEopDD Extended cooking; high ClO2 subst. 11H Hypochlorite bleaching 6 OCdEdD O2 delign. & ext cooking; low ClO2 sub 8N No wash stage, where ordinarily expected

O; Eo Oxygen delignification; oxygen extraction (4) Paper Task Force Base Case Group TypesECF Elemental Chlorine Free PTF Type Typical bleaching sequence & Fibe Base case mill defining characteristics CapacityP; Ep Hydrogen peroxide bleaching; peroxide extraction 1 DcEDED Softwood 50% chlorine dioxide substitution 1000

R Papricycle 2 DcEDED Hardwood 50% chlorine dioxide substitution 500Z Ozone delignification/bleaching 3 DcEDED Softwood 50% chlorine dioxide substitution 500

4 ODEDED Softwood O2 Delignification; 100% chlorine dioxide 1000

V-25

Mills are not called “greenfield” for environmental qualities, but simply as a way to distinguish16

new pulp mills from mills undergoing modernization.

economic competitiveness of new, greenfield mills before we introduce the16

complexities of retrofitting. Richard Albert (1994a,b), a technical staff manager for theengineering firm Parsons Main has calculated such a comparison (see Table V-6).Each process takes advantage of the chemical cost savings and pollution preventioncapabilities of extended delignification. His analysis has shown that the totally chorineand effluent free process (TCF-TEF) has unique cost advantages over the chlorinedioxide-ECF process. The most important of these are: avoided pollution control costs(for effluent treatment), process chemical cost savings and waste recovery. This canresult, according to Albert, in an overall cost advantage for TCF-TEF of US$35 per tonof pulp.

TABLE V-6: Greenfield TCF-TEF Kraft Mill CostsCompared with Chlorine Dioxide-ECF Mill

Analysis and Mill Process Costs Costs arativeCapital Operating Comp-

US$ US$/ton CostMillions US$/ton

R. Albert, Parson Mains (1994)

Totally Chlorine & Effluent Free: TCF-TEF 585 58 58

Chlorine Dioxide-Elemental Chlorine Free: 625 72 93ECF

TCF-TEF Cost Advantage +40 +14 +35

AET Revisions (Forbes & Manolescu, 1994)

Totally Chlorine & Effluent Free TCF-TEF 623 45 45

Chlorine Dioxide-Elemental Chlorine Free: 631 40 44ECF

TCF-TEF Cost Advantage +8 -5 +1

Notes: Fiber costs and labor costs not included in operating costs. Comparative costs are calculated to include the differences in capital and maintenance costs on a per ton basis.

The Alliance for Environmental Technology (AET), a group of chlorine and pulpmanufacturers, enlisted David Forbes of BE&K, and Don Manolescu of Zerotech

V-26

The economic studies we apply do not include the TCF conversion scenario that has become17

the norm for modern hardwood mills in the Nordic countries: oxygen delignification; and multiple stagesof hydrogen peroxide with chelant stages (“Q”) (chelation removes metals and optimizes TCF chemicaluse). This TCF process can be easily adapted to the ECF-2 capital equipment, but with higher chemicalusage, and higher chemical costs when high brightness is required. The capital conversion costs fromthe base case to the to this hydrogen peroxide TCF process is less than for the ECF-2 case for mills thathave low pre-existing chlorine dioxide capacity. This option is relatively more expensive for softwoodbleaching, but still can be economical: Louisiana Pacific’s Samoa, California softwood mill employs thisconfiguration.

Technologies, Ltd (1994), to critique Albert’s work. They did not dispute that TCF wascompetitive with chlorine dioxide technologies, but after making adjustments, theyfound only a negligible difference between them, considering the uncertainty inengineering estimates. The Paper Task Force (1995a, pg.192; 1995b, page pg.37-38),after evaluating many engineering studies, also concluded that there are essentially nosubstantial differences in the cost of TCF and chlorine dioxide-ECF production.

The economics of retrofitting old mills, such as those in the Great Lakes, presents special problems. The mills are not all alike. Even when they use the sameproduction technology, they may differ in their physical condition or in the type of rawmaterial, leading to different economic and environmental effects. Due to their wornand inflexible equipment, it is difficult for older mills to match the economic performanceof a new mill. Nevertheless, such existing mills must replace equipment as itdeteriorates, giving them an opportunity to modernize their operations and make themmore efficient. The basic choice is to decide between moving toward the ECF design,based on the use of chlorine dioxide and the delignification improvements required bythe EPA proposed regulations, or to adopt the state-of-the-art environmentaltechnology, TCF.

For the reasons already discussed, this choice will determine whether the mill’sproduction of dioxin and other AOX pollutants will merely be reduced, or, in keepingwith the principle of pollution prevention, actually eliminated. As a contribution to thedevelopment of policy to guide this transition in the Great Lakes mills, we haveevaluated the economic consequences of converting them into three alternative formsof ECF and the TCF design:17

� ECF-1: Adapted Traditional Chlorine Dioxide . Adaptation of traditionalelemental chlorine mills to chlorine dioxide, with no other substantial changes indelignification or bleaching technology. The conversion trend in the NorthAmerican industry appears to be toward ECF-1.

� ECF-2: Modern Chlorine Dioxide. U.S. EPA recommended (in its1993proposed cluster rules) modern, oxygen delignification (or extended cookingdelignification), chlorine dioxide elemental chlorine-free system. This is the most

V-27

common type of retrofitted ECF mill in Europe.

� ECF-3: Advanced Low Effluent Chlorine Dioxide. A more advanced loweffluent oxygen delignification, ozone bleaching, chlorine dioxide elementalchlorine-free system. The bleach plant effluent can be easily recycled up to thelast chlorine dioxide stage. Union Camp, Virginia, has pioneered this ozonetechnology; Consolidated Papers, Wisconsin Rapids, will be the first mill in theGreat Lakes states to install this advanced technology.

� TCF: Advanced Low Effluent Totally Chlorine Free . Uses identical technology

as ECF-3, but with hydrogen peroxide in place of chlorine dioxide. Thisconfiguration can be readily converted to a totally effluent free (TEF) mill. Thereis a stockholders movement at Union Camp demanding conversion to ozoneTCF.

In each case we have estimated the change in the cost of pulp production (i.e.,in comparison with the existing plant’s present cost) that would occur if each of theexisting Great Lakes mills were converted to the new design. Each scenario maintainsthe same levels of pulp brightness. (At lower levels of brightness, TCF becomes morecost competitive with ECF. See Govers’ analysis reported in appendix Table V-A.7.)

Economic Data Sources: Radian Corporation and The Paper Task Force. Tomake our estimates, we have made use of the two most recent independent studies ofsuch pulp process changes. The Radian Corporation (1995) and the Paper Task Force(1995a,c) analyzed alternative investment paths based on typical pulp mill baseconditions. These analyses can be advantageously adapted to the Great Lakes mills,for they are based on otherwise unavailable proprietary data on actual mill conditionsand provide a common reference point to our own analysis.

The Radian Corporation analysis (1995) has many useful features. Theydevelop two chlorine dioxide-ECF scenarios (ECF-2 & ECF-3), which we could easilyextend to a third, TCF scenario. They categorized U.S. mills into five groups of types,according to pulp and bleaching process technology. They used proprietarytechnological and economic data of actual U.S. mills to calculate conversion costs foran existing representative mill of each base case type. Minimal capital expenditures,i.e., for only the equipment necessary for the conversion were used. In contrast,operation and maintenance cost estimates were relatively high, especially for non-chlorine chemicals (e.g. they used a $2.00/kg price for leased ozone, when suppliersquote $1.30 to $1.60/kg). Their results are normalized to a typical mill output of 550metric ton/ day, which we adjusted for scale relative to the actual sizes of the GreatLakes mills.

The Paper Task Force (1995a,c) developed relatively high capital estimates byincluding in the modernized equipment other pollution prevention measures not always

V-28

Consistency, in pulping terminology, refers to the percentage of cellulose fibers in the solution18

of pulping chemicals.

Adaptation of Technical Data to Great Lakes Mills: For the purposes of this study, we19

assigned each Great Lakes mill to the most similar base case for each of the two approaches. In thecase of the Radian approach, we adjusted capital expenditures downward to correct for addedinvestments that were already in place at the Great Lakes mill. We made an additional adjustment to thecapital expenditures, for each approach, to account for the quantity of mill output. We used theconventional factor -- Great Lakes mill output/ base mill output raised to the power of 0.6 -- to adjust foreconomies of scale. Following the advice of the American Forest and Paper Association, we calculatedseparately the scale of production for each bleach line instead of aggregate output for all lines. Wediscovered that this increased aggregate capital estimates by 16-20%, as compared with an analysisbased on the total aggregate output of each of the mills. Because some capital expenditures will not beduplicated in all the lines, scaling output separately for each of them will overstate actual capitalexpenses. A TCF scenario was constructed from Radian’s for capital conversion expenditures for ECF-3, which is identical with TCF capital equipment, with an additional $10.49 in operating expenses toaccount for the increased quantities of hydrogen peroxide needed for TCF. (Based on data from anInternational Paper Company analysis, Lancaster et al., 1992.) A supplementary discussion of ourmethodology can be found in the appendix with tables showing the calculations for each mill (Tables V-A.4, V-A.5 and V-A.6).

required for reducing dioxin generation, but likely to accompany them. One result isthat new bleaching chemicals are used more efficiently than they are in the Radiananalysis. Separate hardwood and softwood base cases and two output levels (500 and1000 metric tons/day) are analysed. Only two bleaching technologies -- 50% chlorinedioxide and oxygen delignification with 100% chlorine dioxide (softwood only) -- areanalyzed. The latter case, the modern ECF-2, is similar to two mills in the Great Lakes. The Task Force constructed more alternative scenarios than Radian, including two thatwere useful for our objectives: 1) ECF-1, the current North American industry trajectoryof 100% chlorine dioxide substitution with no delignification modernizations, and 2) ahigh consistency ozone stage for ECF-3, which entails a higher capital cost than the18

medium consistency stage that Radian selected, but which substantially reducesoperating costs for TCF.

The Cost of Economic Conversion to ECF & TCF . In order to comply withexpected future regulations and the international preference for ECF and TCF paperproducts, the Great Lakes mills will have to undertake one of the capital investmentpaths outlined above: ECF-1, ECF-2, ECF-3 or TCF. As environmental regulationsbecome more strict, mills will need to adopt the more advanced pollution preventiontechnologies. We first present, in Table V-7 below, our total capital and weightedaverage cost estimates of converting the Great Lakes basin kraft and soda mills to eachpath. Then, in Tables V-8 and V-9 we present these results, separately, for each of themills. The actual conversion costs are likely to be somewhere between the Radian19

and Paper Task Force estimates.

Aggregate (Weighted Average) Costs of Conversion . Table V-7 shows the

V-29

Currency conversions and adjustments for inflation are adjusted in this chapter according to20

the foreign exchange rates and producer price index in Tables 1417 and 760, Statistical Abstract of theUnited States: 1995, U.S. Commerce Department, Washington D.C.

The typical carrying cost of capital expenses (borrowing) of these mills was Canadian $21 -21

$41/metric ton (‘94 US $18-$35). Note that total capital spending will be higher than these carry-overcosts, since additional capital spending comes from retained earnings and other sources of equity.

total cost of the capital equipment needed to convert all nine Great Lakes kraft andsoda mills to the several ECF and TCF configurations and the annual expenditures thatcost represents. Also shown are the weighted averages in annual operating costs(including capital, operating and maintenance costs) per metric ton of pulp.

The variation in the change of operating and maintenance costs ranged from anaverage saving of US$3/metric ton for the ECF-2 mill to an additional cost of US $7 forthe medium consistency ozone TCF mill in the Radian application. The largest cost,allocated on a per ton basis, is the capital cost, testifying to the capital intensity of thepulp industry. Estimates of total costs (capital and operation and maintenance) varyfrom a low of US $6/metric ton for the ECF-2 mill in the Radian approach to US$20 forECF-3 and TCF mills. The latter amount is about 4.3% of the average production costof $460 (see box below). After the debt on capital equipment is paid off, the change inongoing operating cost is at most 1.5% (Radian) and more likely to be even less (PaperTask Force).

As shown in Table V-7, the increases in overall production costs -- that is, theincreased cost of producing a metric ton of pulp -- range from $4 to $20 among theseveral types of conversion. These increases need to be viewed against thebackground of two features of the overall pulp industry: (a) the range of productioncosts among the mills that the Great Lakes plants must compete with; and (b) thefluctuation in the market price of pulp.

First, Sinclair (1991) has reported that the range of production costs among allNorth American pulp manufacturers in 1988 was U.S.$170 in 1994 dollars per metricton. Other recent estimates of the range in production costs are between U.S.$3520

per metric ton for U.S. plants in 1995 (The Paper Task Force, 1995b, p. 38) andU.S.$85 among four typical Canadian kraft mills (H.A. Simmons, 1992). Clearly, even21

the largest increase in production costs in converting the nine Great Lakes mills ($20)falls well within the normal range of variation in these costs among competing mills. This suggests that all but the highest cost marginal producers should be capable ofcoping with even the largest of the conversion costs.

Second, the indicated increase in production costs is also small relative to theextra earnings that mills make when the market price rises more rapidly than theirproduction costs. These earnings, as represented by the difference between

V-30

The price of bleached softwood market pulp has ranged from an average high of $855 per22

metric ton ($805 hardwood) in the 2nd quarter of 1995 to a current average quoted price of $505 ($365hardwood) in the 2nd quarter 1996. Pulp and Paper Week, April 15, 1996.

These values are calculated from estimated revenue of each mills product lines and national23

investment expenditures characteristic of the closest mill type reported in the 1992 U.S. Census ofManufacturers.

production costs and market price, have at times been more than $350 per metric ton inthe last year -- or over 17 times the size of the largest conversion cost. 22

Consequently, the conversion costs need not affect the market price of pulp, exceptperhaps during periods of oversupply where prices are at their lowest.

Thus, in economic terms, the increased cost of converting to ECF or TCFproduction falls well within the range of variations that are characteristic of the NorthAmerican pulp market. The capital investments necessary for these conversions of theGreat Lakes kraft mills will probably be between US$150-$450 million, or on anannualized pre-tax basis US$20-$60 million. This compares to the Great Lakes mills’1992 estimated total annual capital expenditures of US$250 million (‘94US$254 million,see Table V-4), which represents $88 per metric ton, and total annual revenue ofUS$2.6 billion, or $887/metric ton. Thus, the substantial capital investments needed23

for converting the Great Lakes mills to dioxin-free TCF production appear to be, inaggregate, well within the financial means of the region’s industry, provided adequatetime is allowed.

V-31

TABLE V-7: Conversion Costs of Nine Great Lakes Kraft and Soda Millsto ECFand TCF Pulp Production Processes (1994US$)

Study Applied to Great Lakes Mills- (Millions of US$) in Operating Costs perBleaching Process Scenario Metric Ton of Pulp (US$)

Capital Expense Weighted Average Change

Total Annual Capital O & M Total

Radian Costs Applied Minimum Capital Estimates

ECF-1: Adapted TraditionalChlorine Dioxide-Elemental Chlorine Free

- - - - -

ECF-2: Modern Oxygen Delignification, 150 20 +6 -3 +4Chlorine Dioxide-Elemental Chlorine Free

ECF-3: Advanced Low Effluent 225 30 +9 -3 +6Oxygen, Medium Consistency Ozone,Chlorine Dioxide-Elemental Chlorine Free

TCF: Advanced Low Effluent 225 30 +9 +7 +17Oxygen, Medium Consistency Ozone, Hydrogen Peroxide-Totally Chlorine Free

Paper Task Force Costs AppliedHigh Capital Estimates-includes ancillary costs

ECF-1: Adapted Traditional 160 21 +11 +7 +19Chlorine Dioxide-Elemental Chlorine Free

ECF-2: Modern Oxygen Delignification, 285 38 +16 -0 +16Chlorine Dioxide-Elemental Chlorine Free

ECF-3: Advanced Low Effluent 440 58 +18 +2 +20Oxygen, High Consistency Ozone, Chlorine Dioxide-Elemental Chlorine Free

TCF: Advanced Low Effluent 450 60 +19 +1 +20Oxygen, High Consistency Ozone,Hydrogen Peroxide-Totally Chlorine Free

Sources: Radian (1995); Paper Task Force (1995b) For full understanding of the power and limitation of thisanalysis, it is strongly recommended that these original sources be consulted.Notes: Numbers may not add in table due to rounding, see following tables and appendix for calculations andmethodology.O&M: Operating and Maintenance cost.Annual: annual expenditures to cover debt, calculated at 10% interest over 15 years; not adjusted for taxes (thePaper Task Force had lower annualized capital costs due to adjustment for taxes). For purposes of comparison withRadian, and the inclusion of Canadian mills with a different tax rate, we omitted tax adjustments.

V-32

Table V-8: Increment in Production Costs per Metric Ton of Pulp (U.S.$1994) for Conversion of Great Lakes Kraft & Soda Mills to

ECF and TCF Processes (Radian Analysis Applied)

Plant MetricOutput Annualized Capital Operation & Maintenance Total

ton/day ECF-2 ECF-3 TCF ECF-2 ECF-3 TCF ECF-2 ECF-3 TCF

CANADA

1) Avenor 755S 14 +10 +10 -4 -7 +4 +3 +3 +14755HS +10 +10 -4 -7 +4 +3 +3 +14

2) EB Eddy* 500S +1 +5 +5 +4 +8 +19 +5 +13 +24500H +1 +5 +5 +4 +8 +19 +5 +13 +24

3) James Riv 500S +8 +12 +12 -4 -7 +4 +4 +5 +15

4) Kimberly- 880S +6 +9 +9 -4 -7 +4 +2 +2 +13 Clark 380H +9 +13 +13 -4 -7 +4 +5 +6 +17

UNITED STATES

5) Champion* 1040H +0 +8 +8 0 +8 +19 +0 +12 +22

6) Int’l Paper 880H +10 +12 +12 -4 -6 +5 +6 +6 +16

7) Mead 790S +7 +10 +10 -4 -7 +5 +2 +3 +13960H +6 +9 +9 -4 -7 +4 +2 +2 +13

8) Potlatch 90S +16 +24 +24 -4 -7 +4 +12 +17 +27400H +9 +13 +13 -4 -7 +4 +5 +6 +17

9) SD Warren 230SH +18 +20 +20 -4 -1 +9 +14 +19 +29

Weighted Average +6 +9 +9 -3 -3 +7 +6 +6 +17

*Without Champion&Eddy +8 +11 +11 -3 -6 +5 +4 +5 +16

Notes: H: Hardwood; S: Softwood; nc: no change in technological configuration from base case.Numbers may not add in table due to rounding, see appendix for calculations and methodology.*Champion & E.B. Eddy do not fit the base case type, producing misleading/y high operating cost estimates, they fit the Paper Task Force basecase for ECF-3 and TCF scenarios much better.References: Radian (1995).

V-33

The Radian analysis, did not have an appropriate base case for this configuration, so it24

overstates costs in the ECF-3 and TCF scenarios. The Paper Task Force base case is for a softwoodmill: the capital costs should be similar for the hardwood lines, but the bleaching chemical usage is lowerfor hardwood, so chemical cost differences may be different than those predicted by our adaptation.

Champion International’s corporate planning has taken a different tack, the development of a25

chlorine dioxide-elementally chlorine and effluent free process (ECF-TEF). But a low effluent TCF millwould be more economical for Champion’s Quinessec, Michigan mill: ECF-TEF has higher capital costs($7 per metric ton) and operating costs ($6-$8 per metric ton) (adapted from Paper Task Force 1995b,pp. 39-42).

The Impact of ECF and TCF Conversion on the Individual Mills :

Since there are significant differences among the existing designs andoperations of the nine Great Lakes kraft and soda mills, the conversion process willrepresent different advantages and problems as well. Below, we summarize some ofthe specific effects on conversion on the individual mills.

Conversion of Modern Bleach Lines with Oxygen Delignification:Champion International and E.B. Eddy : These two mills are the most modern kraftpulp mills in the Great Lakes Basin and cost the least to convert to TCF: only $6-$8 permetric ton, with no significant differences in operating cost, according to our applicationof the Paper Task Force analysis. They are likely to realize additional chemical cost24

savings from modifications already made to their digesters for extended cooking. E.B.Eddy may require expanded investments in chlorine dioxide capacity to operate ECF ona permanent basis, making the low effluent ozone ECF-3 and TCF more attractive andtimely. Indeed, E.B. Eddy has a pilot ozone plant and is considering implementingozone on a mill scale. These two mills have the competitive advantage that Nehrt25

(1993, 1995) discovered to be keys to market share and profitablilty: early developmentand adaptation of advanced technology. They are also in the best situation toimplement advanced TCF pollution prevention technologies.

Conversion of Bleach Plants with Partial Chlorine Dioxide Substitution:Kimberly Clark and Mead. These bleach lines represent an intermediate dioxinreduction step, with a small commitment to chlorine dioxide use arising from recentlimited investments.

As we can see from Table V-9, converting the softwood lines to advanced loweffluent TCF has a small total average cost advantage ($1-$2) over permanent 100%chlorine dioxide-ECF-1. What is more important in the long run, especially after thedebt is paid off, is that there is a large operating cost advantage for TCF softwoodconversions ($11 per metric ton). This shows that for the large softwood kraft mill, thelarger initial capital expenditures for TCF technology is offset by economies of scaleand more than compensated by savings in operation, providing a strong competitive

V-34

Table V-9: Increment in Production Costs per Metric Ton of Pulp (U.S.$1994) forConversion of Great Lakes Kraft & Soda Mills to ECF and TCF Processes

(Paper Task Force Analysis Applied)

Plant MetricOutput Annualized Capital Operation & Maintenance Total

ton/day ECF- ECF- ECF- TCF ECF- ECF- ECF- TCF ECF- ECF- ECF- TCF1 2 3 1 2 3 1 2 3

CANADA

1) Avenor 755S nc 30 +21 +22 nc -2 -2 -2 nc 28 +19 45755HS nc +21 +22 nc +2 +6 +4 nc +26

2) EB Eddy 500S +18* nc +7 +8 +9* nc +1 +0 +22* nc +8 +8500H +18* nc +7 +8 +6* nc +1 +0 +19* nc +8 +8

3) James Riv 500S nc +18 +26 +27 nc -2 -1 -2 nc +16 +24 +25

4) Kimberly- 880S +11 +14 +20 +20 +9 -2 -2 -2 +20 +11 +18 +18 Clark 380H +14 +20 +29 +29 +6 +2 +6 +4 +20 +22 +34 +33

UNITED STATES

5) Champion 1040H nc nc +5 +6 nc nc +1 +0 nc nc +6 +6

6) Int’l Paper 880H +10 +14 +19 +19 +6 +2 +6 +4 +16 +15 +25 +23

7) Mead 790S +12 +14 +20 +20 +9 -2 -2 -2 +20 +12 +19 +19960H +9 +13 +19 +19 +6 +2 +6 +4 +16 +15 +25 +23

8) Potlatch 90S nc +36 +51 +52 nc -2 -1 -2 nc +34 +50 84400H nc +20 +28 +29 nc +2 +6 +4 nc +22 +34

9) SD Warren 230SH +18 +25 +35 +36 +9 -2 -1 -2 +27 +23 +34 +35

Weighted Average +11 +16 +18 +19 +7 -0 +2 +1 +19 +16 +20 +20excluding nc mills

Notes: H: Hardwood; S: Softwood; nc: no change from base case, already in similar technological configuration.Numbers do not always add due to rounding, see appendix for calculations and methodology.*E.B. Eddy, does not fit the conversion case for ECF-1 well: it has advanced delignification technology, but does not operate at full chlorine dioxidesubstitution.References: Paper Task Force (1995b).

V-35

advantage over the traditional ECF-1 path. The ECF-2 configuration is, however, theleast expensive conversion due to capital expenditures that amount to $6 less permetric ton, so a regulatory or market incentive is nevertheless needed to realize theenvironmental gains of low effluent TCF.

In contrast, the hardwood lines do not enjoy the operating cost advantages (only$2 per metric ton) that would compensate for the higher capital costs of the moreadvanced technologies. TCF has an overall $7 disadvantage for Mead’s line and a$13 disadvantage for Kimberly Clark’s smaller line, which does not benefit fromeconomies of scale. The hardwood lines are in a different situation because they useless bleaching chemicals in the first place (due to lower lignin content) and thereforehave less operational costs to economize through increased capital substitution. Thesehardwood bleach plants, especially Kimberly Clark’s smaller line, may find thatconversion to the less capital intensive chlorine dioxide ECF-2 configuration a moreeconomical route to TCF conversion. A strong TCF market incentive could overcomethese TCF hardwood handicaps. Hardwood market pulp is priced $50-$100 lower thansoftwood due to its shorter fibers. Even with a TCF premium price, hardwood pulp couldbe more inexpensive than softwood ECF pulp.

Conversion of Traditional Bleach Lines Adapted to Chlorine Dioxide-ECF-1:Avenor, James River, and Potlatch. Unlike investments in TCF technologies, thesemills’ recent investments in 100% chlorine dioxide substitution-ECF-1 provides themwith no economic advantage for adopting the more modern pollution preventiontechnologies. They face essentially the same modernization costs as mills with partialchlorine dioxide substitution, but face an additional handicap -- the debt burden frompast chlorine dioxide invesments, which become redundant with modern bleachchemical economizing technologies. Consequently, these mills will be the mostresistant to the adoption of TCF technologies until they fully recover their recentchlorine dioxide investments.

The Potlatch mill is in a different situation than the Avenor and James River mills.Its recent investments in additional chlorine dioxide generation are part of acomprehensive plan to expand its softwood line and convert the first chlorine dioxidestage to oxygen delignification (i.e., the modern ECF-2 configuration). While theirrecent investments in chlorine dioxide will not become redundant in the larger ECF-2line, the additional chlorine dioxide would not be necessary in a plan to adopt the moreadvanced low effluent ECF-3 or TCF technologies. (The issues of converting Potlatch’sand other small bleach lines will be discussed further below.)

Conversion of a Hardwood Soda Mill: International Paper. This mill is onlyone of two mills in the United States that bleaches soda hardwood pulp; directlyapplicable economic conversion data are not available. Our analyses should berelatively accurate for capital expenses, but less so for operating expenses, since soda

V-36

Soda mills produce a lighter pulp than kraft mills because they do not use sulfides which26

darken residual lignin during the kraft cooking process. Their advantage is lower bleaching costs. Sodapulping is not as effective in delignification as the kraft process, so is less strong and commands a lowermarket price.

An additional option for the small mills is to convert to recycled fiber or non-wood fibers like27

agricultural waste, abundant in the Great Lakes region. These options are more economical to bleachTCF and do not require the same high scale of production as kraft. S.D. Warren’s tissue product line isparticular amenable to recycled fiber (refer to the following deinking recycled mill section).

U.S. EPA’s recent impact analysis (November 1993, section 5) simply equates mill closure28

due to an environmental regulation as a loss of output, resulting in seriously over-projecting losses innational output.

mills’ pulp requires even less bleaching chemicals than the typical hardwood mill. 26

Consequently, this mill may face the same high cost of conversion to TCF as Mead andAvenor’s large hardwood lines. However, TCF conversion would be less costly forInternational Paper than for Mead and Avenor’s kraft mills, since TCF bleaching costsshould be relatively lower. International Paper has taken one step toward TCF: it is theonly one of the Great Lakes mills with a full hydrogen peroxide bleaching stage.

Conversion of Small Bleach Lines: S.D. Warren (Scott) and Potlatch. Thegreatest capital barriers to conversion toward the low effluent ECF-3 and TCFtechnology occurs in small bleach lines, which have diseconomies of scale: capitalimprovements cost more, on a per ton basis, than for larger mills. Thus, TCFconversion of S.D. Warren’s 230 metric ton per day mill would cost $35 per metric toncompared to $23 per metric ton for the less capital intensive ECF-2. TCF conversion ofPotlatch’s 90 metric ton per day softwood line would result in a prohibitive $50 permetric ton cost increase compared to $34 for ECF-2. The best route in this situation isto expand capacity when modernizing to take advantage of economic returns to scale, 27

as Potlatch plans to do. In some cases, it may be more economically andenvironmentally advantageous for the Great Lakes region to consolidate the productionof small bleach lines to fewer locations. Since fiber supply is a crucial limiting factor forpulp output in the Great Lakes region, any existing fiber supply that becomes availablein the region from a small mill shutdown will probably be picked up by other mills in theregion.28

Implementation; Economically Feasible Paths. Since pollution preventiontechnology replaces existing technology, the economic problem is a matter ofscheduling financial investment. For any mill to survive and provide economic returnsin the long run, it must have a modernization strategy. To do so, company engineersand executives must forecast what technologies will be needed in order to becompetitive and to meet society’s environmental goals. Once these goals are clear, atechnological investment path and schedule can be established. As we have shown,TCF-TEF technology is cost-effective for a modern mill and is therefore a reasonable

V-37

Why other studies’ TCF pollution prevention cost estimates appear prohibitively high:

Earlier ECF & TCF Conversion Studies: The studies by McCubbin, et al. (1992), Lancaster,et.al., International Paper (1992) and H.A. Simons Ltd. (1992) deserve special mention. While some TCF technologies were known in 1992, they were not adopted at the scale andrange of conditions that they are today. As a result, the above 1992 studies seriouslyoverestimated expenditures. The following three examples demonstrate theseshortcomings:

1) Since 1992, it has been known that the addition of anthraquinone can substitutefor extensive capital outlays in extended cooking, and still produce a viable TCF pulp. Someof the 1992 studies cited above advocated complete replacement of the pulp digesters withthe new modern extended cookers ($36.4-$51.5 million; Paper Task Force, 1995b, p.53).New digester equipment can optimize the use of TCF bleaching chemicals, but there is noneed to immediately install them.

2) Some analyses have added the cost of a new recovery boiler to TCF estimates($84.4 million, Paper Task Force, 1995b, p.27; Lancaster et al., International Paper, 1992).Many recovery boilers have excess capacity (3 out of 4 of the Great Lake Ontario mills haveexcess capacity). Many of those at full capacity can be modified and expanded, at costs thatthe Paper Task Force estimated. A Weyerhauser study (Patrick, et al., 1994; Paper TaskForce, 1995b, p.28) found that most United States mills’ recovery boilers will need to berebuilt or replaced in any event in the next decade, due to their age; they are over 30 yearsold. In any case, normal replacement will include expanded capacity, since it is required ofmodernizing toward either process, TCF or ECF.

3) Since 1992, non-chlorine chemical usage has been optimized in TCF mills. Practical mill experience has fine-tuned the bleaching process and optimized TCF pulpquality and yield.

economic goal for the modernization of older mills. Moreover, for most mills in theGreat Lakes, there exists a feasible investment path. For some of these mills ECF-2and ECF-3 may be an appropriate intermediate step to adopting TCF-TEF processes. ECF-1 is not an appropriate intermediate. The smaller bleach lines will have the mostdifficulty and competitive problems, regardless of what minimal environmentalobjectives are implemented.

Modernization, at least in current practice, appears to generally result in reducedemployment relative to output. That the conversion scenarios explored here may entailincreasing the capital intensity and reduced employment is in keeping with the effect ofrecent modernization and productivity improvements on employment. (The U.S.Bureau of Labor Statistics (1994) predicts a 6.4% employment loss from 1992-2005.) If

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Most of the Canadian TCF mills do not produce TCF on a permanent basis, but intermittently,29

in response to its European customers. These mills have not optimized their production equipment forTCF use, but use a combination of chemicals (e.g. anthraquinone and enzymes) to keep productioncosts down.

these declines are strictly proportional to capital investment, then the severalconversion paths would have the following impact on employment and payroll (in 1992U.S.$): traditional ECF-1, loss of 37 jobs and a $1.6 million payroll; modern ECF-2, aloss of 34 to 69 jobs and a $1.5 to $3 million payroll; advanced low effluent ECF-3 andTCF, loss of 52 to 106 jobs and a $2.3-4.6 million payroll. Actual job losses may bemore attributable to investments in automation than to the environmentally motivatedtechnological conversions.

The economic feasibility of conversion to TCF has in fact been demonstrated inpractice: TCF plants have been built and operate successfully. As shown in Table V-14 below, there are now 47 TCF pulp mills operating in Europe, and seven in Canada. 29

There are only two TCF mills in the United States at present, a kraft mill operated by theLouisiana-Pacific Company in Samoa, CA, and a sulfite mill operated by Lyons FallsPulp & Paper in Lyons Falls, NY. Their experiences are informative.

Louisiana-Pacific's Samoa kraft pulp mill, like many TCF mills in Europe, beganconverting to TCF as a means of reducing a number of pollution problems caused bythe use of elemental chlorine. Conversion began on an experimental basis in 1991 andwas completed in 1994, one year ahead of schedule. The plant is now able to achievebrightness of over 85 ISO with strength equivalent to that of chlorinated pulp (chlorinebleaching generally achieves a brightness of 90 ISO). Louisiana-Pacific has found astrong market for its TCF pulp in Europe, where it has commanded a premium price ofup to $50 per metric ton (Louisiana Pacific, 1995). The Samoa plant has alreadydiverted some of its effluent into closed-loop recycling systems, a step that may havecontributed to the economic success of its conversion.

The Lyons Falls sulfite mill is another example of an economically successfulU.S. conversion to TCF. One of its chief products is paper for book publishing. Thecompany has actively promoted the use of TCF paper to publishers and now suppliesseveral with paper for books that often bear a TCF logo.

The United States experience, however limited, indicates that TCF production iseconomically viable. Many North American pulp mills cite environmental problems ascontributing factors to mill abandonment that could be solved with the closed looptechnologies that become possible as TCF is adopted. Ultimately, closed looptechnologies promise to reduce the costs of TCF pulp to that of ECF pulp, or less. Toreach that goal, TCF needs the proper market incentives and regulatory signals in orderto evolve and become internationally competitive. This aspect of the problem isdiscussed in section F below.

b. Deinking pulp mills:

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1) Technology and environmental impact:

Of the 20 Great Lakes pulp and paper mills that use chlorine compounds anddischarge effluent into the Great Lakes or their tributaries, 10 are solely devoted to theproduction of recycled paper. They employ about 4,800 employees, have a payroll of$203 million, and shipments of $1.3 billion (see Table V-4).

Technology: Since these plants manufacture pulp and paper directly frompaper rather than wood, the manufacturing process is complicated by the removal ofvarious impurities -- e.g., inks, fillers, coatings, and “stickies” -- but in other respectsentails less capital and operating costs. Chemical cooking is unnecessary; only waterand agitation are needed to mash waste paper into pulp. Reagents are added torelease the ink and other impurities from the paper fiber; these particles are thenseparated from the pulp, for example by flotation, and collected as a waste sludge. Forsome products the deinked pulp may need additional brightening. Since manywastepaper grades have been previously bleached, they require less bleaching thantheir virgin counterparts. Nine Great Lakes deinking plants presently use chlorine orhypochlorite as bleaching agents, and in one plant, reportedly as an agent to improvedisposal in sewer systems. Bleaching chemicals have little effect on inks, but they doreduce the color of dyes, impurities, or yellowed lignin, brightening the pulp.

Dioxin Formation : Because it contains less lignin than virgin pulp, chlorine or hypochlorite is needed to bleach deinked pulp made from previously bleached wastepaper. It follows that there is also less likelihood that dioxin will be synthesized in thebleaching of deinked pulp. Nevertheless, there is evidence that chlorine bleaching ofrecycled pulp does generate some dioxin. This is shown by the fact that samples ofrecycled paper produced by mills that use chlorine bleaching typically have a higherdioxin content than the virgin paper (Beck et al. 1988; Rotard et al., 1990; Fiedler &Timms 1990; Rappe et al. 1990; Santl et al. 1994). When the wastepaper has arelatively high lignin content -- as in the case of unbleached paper or wastepaper madefrom mechanical pulp -- chlorine bleaching is likely to produce higher levels of dioxin.

This view is supported by the U.S. EPA’s (October 1993, pg 7-9, 7-44)evaluation of a survey of 23 recycled paper deinking mills and 6 recycled paper non-deinking mills. They found that chlorine bleaching of recycled pulp producedchlorinated organic wastes similar to those produced at virgin chemical pulp bleachplants, but generally at much lower levels. In their 1989 one mill study, the U.S. EPAfound a relatively high dioxin content in the wastepaper inputs, indicating that much ofthe dioxin in the sludge and bleach plant effluent originated from the wastepaper. U.S.EPA surmised that dioxin might have been formed in the chlorine bleaching of the virginpaper or resulted from fallout of dioxins from the atmosphere, that settled on thewastepaper. (See also Berry, 1993 and Rappe, et al. 1990.) Research in Germanyhas revealed other sources of waste paper dioxin: certain inks have high dioxin

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A thorough mass balance needs to be done to account for all of the dioxin going into and out30

of the bleach plant system. It is important that these studies are done for the mills that use chlorinecompounds to bleach lower grade high lignin content papers into higher paper grades, an increasinglycommon practice.

ISO and GE are the names for two different scales used by the pulp and paper industry to31

measure the brightness of their market pulp and paper products. ISO is the more commonly used scaleof measurement today; the GE scale is still used by many deinking mills to measure the brightness ofdeinked pulp.

concentrations with a pattern of different congeners (“dioxin fingerprints”) consistentwith that found in wastepaper; tall oil rosin sizing agents used in paper production andwastepaper contaminated with pentachlorophenol (PCP) might be responsible as well(Santl, Gruber and Stöhrer, 1994a,b).

In the absence of chlorine-based bleaching the recycling process itself does notappear to contribute significantly to the dioxin problem (Santl et al., 1994). More than90% of the dioxin in the input of a non-bleaching recycled paper mill was accounted forby the dioxin content of the waste paper; sizing agents accounted for the rest. Thedioxin content of the recycled paper pulp was a third of the dioxin content of the wastepaper used to manufacture it.

NCASI has provided us with unpublished data regarding the dioxin content ofhypochlorite bleached and unbleached recycled pulp. The overall results areambiguous and do not appear to establish that bleaching is entirely free of dioxinformation. In view of this uncertainty, it is prudent to consider non-chlorine bleaching30

alternatives, which will not compound the problem of dioxin formation.

2) Alternatives to chlorine-based bleaching:

Most recycled paper plants bleach in one- or two-stage bleaching withhypochlorite. For higher brightness a chlorine stage followed by a hypochlorite stagemay be used. Hypochlorite efficiently strips the color from dyed paper and brightensthe final paper product. Apart from pollution problems, one of the reasons foreliminating the use of hypochlorite for bleaching recycled pulp is that non-chlorinealternatives can produce brighter paper from mixed waste paper. As recyclingproduction capacity has expanded the availability of high grade wastepaper hasbecome more limited. This has encouraged many mills to use more flexible chemicalbleaching technology. The most easily substituted chemicals are: hydrogen peroxide,sodium hydrosulfite, and formamidine sulfinic acid (FAS). They are used to produce“process chlorine-free” (PCF) pulp. Recently, firms interested in achieving a high levelof brightness have taken advantage of this opportunity. For example, Kieffer PaperMills’ chlorine-free bleached deinking mill has achieved 88% ISO brightness recycled31

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These are Chicago price quotes for November-December 1995 from Pulp & Paper Week. 32

Prices and supply are volatile, but there are consistent price premiums for woodfree wastepaper grades.

Freesheet or woodfree refer to paper that contains no mechanical pulp fibers.33

pulp, higher than that typically achieved by chlorine bleaching (Paper Age July 1995).They are experimenting with a third non-chlorine bleaching stage to reach a 91.5% ISOlevel of brightness.

3) The Economic Aspects:

The substitution of non-chlorine-based bleaching agents, such as sodiumhydrosulfite or hydrogen peroxide, for chlorine-based agents in recycled pulp plants caninvolve little or no new equipment. Since most non-chlorine bleach chemicals do notneed to be generated on-site (as do hypochlorite and chlorine dioxide), the necessarycapital investment is negligible. The pre-existing pulping and bleaching equipmentgenerally need only minor modifications, which may range from zero to $225,000 incost (Radian 1995). As a result, the cost differential between the alternative bleachingstrategies is influenced by the relative costs of the agents themselves. Sodiumhypochlorite costs about half as much as sodium hydrosulfite or hydrogen peroxide(see Table V-10). On the other hand, there are significant economic advantages to theuse of non-chlorine-based bleaching agents. In many conditions they can produce ahigher level of brightness in the final product -- a property that can enhance its sellingprice. Non-chlorine-based alternatives also allow the use of less expensive wood-containing fiber (high lignin content “furnish”) because -- unlike hypochlorite -- they donot cause the yellowing of lignin. Thus, the use of hydrosulfite in place of hypochloriteenables a recycled pulp mill to replace some of the wood-free furnish costing from$120-$215 per ton (colored ledger to computer printout) with wood-containing furnishfrom $5-$55 per ton (mixed paper to old newspapers).32

Based on these considerations, we have assembled data on several alternativeways of bleaching recycled pulp in order to estimate the relative costs of manufacturingit with sodium hypochlorite bleach or sodium hydrosulfite/hydrogen peroxide bleach toproduce tissue-grade pulp with a target brightness of 80% (GE). The results are shownin Table V-10, which compares the production costs and brightness achieved in thevarious processes. When the process uses only wood-free furnish and is chlorine-33

free (PCF), the cost of production is about $4.60 more per ton than the cost of acomparable, chlorine-based process. This represents only 2% of material costs andless than 1% of the price of deinked bleached market pulp (according to Paper Age,

Table V-10Deinking Bleaching: Hypochlorite vs. Process Chlorine Free Cost Comparisons with Woodfree and Mixed Wastepaper Target 80% Brightness (GE) Tissue Grade Recycled Pulp

Wastepaper Furnish & % Quantity Cost Cost Brightness

Bleaching Chemicals ton @100% US$ 1992 US$ 1995 % GE

Woodfree Wastepaper

Hypochlorite BleachingWoodfree Coated Book Furnish 100.0 1 ton 69.69 125.00Sodium Hypochlorite 0.5 10 lbs 2.50 2.50Sodium Hydroxide 1.0 20 lbs 6.40 2.80 Total Chemical & Furnish Costs 78.59 130.30Brightness 80.9

Hydrosulfite Bleaching (PCF)Wood-Free Coated Book Furnish 100.0 1 ton 69.69 125.00Sodium Hydrosulf ite 0.5 10 lbs 7.10 7.10Sodium Hydroxide 1.0 20 lbs 6.40 2.80 Total Chemical & Furnish Costs 83.19 134.9Brightness 82.8

Mixed Wastepaper

Hypochlorite BleachingWoodfree Coated Book 70.0 0.7 ton 48.78 87.50Groundw ood (Old New spapers) 30.0 0.3 ton 8.25 9.00Sodium Hydroxide 1.0 20 lbs 6.40 2.80Sodium Hypochlorite 0.5 10 lbs 2.50 2.50 Total Chemical & Furnish Costs 65.93 101.8Brightness 72.2

Hydrosulfite/Peroxide Bleaching (PCF)Woodfree Coated Book 70.0 0.7 ton 48.78 87.50Groundw ood (Old New spapers) 30.0 0.3 ton 8.25 9.00Sodium Hydroxide 1.0 20 lbs 6.40 2.80Hydrogen Peroxide 0.5 10 lbs 6.85 3.80Sodium Hydrosulf ite 0.5 10 lbs 7.10 7.10 Total Chemical & Furnish Costs 77.38 110.2Brightness 81.0

Sources:Adapted from Timothy E.McKinney, "Alternative Chemicals Gain Popularity forBleaching Woodfree Furnishes," Pulp & Paper March 1992Chemical Marketing Reporter 1992-1995 did not show any differences in l ist pricesfor these bleaching chemicals. Contracted prices are lower and vary by sale and location. Price estimates for sodium hydroxide (13c/lb) and hydrogen peroxide (38c/lb) are those reported by Forbes and Manolescu (September 1994).1995 waste paper prices were those reported by Paper Recycler for Chicago seller's f.o.b. in December.

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Process Chlorine Free (PCF) does not necessarily result in Totally Chlorine Free (TCF) pulp34

and paper, because in recycling, waste paper often contains chlorine and organochlorines, such asdioxin, from the original chlorine manufacturing processes or inks.

Since the price of high-grade bleached wastepaper has gone up and availability down,35

recycled paper mills are beginning to use unbleached wastepaper with significant amounts of lignin thatneeds to be delignified for certain paper products (see Haywood, Pulp& Paper, Feb. 1995). OldCorrugated Cardboard (OCC) can also be substituted for virgin fiber in a TCF kraft mill to produce high-grade papers of up to 87 ISO (Pichler et al., 1995).

July 1995, $540/ton). However, when the chlorine-free process makes use of cheaperfurnish -- i.e., wood-containing wastepaper such as old newspaper -- as a substitute for30% of the wood-free furnish, then chlorine-free production of bleached wood-free pulpat a brightness of 80% GE costs about $20 less per ton than hypochlorite-basedproduction. According to industry sources, PCF production costs for tissue productsmay increase up to $10 per ton if higher brightness is required.

Thus, conversion of many of the Great Lakes basin deinking pulp mills toprocess chlorine-free (PCF) operation can be done by simply substituting non-chlorine34

bleaching chemicals -- hydrogen peroxide, hydrosulfite or FAS -- for chlorine-basedbleaching compounds such as chlorine, hypochlorite or chlorine dioxide. Oxygen orozone bleaching may also be substituted for chlorine bleaching especially for brighterpaper grades or certain types of wastepaper , but may entail additional capital outlays35

for an ozone generator and an oxygen bleaching tower. Since the outcome ofconversion to PCF may be slightly higher costs or less bright product, increased publicawareness of the environmental benefits may compensate in the marketplace for thesedisadvantages. The development of TCF and PCF product markets is discussed insection E below.

Conversion to PCF should not affect employment, payroll or sales. Some firmsmight incur slightly higher operating costs and slightly smaller profit margins, and wouldtherefore resist conversion. All but one of the deinking mills surveyed by CBNSpredicted no significant losses of employment due to environmental improvements. One mill reported that environmental improvements added 15-20 jobs. Another millsaid that environmental improvements substantially reduced employee turnover. Onemill said that it was conceivable that the proposed U.S. EPA cluster rules and GreatLakes Initiatives could result in mill closure. (It is interesting to note that this companyhad closed a hypochlorite bleaching deinking mill, which was successfully converted toa PCF mill by its successor.) Any possible declines in employment will be more thanoffset by the increased job opportunities generated by the expansion and newconstruction of deinking mills. Deinking capacity is expected to triple, as Americanpaper companies have recently invested $7.5 billion in recycling capacity and plan toinvest another $10 billion in the next five years. The limiting factor appears to bewastepaper supply, not the relatively small cost of bleaching recycled fiber.

Conclusion: An examination of 1994-1995 Pulp & Paper Project newsletters

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It is possible that Great Lakes chlorine dioxide bleached kraft mills would bleach secondary36

fiber with chlorine dioxide if they should develop secondary fiber sources and pulping capacity.

that report new planned bleached deink mills failed to identify any mill planning to usehypochlorite or chlorine. The Paper Task Force (1995a) forecast PCF for all newdeinking mills and expected older mills to convert. Georgia-Pacific in Kalamazoo,Michigan, which bleaches 400 tons per day of deinked pulp recently converted theirbleaching process from hypochlorite/hydrosulfite to hydrogen peroxide/hydrosulfite, andis now PCF (Lockwood Post 1995). Ponderosa has recently converted a mill to ozonebleaching of deinked market pulp. They are exploring the possibility of converting theirGreat Lakes mill to ozone or another PCF process.The trend in new U.S. facilities istoward totally chlorine-free production. For example, a new mill scheduled forcompletion this year in Michigan, Great Lakes Pulp and Fibre, will produce 715 tons perday of PCF deinked market pulp -- will reportedly be the largest plant in the world fordeinking fine papers, according to the 1995 Lockwood-Post's Directory. Thus, there ispractical evidence that both the construction of new PCF recycled pulp mills and theconversion of existing mills to PCF process is technologically and economicallyfeasible. Nevertheless, this trend would be increased by government action. Inparticular, clear identification of PCF products and government regulatory andprocurement policies that favor PCF would have a significant effect on conversion. 36

c. Sulfite pulp mills:

There is one sulfite mill in the Great Lakes water basin -- Badger Paper -- whichcontributes dioxins to the Great Lakes. Badger, an integrated pulp and paper mill, hasabout $65 million in revenue and employs over 200 people. The bleaching process,chlorine-extraction-hypochlorite (CEH), is unchanged since the 1988 104 mill study,when its effluent dioxin samples ranged from 0.013 to 0.182 g TEQ per year (calculatedfrom values reported in TetraTech, 1990). NCASI has indicated that they will releasean estimated 0.0041 g TEQ/yr (medium) in 1993, based on self-reported data. Wehave not been given any indication of how this reported decline could have occurredwith the continued use of 100% elemental chlorine in the first stage and hypochlorite inthe last bleaching stage.

Like most sulfite mills in North America, Badger is relatively old; it was founded in1929. The mill “cooks” with sulfurous acid instead of the sulfate-caustic soda solutionused in the kraft process. This process produces brighter pulp at higher yield but whichis less strong than kraft pulp. It requires less bleaching than kraft pulp, since sulfurousacid darkens pulp less than sulfate does.

It appears that considerable research and development would be needed tomodernize Badger Paper. The relatively small size of Badger Paper makes it unlikelythat substantial capital investment will be made, unless capacity were to expand and its

V-45

wood fiber source capitalized. Badger Paper is in a difficult position; according tocorporate reports, it has not been doing well financially. Rather than invest inmodernization of its existing mill, it recently acquired another mill, which it couldn’tafford to keep and later had to sell. Indeed, Badger Paper company has announcedthe shutdown of their sulfite pulping operations in April 1996, citing that the variablecosts of its sulfite pulp were higher than the pulp it could purchase on the market. Theyalso mentioned the prohibitive expense of meeting the expected environmentalguidelines.

This phenonomen is typical of many North American paper companies. Whenthey are in a position to expand sales, they tend to favor acquisitions over modernizingexpansions or building a new mill. This approach often requires less capital, but doesnot economize on operating costs, which are minimized through modernization. Theresult is often high debt, with no new capital equipment to show for it, or higherproductivity which could enable the company to survive a downturn. Unlike Europeansulfite mills, most sulfite mills in North America have not modernized.This may be acontibuting factor to their demise; from 1980 to 1990, 60%of the sulfite mills in theUnited States closed. In constrast, Lyons Falls’ New York sulfite mill, like many suchmills in Europe, has used TCF conversion as a successful strategy for modernizationand survival.

E. Product Marketing and Demand:

The preceding analyses provide us with information about the economicfeasibility of modifications in pulp production technology that can achieve the virtualelimination of dioxin (and of similar organochlorine pollutants). In the manufacture ofvirgin kraft pulp, the growing application of bleaching sequences based on the substitution of chlorine dioxide for chlorine (ECF) have significantly reduced the levelsof dioxin, and of organochlorine pollutants generally, in the plant effluents. Nevertheless, the use of chlorine dioxide always releases a small amount of chlorine,which, reacting with residual lignin, produces dioxin and other organochlorinepollutants. Hence, ECF plants are not in fact entirely “chlorine-free,” “dioxin-free” or“organochlorine (AOX) pollutant-free.”

On the other hand, the available evidence shows that neither dioxin nor AOX isproduced by the TCF bleaching process, which, in that sense, is both dioxin-free andAOX-free. It is fair to say, therefore, that although ECF mills are a considerableenvironmental improvement over elemental chlorine-based mills, it is only the TCFprocess that has achieved the goal of eliminating the dioxin that the production of non-TCF bleached pulp imposes on the environment. TCF also enjoys anotherenvironmental advantage over ECF: unlike ECF plants, TCF plants can be much morereadily converted to an effluent-free status by recycling their effluents in closed-loopsystems -- thus totally eliminating all waterborne pollutants and recapturing fuel andprocess chemicals.

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In sum, as a matter of policy, the goal of virtually eliminating the entry of dioxinand similar organochlorine pollutants into the Great Lakes from the pulp and paperindustry ought to be implemented by converting the industry to TCF operations and, inthe case of deinking recycling mills, to process chlorine-free (PCF) operation.

There is, however, an important economic barrier to the implementation of thisenvironmentally motivated policy: TCF pulp is at present more costly for existing mills toproduce than ECF pulp. This raises the question of whether TCF pulp and paper cancommand a correspondingly higher price and thereby motivate the necessaryinvestment in the process. In turn, this issue depends on the demand for TCF paper.

The products manufactured by the 20 Great Lakes region pulp and paper millsinclude: printing papers, fine or writing papers, packaging and industrial convertingpapers, market pulp and tissue. The major Great Lakes products are coated papers,tissue, and market pulp. Together these three categories account for over three-quarters of the mills’ revenue. The Great Lakes mills account for about 30% of theNorth American production of coated papers, which are used in a wide range ofbusiness and consumer products where high-quality printing is important: magazines,business publications, annual reports, and advertising. These are items withconsiderable public visibility and therefore particularly sensitive to consumer demandand government procurement preference for recycled and chlorine-free paper.

The Great Lakes mills are also significant producers of tissue products, with anestimated 17% of the combined Canadian and U.S. production. The tissue productsproduced by these mills -- which are all made from recycled deinked pulp -- includenapkins, table covers, as well as toilet paper, towels, sanitary and other tissues. Unlikehigh-grade printing paper, these end-uses often do not require high brightness. Marketpulp is produced for sale to paper mills in open competition with other international pulpproducers. The market pulp production capacity is concentrated in the region’sCanadian facilities. Most Canadian market pulp (59%) is shipped outside of NorthAmerica; 31% is shipped to the U.S.; and 10% to paper companies in Canada (Pulp &Paper North American Fact Book, 1993, p. 301).

There is a rather close relationship between the supply of the several types ofcommodities produced by the Great Lakes mills and the estimated regional demand forthem (defined as the demand arising from the eight Great Lakes states and theProvince of Ontario). This is shown in Table V-11. The demand for paper products inthe region arises principally from magazine, catalogue and other commercial printers(for coated freesheet), book publishers and printers and other commercial printers (foruncoated freesheet), government agencies (for uncoated freesheet and tissues), andhouseholds (for tissues). The largest demand arises from the printing and publishingindustry, which is relatively concentrated in the region. The U.S. firms in the regionalprinting and publishing industry comprise almost 50% of the total U.S. industry in termsof value of shipments. (See Table V-12) Similarly, Ontario firms account for about one-

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Conversation with Mark Floegel, of Greenpeace, Oct. 13, 1995. Government agencies included37

State of Massachusetts and the U.S. General Services Administration.

Conversation with Pat Wendell, of MoDoCell, Oct. 13, 1995, regarding purchasers of MoDo’s TCF38

pulp, who include a converter for food wrapping papers.

There are approximately 100 university presses in the United States, and an additional 6-10 in 39

Canada, per telephone conversation with Tony Crouch, Director of Design and Production for the Univ.Of Calif. Press, Oct. 1995.

half of Canada’s printing and publishing industry (Manufacturing Industries of Canada,Statistics Canada, 1991-92). Table V-11 shows that the existing regional demand ismore than sufficient to absorb the regional supply of the major Great Lakes paperproducts.

It follows, then, that a policy directed at increasing the regional demand for TCFproducts could have a significant impact on the region’s suppliers, in the sense ofjustifying their investment in the transition to TCF. The printing and publishing industryis already playing a key role in this transition. Recent purchasers of TCF pulp andpaper in the United States include book publishers; state and Federal governmentagencies; a Midwestern pulp converter manufacturing food-wrap papers ; non-profit37 38

environmental organizations (National Wildlife Federation and Environmental DefenseFund); magazines (e.g., Scuba Times), and fast-food chains such as McDonalds, whichuses TCF in french fry bags.

Jossey-Bass Inc., a California-based publisher (a subsidiary of Simon &Schuster), has worked extensively to define environmentally responsible publishingpractices, and is the first U.S. trade publisher to use TCF paper (Bruner, 1995). Jossey-Bass began using TCF uncoated paper for printing books in 1994, and afterfinding the price and quality acceptable, is using TCF stock for the majority of thecompany’s titles. The company prints about 140 new book titles, several hundredreprint titles, and about 90 journals annually (Bruner, 1995). Additionally, the Universityof California Press, one of the largest university presses in the United States, will soonconvert a portion of their printing to TCF papers. By 1997 they expect to use TCFpaper stock for about 50% of their new titles and book reprints. Most of the39

manufacturers contracted to print books for the University of California Press are

TABLE V-11

DEMAND FOR PULP AND PAPER PRODUCTS IN THE GREAT LAKES REGIONCOMPARED TO THE SUPPLY PRODUCED BY 20 GREAT LAKES MILLS

GREAT LAKES GREAT LAKES RATIO: COMMODITY 20 MILL SUPPLY CONSUMER DEMAND REGIONAL DEMAND/

(1,000 tons) SECTOR (1,000 tons) MILLS SUPPLY

Market Pulp 2,321.48 Paper Mills 2,077.64 0.9

Coated Freesheet 1,196.29 Printing & Publishing 1,339.85 1.1 Papers Industries (1)

Uncoated Freesheet 490.01 Printing & Publishing 3,695.51 7.5 Papers Industries

Tissue Products 1,197.20 Consumer, 1,945.4 1.6Commercial & industrial

Source:Pulp & Paper 1994 North American Factbook, 1995 Lockw ood-Post's DirectoryUS Census of Manufactures, 1992Notes:(1) Printing & Publishing Industries include: U.S. SIC 27 (except SIC 279, Printing Trade Services and 2711, New spapers) and Canadian Major Group 28.

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TABLE V-12: INDUSTRY PROFILEM AJOR SECTORS OF THE PRINTING AND PUBLISHING INDUSTRY IN THE GREAT LAKES STATES (U.S.)

Num ber ESTABL TOTAL ANNUAL VALUE COST OF VALUEOF OVER 20 NUM BER PAYROLL PROD. ADDED M ATERIALS SHIPM ENTS

ESTABL PERSONS EM PLOYEES ($1,000) WORKERS ($1,000) ($1,000) ($1,000)COMMERCIAL PRINTING

total Great Lakes: 12,100 2,140 228,533 $6,203,900 159,900 $13,181,800 $9,566,400 $22,762,600

total U.S.: 38,465 5,596 568,700 15,370,600 409,200 31,975,000 24,374,900 56,438,900Ratio GL/US 31% 38% 40% 40% 39% 41% 39% 40%

BOOK PUBLISHERS & PRINTERS

total Great Lakes: 1,081 308 60,200 $2,050,100 24,500 $7,771,400 $4,013,700 $12,126,734

total U.S.: 3,267 793 130,500 $4,036,400 57,400 $14,328,000 $7,206,100 $21,419,000Ratio GL/US 33% 46% 46% 51% 43% 54% 56% 57%

PERIODICALS: PUBLISHING, OR PUBLISHING & PRINTING

total Great Lakes: 1,278 405 48,800 $1,954,100 6,700 $8,716,200 $3,471,400 $13,641,200

total U.S.: 4,699 991 116,200 $4,074,500 20,100 $15,833,000 $6,200,900 $22,033,900Ratio GL/US 27% 41% 42% 48% 33% 55% 56% 62%

BUSINESS FORM PRINTING

total Great Lakes: 299 183 17,600 $513,700 12,200 $1,440,500 $1,367,400 $2,807,700

total U.S.: 922 540 47,900 $1,343,200 33,600 $3,924,700 $3,499,900 $7,435,900Ratio GL/US 32% 34% 37% 38% 36% 37% 39% 38%

MISCELLANEOUS PUBLISHING

total Great Lakes: 1,048 220 24,500 $657,000 9,000 $3,156,500 $1,069,200 $4,221,400

total U.S.: 3,390 570 65,400 $1,732,900 23,700 $8,524,900 $2,476,700 $10,977,100Ratio GL/US 31% 39% 37% 38% 38% 37% 43% 38%

TOTAL US GREAT LAKES, MAJOR PUBLISHING AND PRINTING SECTORS15,806 3,256 379,633 $11,378,800 212,300 $34,266,400 $19,488,100 $55,559,634

TOTAL U.S., MAJOR PUBLISHING AND PRINTING SECTORS:

50,743 8,490 928,700 $26,557,600 544,000 $74,585,600 $43,758,500 $118,304,800

RATIO, GREAT LAKES/U.S.31% 38% 41% 43% 39% 46% 45% 47%

Source: Census of Manufactures, 1992.Great Lakes states includes: Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania, Wisconsin.Note: Value of shipments estimated for Indiana Book Publishing (SIC 2731) and Book Printing (2732).

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The following amounts of TCF paper were purchased by GSA: Napkins (4 types): $100,000; toilet40

tissue: $580,000; towels (3 types): $350,000; bond: $30,000; xerographic: $50,000; and an unspecifiedamount of envelopes; per telephone conversation with John Marrone, US General Services Admin.,10/16/95.

located within the Great Lakes region -- chiefly in Michigan, New York andPennsylvania. Clearly, publishers and printers in the Great Lakes region are in anexcellent position to encourage regional pulp and paper mills to shift to TCF operationsby providing substantial market incentives through their growing demand for chlorine-free and dioxin-free paper.

The public’s interest in environmentally benign paper products is also reflected inrecent government actions. The U.S. General Services Administration has purchasedover $1.1 million worth of PCF tissue (napkins, bathroom tissues and towels) and TCFbond, xerographic and envelopes during Fiscal Year 1995 and reports receivingrequests from other Federal agencies for TCF paper procurement. In 1993, an effort40

was made to include TCF in the requirements for Federal government paper products,but this provision was eventually deleted from the Executive Order on purchasingrequirements. However, several states and cities have passed ordinances toencourage the procurement of TCF paper products. (See Table V-13.)

Finally, households -- a large customer for tissue products -- are an importantvehicle for generating a demand for TCF. The tissue products produced by the GreatLakes deinking mills -- such as the paper towels, napkins, and table covers producedby the large Fort Howard mill in Green Bay, WI -- are a major component of the region’spaper output. Increased consumer acceptance of slightly lower brightness (i.e.,products in the range of 75-80 ISO) for sanitary tissues would encourage the adoptionof PCF brightening for deinked pulp. In Europe, consumers in the Nordic and German-speaking countries seek out products made from TCF pulp in preference to higher-brightness ECF pulp, especially in sanitary products. It is now possible to produce PCFsanitary tissues with a high post-consumer recycled content (60% or more) from mixedwaste paper and a brightness level of about 78% GE at competitive prices.

Thus, the Great Lakes region is in an advantageous position to implement apolicy based on a demand-driven transition to TCF production by the region’s pulp mills. The region’s printing and publishing industry could take the lead, among industrialpaper consumers, in shifting to TCF products. The Great Lakes Governor’s Council,which has been actively developing purchase programs for recycled paper, couldextend them to include TCF and PCF paper. The Federal Administration could reverseits rejection of TCF requirements in government purchase program. Cities in the regioncould follow the example of Chicago and Ann Arbor, which have procurement policiesfavoring non-chlorine bleached paper products.

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Table V-13: Government Purchasing Policies: Totally Chlorine Free Paper

Legal Citation and Description Affects Additional DetailsEffective Date

State of Oregon Develop purchasing State agencies, Dept. of GeneralGovernor’s Executive practices for paper contractors Services to provideOrder No. EO-90-09 products made from guidelines, including9/1/90 paper with no bleach or sources; DGS bidders

without chlorine. to report whether theirproducts are TCF

City of Seattle Ord. Purchase recycled TCF City depts. Director of All City departments#116270, Sec. 4 of photocopy paper if Administrative Services shall changeMunicipal Code Section readily available and specifications to3.18.918 priced similarly to non- conform to ordinance7/8/93 TCF recycled.

City of Chicago Purchase post- City purchasing agents, Printed pieces say ifCity Council Ord., Sec. consumer and TCF contractors, consultants TCF or recycled; TCF2-92-590 of Chap. 2-92, recycled paper and must meet lowestMunicipal Code 3/1/96 paper products; use recycled paper prices;

equipment that re-evaluate standardsoperates with them. and specs; annual

reports.

City of Bellevue, WA All City departments City depts., contractors, Several departmentsAdmin. Order No. 94-01 shall use paper that has consultants provide technical3/1/96 not been bleached with assistance to

chlorine. implement; annualreports.

State of Phased-in program to State agencies must Current bid is forMassachusetts reduce chlorine buy from state contract, janitorial products.Environmental Policy bleached purchases. local governments may DPGS may expand toStatement by Dept. of TCF given preferences also. other paper and paperProcurement and when price is equal; products in the future.General Services in goal to eliminateInvitation for Bids chlorine-bleachedEffective 4/26/95 products by 3/31/97

Source: Government Purchasing Project, Center for the Study of Responsive Law

In sum, the Great Lakes region is in an excellent position to implement thetransition to TCF and PCF production in the region’s mills and thereby virtually eliminatetheir waterborne emissions of dioxin and other chlorinated pollutants.

Although the current markets for TCF pulp and paper products in the U.S. aresmall, the potential exists in the U.S. for the markets to grow substantially as a result ofthe same concerns that spurred development of the TCF market in Germany. Theenvironmental and public health concerns that have created the existing markets for

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For information and brochures, contact Susan McLain, Program Director of the Washington41

Citizens for Recycling, (206) 343-5171.

“At the Source; Campaigns Aim for Zero Discharge in Great Lakes”, p.3, Scott Sederstrom, Great42

Lakes United, September/October 1995.

Contact Larry Ferber, University of Virginia Student Environmental Action, e-mail address: 43

lrf9q@galen.med.virginia.edu.

TCF production could create a rapid increase in demand in the U.S., similar inmagnitude to the rapid development of markets for recycled post-consumer fibers inpaper over the past ten years. Many of the same groups that first purchased recycledpaper, such as colleges and universities, environmental organizations, andenvironmentally conscious corporations, are beginning to seek out TCF paper products.A number of grassroots citizens’ campaigns have recently emerged to informpurchasers about paper manufactured without chlorine-based bleaches, and toencourage consumers, government agencies, and institutions to purchase thesepapers.

For example, The “Reach for Unbleached” campaign, a coalition of citizens’groups in Washington state led by the Washington Citizens for Recycling, publishes a41

consumers’ guide to stores in the Seattle area that sell different grades of paper andtissue products. In the Great Lakes region, students are working with the University ofMichigan to alter procurement practices. Student organizations in other states, such42

as the Student Environmental Action group of the University of Virginia , have started43

campus campaigns to improve their colleges’ procurement of recycled and non-chlorinebased paper.

The International Market for TCF and PCF Paper and Pulp

Another important policy consideration relates to the position of the U.S. pulpand paper industry -- and of its significant sector in the Great Lakes -- in theinternational market. Exports play an increasingly important role in the U.S. andCanadian pulp and paper industry, accounting for about 8.5% of the total value of U.S.paper goods shipments in 1992 (U.S. Industrial Outlook 1993, p. 10-4). U.S. exports ofpaper and allied products (including wastepaper) totaled an estimated $10.4 billion in1992. These exports consisted mainly of market pulp (about 31% of the total value),printing and writing papers, including newsprint (15%), linerboard (11%), wastepaper(6%), boxboard (8%), and sanitary and all other converted products (almost 30%) (U.S.Industrial Outlook 1993, p. 10-3). The European Community is the principal regionalexport market for the U.S. paper industry, accounting for about 22% of the total value in1992. Germany tops the list of European countries importing U.S. pulp and paperproducts, purchasing about $483 million of U.S. paper products (over 5% of the export

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Soedra Cell, personal communication, 5/6/96.44

International Papermaker, November 1995, Vol.58, No. 11,”TCF is the Right Product.”45

market) and 600,000 metric tons of market pulp worth, about $300 million (9% of U.S.exports of bleached kraft market pulp) in 1992 (U.S. Industrial Outlook 1993, p. 10-7). Canada supplies about one-third of Germany’s demand for bleached kraft pulp (MIT,1993).

The conversion of the Scandinavian pulp and paper industry to TCF and ECFtechnologies came largely in response to market demand from Germany and to publicdemand for less pollution from pulp and paper mills. In November 1990, a Germangovernmental scientific advisory group (Rat der Sachverstaendigen fuer Umweltfragen)called for a ban on chlorine bleaching in the pulp industry (Greenpeace 1994a). Although no subsequent legislation was passed, in 1991 the German governmentadvised the pulp and paper industry to phase out all chlorine-based bleaching. Theseactivities reflect the concern of European environmentalists and consumers over thehealth and environmental impacts of organochlorine pollution by the paper industry. This concern, coupled with proactive environmental regulators in Germany and theNordic countries, has accelerated the adoption of TCF process changes in the Nordicpaper industry over the past ten years (Greenpeace 1994a, p. 5). For example, anagreement of the Nordic Ministers of the Environment in 1990 regardingorganochlorines stated, “The discharges of chlorinated organic substances should beeliminated altogether....The Nordic countries should aim at reaching this goal as soonas possible.” Additionally, the Nordic Environmental Labelling scheme, adopted in1994 by the Swedish Standards Institution, creates a rating system for “Environmentallabeling of fine paper (with and without wood pulp) for printing, writing and copying.” The formula for rating paper employed in this system favors the use of TCF over ECFpapers, and sets a maximum limit of 0.40 kg AOX/ton of paper.

The results of these initiatives are impressive. According to the Confederation ofEuropean Paper Industries (CEPI), one million metric tons of TCF kraft pulp wereconsumed in Europe in 1993, accounting for 30% of the total market for printing andwriting paper in the Nordic and Germanic countries. Several German magazines withlarge national circulation, including Der Spiegel, the largest circulation weekly inGermany, converted to the use of TCF paper in the early 1990s. Among otherbusiness purchasers of TCF paper, the international furniture company IKEA now printsits catalogue on paper made from Scandinavian TCF kraft (Greenpeace 1994b). Consumer demand for TCF has continued to rise: CEPI projected that by 1996, 60-70%of all printing and writing paper in the Germanic and Nordic countries will be TCF (Clark1993). Industry sources estimate that approximately 50% of the woodfree printing andwriting grades of paper used in the Germanic and Nordic countries currently is TCF. 44

The Benelux countries -- Belgium, Netherlands and Luxemborg -- are also expected toincrease their markets for TCF pulp and paper products. Additional, but smaller,45

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The Soedra Cell Guide to TCF Papers, Soedra Cell (UK) Limited, 1996.46

International Papermaker, Nov. 1995: The Metsa-Rauma plant representatives state that the mill47

design is aimed at maximum recirculation of process water and chemicals, and ultimately, totally effluentfree (TEF) production.

Personal communication, Roland Loevblad, SOEDRA CELL AB, March 3, 1996. Also, Response from48

Soedra Cell, Autumn 1995.

markets now exist in France, Italy and the United Kingdom. For example, over 100brands of TCF papers are available to purchasers in the UK, including businessstationary and office papers, coated and uncoated printing papers, specialty papers andpaperboards.46

By mid-1994, 22 mills produced TCF bleached kraft pulp in Europe (see Table V-14). There were also 17 mills in Europe producing TCF bleached sulfite pulp at thistime, most of them integrated pulp and paper mills. The capacity to produce TCF kraftpulp in northern Europe continues to grow; the world’s first greenfield pulp millproducing TCF started in March 1996 at Rauma on Finland’s West Coast; it willproduce 500,000 tons per year of TCF softwood pulp. Soedra Cell, Europe’s largest47

chemical pulp producer (and also largest TCF pulp producer) is also currentlyexpanding its’ production of TCF market pulp. According to Soedra Cell, in 1995, 75%of their production was TCF, rising to 91% in February of 1996. Soedra Cell’s goal is toproduce only TCF pulp within two years.48

As seen from Table V-14, many of the kraft mills listed as producing TCF pulphave used only a portion of their capacity to produce and market TCF pulp. As istypical of fast growing markets, the TCF capacity has become greater than what iscurrently supplied. This has occurred as the worldwide pulp and paper industry hit apeak in 1996; worldwide inventories and capacity overcame demand, causing marketpulp prices to fall to unprofitable prices. This difference reflects the potential of manycompanies to increase their output of TCF pulp while they increase market share forthese products. An ability to shift between production of either TCF and ECF pulp hasenabled these mills to build-up their production of TCF while the markets develop. Rather than produce TCF on pure speculation, major TCF suppliers have adopted adegree of flexibility in their production that enables them to synchronize their TCFoutput with incremental increases in TCF demand. This assures that the TCF productcan realize a market premium price for the environmental qualities that purchasersseek, and cover producer costs.

When TCF pulp was first introduced, careful supply management wasn’tnecessary. As in many successful new product markets, demand outstripped supply,

TABLE V-14: Worldwide TCF chemical pulp producers

Country/producer/location Metric Tons Grades Process Market IntegratedSWEDENAspa Bruk, Aspa Bruk 115,000 S Kraft Oxygen + Peroxide XASSI Doman Karlsborg (1) 260,000 H+S Kraft Oxygen + Peroxide X XHolmens Bruk, Wargons Bruk 45,000 S Sulfite PeroxideKoltneros 50,000 H+S Sulfite XKorsnas, Gavle Kraft Fluff Oxygen+Peroxide MoDo Paper, Domsjo 240,000 S Sulfite Oxygen+Peroxide X XMoDo Paper, Husum 100,000 H Kraft X XNCB Vallvik 200,000 S Kraft Oxygen+Peroxide XRockhammer, Frovi 55,000 H+S CTMP Peroxide XRoltneros 60,000 S CTMP Peroxide XRoltneros 90,000 S Mech Peroxide XSCA Wifsta-Ostrand, Timra H+S Kraft Oxygen+Peroxide(Lignox) XSoedra Cell, Morrum Bruk 350,000 H+S Kraft Oxygen XSoedra Cell, Varo Bruk (Total for S Kraft Oxygen+Peroxide XSoedra Cell, Monsteras 3 Mills) H+Kraft Oxygen+Peroxide XStora Cell, Norrsundet 275,000 S Kraft O Eop XStora Cell, Skoghall 160,000 H+S Kraft Oxygen+Peroxide XStora Cell, Skutskar 330,000 Kraft Fluff+H Kraft O Eop XStora Papyrus, Nymolla 340,000 H+S Sulfite Oxygen+Peroxide X XRoltneros, Utansjo 70,000 H+S Sulfite Peroxide XRoltneros, Utansjo 80,000 S MechNORWAYBorregaard Indust, Sarpsborg 160,000 S Sulfite Oxygen+Peroxide XNorske Skog, Tofte 50,000 H+S Kraft Oxygen+Peroxide(Lignox) XFINLANDEnocell, Ulma 100,000 H+S Kraft Oxygen+Peroxide X XKymmene, Pietarsaari 100,000 H Kraft Oxygen+Peroxide XMetsa-Botnia, Kaskinen 300,000 H+S Kraft MCC+O-P-X X XMetsa-Botnia, Kemi 100,000 H+S Kraft MCC+O-P-X X XMetsa-Rauma (2) 500,000 S KraftMetsa-Selia, Aanekoski H+S Kraft XSunila, Sunila 100,000 S Kraft Oxygen+X+PVeitsiluoto, Kemijarvi 50,000 H+S Kraft Oxygen+Peroxide X XPORTUGALCaima, Constancia 70,000 H Sulfite Peroxide XCelbi, Figueira daFoz 50,000 H Kraft Oxygen+Peroxide XSPAIN ENCE, Pontevedra 100,000 H Kraft Oxygen+Peroxide XUSALouisiana-Pacific, Calif. 10,000 S Kraft XLyons Falls Pulp & Paper 40,000 Sulfite Peroxide-Hydrosulphite XGERMANYHannover, Alfeld 90,000 S Sulfite XPWA, Manheim+Stockstadt 400,000 H+S Sulfite XRosenthal, Blankenstein 150,000 S Sulfite XSchwabische Zellstoff, Ehingen 110,000 H+S Sulfite EOP-P-P X XStora, Baienfurt 30,000 ASAM O-P XAUSTRIALeykam, Gratkorn 220,000 H+S Magnefite Q-EOP-PNC/PNC X XNeusiedler, Kematen 40,000 S Sulfite XPWA, Hallein 110,000 S Sulfite EOP-P XFRANCEStracel, Stasbourg 40,000 H+S Sulfite EO-P XSWITZERLANDCellulose Attisholz, Luterbach 50,000 H Sulfite EOP,EOP-P,EOP-P-P-P-P XCellulose Attisholz, Luterbach 50,000 S Sulfite EOP,EOP-P,EOP-P-P-P-P XCZECH REP.Biocel 50,000 S Sulfite XCANADAAtholville Pulp, Atholville 120,000 Sulfite Oxygen+Peroxide ClosedCanfor, Prince George 20,000 S Kraft xHowe Sound, Howe Sound (1) 20,000 S KraftMillar Western, Meadow Lake 240,000 H CTMP Peroxide xStora Forest, Pt. Hawkesbury 100,000 S Sulfite xBRAZILAracruz 150,000 H Kraft xITALYCellulosa Calabra, Crotone 50,000 H NaCo Peroxide

Source: Pulp & Paper magazine, June 1994; 1995 Lockwood-Post's DirectoryNotes: (1) The Howe Sound mill in Canada and ASSI Doman Karlsborg mill in Sweden did not produce TCF pulp in 1995.(2) Metsa-Rauma, the world's first greenfield TCF pulp mill, was scheduled to start producing in March 1996.(3) The two Canadian kraft mills do not produce TCF on a permanent basis, but are capable of making TCF bleached pulp in response to requests from customers.

V-56

The fourth-quarter 1995 market pulp prices announced by global producers included a substantial49

premium for TCF, as compared to ECF, pulp. Fourth-quarter 1995 prices for TCF market pulpannounced by global producers of market pulp include: for Northern Bleached Softwood Kraft: ECF$1000/ton; TCF $1080/ton (Sodra); ECF and TCF eucalpytus pulps: Ecu 735/ton and Ecu 795/ton,respectively. From Pulp & Paper International, This Week 10, no.25 (June 26-30, 1995). Conversation with representative of Louisiana-Pacific, February 28, 1996.50

no matter how fast industry increased output. But at this time, as capacity has caughtup to demand, TCF suppliers have turned to aggressive marketing and appear to berestraing speculative output growth in order to maintain price premiums. AET (1996),competitors of TCF, have described the TCF output-capacity gap as evidence of TCFmarket limits, rather than as a typical characteristic of a developing new market. ThatTCF markets have not reached their limits, as ECF competitors claim, is evident fromcontinued investment in TCF.

These developments in Europe suggest strongly that the future ability of the U.S.pulp and paper industry to compete in the international market will depend considerablyon its ability to produce TCF pulp and paper. There was a substantial premium for TCFpulp in fourth-quarter 1995 market pulp prices, but this was expected to decline asadditional TCF capacity comes on line in 1996. Apparently, consumers are willing to49

pay more for what they consider to be an environmentally superior product. Marketpulp prices plunged rapidly during the first quarter of 1996, and TCF and ECFproducers were not reporting prices differentials during this period. As market pulpprices stabilize in the near future, a premium price for TCF in the European marketcould be reestablished. The only TCF kraft chemical pulp producer in the U.S.,Louisiana-Pacific, does not now receive a price premium for their TCF chemical pulp. The company views their current pulp pricing strategy as the necessary steps aproducer must take to develop and expand demand for a new product in a supplydriven market. 50

For the reasons already cited, the Great Lakes pulp and paper industry is in anexcellent position to move rapidly toward TCF production, and by doing so improve itsposition in the international market. Increased income from TCF sales could be usedto justify the investments needed to expand TCF production in the United States andCanada.

In sum, there are both powerful environmental and economic reasons for a GreatLakes policy designed to implement the practical, achievable goal of converting theregional pulp and paper industry into one that is characterized by totally chlorine-freeoperations -- thereby ending the industry’s contribution to the environmental hazards ofdioxin and its kindred, highly toxic chlorinated organic substances.

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V-62

Pryke, D.C., S.M. Swanson, G.R. Bourree, J.W. Owens and P.J. Kloepper-Sams, 1995:Environmental Imporvements at Grande Prairie and Ecosystem Response, Pulp &Paper Canada, Vol. 96, No. 11, pp 41-48.

Pulp & Paper Int’l, This Week, 1995. Vol.10, No.25, June 26-30.

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Pulp & Paper 1996 North American Factbook, Miller Freeman, 1995.

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V-63

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V-65

APPENDIX FOR CHAPTER V:Pulp and Paper Industry

Contents:

Figure V-A: Kraft Pulping and Bleaching Process

Table V-A.1: Pulp and Paper Mills Currently Operating in the Great Lakes Basin

Table V-A.2: Additional Pulping and Bleaching Process Improvements

Table V-A.3: Kraft Bleach Process Improvements of AOX

Table V-A.4: Notes on the Radian Analysis

Tables V-A.5(1-3): Applied Radian Analysis

Tables V-A.6(1-4): Applied Paper Task Force Analysis

Table V-A.7: TCF Operational Cost Competitiveness with ECF

V-68

TABLE V-A.1 Pulp and Paper Mills Currently Operating in the Great Lakes Basin (using chlorine compounds)

Mill Name City or Type with Products and Chlorine

State Mill Integrated Bleaching Sequence

Prov. Paper Mill Compound(s) Used

U.S.

Badger Paper Mills Peshtigo WI Sulfite yes Bond, alkaline based, mimeo, unwatermarked CEHopaque, xerox, bristols, computer paper

EcoFibre DePere WI Deinking no Market pulp C

Fort Howard Green Bay WI Deinking yes Towel, napkins, place mat, dollies, table and DEHtray covers, coasters, wipers, tissue

Fox River Fiber DePere WI Deinking no Market pulp, from post consumer waste. H

International Paper Erie PA Soda yes Bond, cover, duplicator, xerographic, C(E/H)PD Hwdenvelope, index bristol, ledger, mimeo, offset

James River Green Bay WI Deinking yes Sanitary tissue, towel and napkin converted H*products

James River Ashland WI Deinking yes Machine creped tissue, plain printed and H**embossed napkins.

Kerwin Paper Appleton WI Deinking yes Color, sulphite bond, fine papers, construction, Htechnical, tablet, envelope

Mead Escanaba MI Kraft yes Coated book and publication papers, kraft (DC)EoDED Swdhardwood market pulp (DC)EoDED Hwd

Ponderosa Pulp Products Oshkosh WI Deinking no Market pulp HH

Potlatch Cloquet MN Kraft yes Coated offset, text and cover, coated web DEDED Swdpapers. DEDED Hwd

P.H. Glatfelter Neenah WI Deinking yes Recycled publishing, book, catalog, opaque, HHsupercalendered, film coated, etc.

Scott Worldwide, Scott Oconto Falls WI Deinking no Deinked pulp for internal use. CPaper

S.D. Warren Co., Scott Muskegon MI Kraft yes Machine coated book, cover and matte coated CEHD HwdPaper papers.

Wisconsin Tissue Mills Menasha WI Deinking yes Napkins, place mats, disposable wipes, CEHbathroom tissue, 50% chlorine free

V-69

Champion International Quinnesec MI Kraft yes Hardwood kraft market pulp and coated free ODEoDD Hwdsheet

Table V-A.1 continued

Canada

Avenor Thunder Bay ONT Kraft, yes Kraft market pulps, standard, recycled-content DREopDEpD SwdDeinking, newsprint DEopDEpD HwdGround-

wood

E.B. Eddy Espanola ONT Kraft yes Kraft market pulp, publishing and ODcEoDnD Swdindustrial/specialty papers ODcEoDnD Hwd ODEoDnD (on demand)

James River Marathon ONT Kraft no Softwood kraft market pulps DEopDED Swd

Kimberly-Clark Terrace Bay ONT Kraft no Kraft market pulps: hardwood, softwood DcPEoDED SwdDcDED Hwd

Sources: Lockwood Post's 1995 Directory, 1994 North American Pulp & Paper Factbook, individual mill surveysAbbreviations: Hwd: Hardwood; Swd: Softwood. For other abbreviations see Table V-5.Notes: * Survey response did not specify bleaching sequence. Probably use hypochlorite (H). ** Survey reported hypochorite (H) use for breaking wet strength (non-chlorine alternatives exist), but did not specify bleaching chemicals.

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Table V-A.2 Additional* Pulping and Bleaching Process Improvements

These improvements generally decrease the amount of bleaching chemicals needed and therebyimproves emissions and conserves operating expenses of other bleaching chemicals.

Process Description Advantage/Disadvantage

Chelation Q Removes metals which Improves performance and efficiency ofinhibit the oxidation peroxide (P) and ozone (Z) bleaching.reactions of peroxide and Makes brighter pulp posssible (Not neededozone. for chlorine dioxide stage.) Metals may need

alternative disposal or recovery technology.

Pressurized PO Peroxide bleaching under Economizes on peroxide use. For ECF, as aPeroxide pressure with oxygen at substitute stage, it reduces usage of ClO .Bleaching higher temperatures. Uses Can make TCF competitive with ECF.

1/2 the chemical and 1/2 the Capital cost similar to conventional P stage,time of conventional but significant capital cost for upgrade.peroxide bleaching.

2

Enzyme X Improves bleachability and Low capital and low chemical usage sincePre-Bleaching extractability of lignin. catalytic reactive. Less oxidative chemicals

Xylanese, mannanase, and usage results in higher brighteness. Morelacase enzymes. commercial research is needed.

Peracid Paa Acidic delignification. Can substitute for Ozone delignification.Delignification Minimal capital expense, high chemical cost.

Costs may improve with further research.

Polysulfide PS Polysulfide extended Extends delignification in the cooking stage.delignification. Requires new capital expenditures.

*Other process modifications--like oxygen, ozone and extended cooking -- are discussed in the text.

V-71

Table V-A.3 Kraft Bleach Process Improvements of AOX

Process Improvement % AOX Capital OperatingDecrease Cost $Mil. Cost

Extended/ Modified Cooking 10-65 10.0-45.0 Down

Anthraquinone Cooking AQ 10-20 .5 Up2

Improved Brownstock 5-10 6.0 DownWashing

Oxygen Deliginification O 25-35 20.0-25.0 Down

Pressurized Peroxide PO 20-40 3.0 Up 3

100% Chlorine Dioxide D 80 3.0-20.0 UpBleaching ECF

Totally Chlorine Free TCF 100 26.5-76.0 Up1

Source: Arie van Donkelaar, “Dial in Compliance: The Cluster Rules,” March 1995.1) Unlike other processes identified above, TCF includes a combination of the following processes, with substitutionof hydrogen peroxide for chlorine: extended/modified or anthraquinone cooking, improved brownstock washing, andoxygen delignification. 2) When fiber or pulp prices rise to the levels such as in 1995, the larger pulp yield (increased productivity) inducedby anthraqinone overcome the high chemical cost, and operating costs go down.3) When compared to conventional peroxide bleaching, operating costs go down.

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Table V-A.4: (NOTES ON THE RADIAN ANALYSIS)

Radian Bleached Kraft Group Types

Radian Typical bleaching Representative mill defining characteristics U.S. Mills ‘93Type sequence

1 CEH Traditional, no ClO on-site 82 CdEHD Traditional, some ClO on-site 413 DcEoDED High ClO substitution; no hypochlorite 114 ODEoDD O2 Delignification; High ClO Subst. 65 CdEopDD Extended Cooking; High ClO Subst. 116 OCdEdD O2 Delign. & Ext Cooking; Low ClO Sub 8

2

2

2

2

2

2

Radian grouped kraft bleached mills into these six categories and selected a representative millfrom the USEPA 1993 study. Three Great Lakes mills do not fit well in the Radian categories. Thisaffects the operating cost estimates, and thereby the comparisons between each scenario:

*E.B. Eddy and Champion have added extended/modified cooking, but also have substantialClO investments, unlike the representative mill used by Radian to make the estimates for Type2

6. Consequently, we assigned these mills to group 4, which more closely represents the capitalexpenditures. The operating costs are likely to be lower for Eddy and Champion than the group4 estimates for scenarios 2 and 3 due to the advantages that extended/modified cookingcontributes. For example, anthraquinone is unnecessary and less bleaching chemicals will beneeded due to the greater delignification.

*International Paper’s mill is the only one of two soda mills in the U.S. Kraft sulphate millsdeveloped out of soda mills. The U.S. EPA proposed cluster rules classifies soda mills with kraftmills for regulation, due to process similarities. Economic comparisons are not likely to be assimilar.

Due to the confidentiality of certain mill processes and economic data, we could not make directestimates for each mill. The U.S. EPA provided confidential mill technological and economic data whichRadian used to estimate conversion costs. They were unable to reveal the representative mills identityor detailed data.

Each Great Lake chemical mill will have particularities which will result in different actual costs. But generally comparisons between each scenario should be informative, except in the case of operatingexpenses noted in the cases of the three mills noted above.

Adaptation of the Radian Analysis: The Radian Corporation (1995) has investigated the coststhat various types of kraft mills would incur in order to achieve an chlorine dioxide ECF bleachingsequence recommended by the U.S. EPA (oxygen delignification, 100% substitution of chlorine dioxidefor elemental chlorine, and the use of hydrogen peroxide in the extraction stage). Radian has alsoinvestigated the cost of an alternative ECF-3 sequence in which chlorine dioxide is applied in a latestage rather than an early one (as in the case of ECF-2). For that purpose Radian has identified severalcharacteristic types of existing pulp-making and bleaching sequences and for each of them hasestimated the cost of the additional capital and changes in operating and maintenance expenditures thatwould be needed for a transition to the two alternative ECF sequences. The additional capital costswere normalized to a standard mill size of 550 metric ton per day.

Using these data we have estimated the incremental cost of these transitions for each of thenine kraft and soda mills listed in Table V-5. For this purpose each mill was assigned to the appropriateRadian type depending on the existing bleaching sequence. Then, as shown, for example, in Tables V-A5(1-3), the increased capital cost appropriate to each mill was estimated in two steps. First, the capital

V-73

cost estimated by Radian for a standard 550 metric tons of air-dried pulp (tpd) plant was adjusted to takeinto account needed equipment that was already in place at each mill. Thus, several mills in Type 3already have installed some capacity for hydrogen peroxide use, representing a savings of $225,000 (onthe scale of 550 tpd) in the cost of this equipment. This adjusted capital cost was then further adjustedto reflect the actual size of the mill, in comparison with the standard 550 tpd mill. This involved the useof a scaling factor based on the ratio of the actual mill size to the 550 tpd standard, raised to the powerof 0.6. (This exponent is derived from Radian estimates, based on the economy of scale due to theequipment characteristics.)

It is then possible, as shown in Table V-A5(1), to estimate the additional capital required to bringeach of the Great Lakes kraft pulp mills to an EPA-recommended bleaching sequence (ECF-2). Finally,this value was converted to an annual cost, based on amortizing this investment at 10% over a 15-yearperiod. This figure is used to compute the increased capital cost per metric ton (of air-dried pulp), which,together with Radian’s estimate of the added operating and maintenance cost per metric ton, yields theoverall increment in each mill’s cost of pulp production due to the conversion to ECF-2. The nextscenario ECF-3 was adopted in a similar manner as shown in Table V-A5(2).

The advanced low effluent TCF scenario was adopted from ECF-3 and is shown in Table V-A5(3). Essentially this TCF scenario uses the same capital equipment, but substitutes the use ofhydrogen peroxide for chlorine dioxide in the last stage. Generally, greater quantities of hydrogenperoxide will be needed than chlorine dioxide in order to achieve the same brightness. FollowingInternational Paper as a high end estimate (Lancaster et al., 1992), a retrofitted mill could use up to$10.49 more in chemical costs per metric ton of pulp than ECF-3 (adjusting for chemical pricedifferences since 1992). On the low end, mills with extended or modified delignification digesters wouldexpect no significant differences (e.g., E.B. Eddy and Champion) in costs. Mills with difficult to bleachwood furnish and other suboptimal equipment, would have the high end. Since we did not have detailedinformation for each mill in these respects, we did not customize the operational cost differences of TCFfor each mill, and used the higher estimate for a conservative analysis of TCF.

TABLE V-A.5(1): Great Lake Kraft & Soda Mills Conversion CostsRadian: MODERN ECF-2

Technology: Oxygen Delignification, Chlorine Dioxide-Elementary Chlorine Free

PULP CAPITAL COST (US$)

OUTPUT AVERAGE

(METRIC) ADJUSTED FOR SCALE O & M TOTAL

RADIAN TONS ECONOMY ADJUSTMENT ADJUSTED PER PER PER

GROUP PER SCALING RADIAN TO RADIAN CAPITAL TOTAL METRIC METRIC METRIC

FACILITY NAME TYPE DAY) FACTOR (1) DATA DATA COST FIXED ANNUAL TON TON (2) TON

CANADA

Avenor (former CPFP) 3 755 S 1.21 12,000,000 225,000 11,775,000 14,240,049 1,872,193 6.89 -4.28 2.61

3 755 H-S 1.21 12,000,000 225,000 11,775,000 14,240,049 1,872,193 6.89 -4.28 2.61

E.B. Eddy 4 500 S 0.94 1,600,000 0 1,600,000 1,511,069 198,666 1.10 4.25 5.35

4 500 H 0.94 1,600,000 0 1,600,000 1,511,069 198,666 1.10 4.25 5.35

James River- Marathon 3 499 S 0.94 12,000,000 225,000 11,775,000 11,106,597 1,460,226 8.13 -4.28 3.85

Kimberly-Clark 3 880 S 1.33 12,000,000 225,000 11,775,000 15,611,078 2,052,447 6.48 -4.28 2.20

3 380 H 0.80 12,000,000 225,000 11,775,000 9,432,210 1,240,088 9.06 -4.28 4.78

UNITED STATES

Champion International 4 1,043 H 1.00 1,600,000 1,375,000 225,000 225,000 29,582 0.08 0.00 0.08

International Paper Co. 2 885 H 1.33 18,500,000 225,000 18,275,000 24,303,155 3,195,228 10.03 -3.69 6.34

Mead Corp. 3 794 S 1.25 12,000,000 0 12,000,000 14,955,074 1,966,200 6.88 -4.28 2.60

3 962 H 1.40 12,000,000 0 12,000,000 16,779,046 2,206,005 6.37 -4.28 2.09

Potlatch Corp. 3 91 S 0.34 12,000,000 0 12,000,000 4,069,900 535,085 16.38 -4.28 12.10

3 399 H 0.83 12,000,000 0 12,000,000 9,900,460 1,301,651 9.06 -4.28 4.78

S.D. Warren Co. (Scott) 2 227 S-H 0.59 18,500,000 0 18,500,000 10,872,721 1,429,478 17.51 -3.69 13.82

TOTALS & WEIGHTED AVERAGES 8,669 148,757,478 19,557,707 6.27 -2.71 3.56

Without Champion & E.B. Eddy 7.54 -3.59 3.95

& M: Operating and Maintenance Costs; H: Hardwood; S: Softwood

** These are fixed costs which do not vary significantly with plant size.

Values displayed here are not rounded to significant digits in order to make calculations transparent.

TABLE V-A.5(2): Great Lake Kraft & Soda Mills Conversion CostsRadian: ADVANCED LOW EFFLUENT ECF-3

Technology: Oxygen Delignification, Medium Consistency Ozone Bleaching,

Chlorine Dioxide-Elementary Chlorine Free

PULP CAPITAL COST (US$)

OUTPUT AVERAGE

(METRIC) ADJUSTED FOR SCALE O & M TOTAL

RADIAN TONS ECONOMY ADJUSTMENT ADJUSTED PER PER PER

GROUP PER SCALING RADIAN TO RADIAN CAPITAL TOTAL METRIC METRIC METRIC

FACILITY NAME TYPE DAY) FACTOR (1) DATA DATA COST FIXED ANNUAL TON TON (2) TON

CANADA

Avenor (former CPFP) 3 755 S 1.21 17,300,000 -225,000 17,075,000 20,649,582 2,714,879 9.99 -6.95 3.04

3 755 H-S 1.21 17,300,000 -225,000 17,075,000 20,649,582 2,714,879 9.99 -6.95 3.04

E.B. Eddy 4 500 S 0.94 7,200,000 0 7,200,000 6,799,812 893,997 4.97 8.21 13.18

4 500 H 0.94 7,200,000 0 7,200,000 6,799,812 893,997 4.97 8.21 13.18

James River- Marathon 3 499 S 0.94 17,300,000 -225,000 17,075,000 16,105,745 2,117,483 11.79 -6.95 4.84

Kimberly-Clark 3 880 S 1.33 17,300,000 -225,000 17,075,000 22,637,721 2,976,267 9.39 -6.95 2.44

3 380 H 0.80 17,300,000 -225,000 17,075,000 13,677,706 1,798,260 13.15 -6.95 6.20

UNITED STATES

Champion International 4 1,043 H 1.47 7,200,000 0 7,200,000 10,571,916 1,389,930 3.70 8.21 11.91

International Paper Co. 2 885 H 1.33 21,200,000 -225,000 20,975,000 27,893,772 3,667,300 11.52 -5.75 5.77

Mead Corp. 3 794 S 1.25 17,300,000 0 17,300,000 21,560,232 2,834,605 9.92 -6.95 2.97

3 962 H 1.40 17,300,000 0 17,300,000 24,189,791 3,180,323 9.19 -6.95 2.24

Potlatch Corp. 3 91 S 0.34 17,300,000 0 17,300,000 5,867,439 771,414 23.62 -6.95 16.67

3 399 H 0.83 17,300,000 0 17,300,000 14,273,163 1,876,547 13.06 -6.95 6.11

S.D. Warren Co. (Scott) 2 227 S-H 0.59 21,200,000 0 21,200,000 12,459,550 1,638,104 20.06 -1.36 18.70

TOTALS & WEIGHTED AVERAGES 8,669 224,135,823 29,467,983 9.44 -3.11 6.33

Without Champion & E.B. Eddy 10.60 -5.56 5.04

NOTES: (1) (output/550)^0.6

(2) O&M: Operating and Maintenance Costs, H: Hardwood, S: Softwood

Values displayed here are not rounded to significant digits in order to make calculations transparent.

TABLE V-A.5(3): Great Lake Kraft & Soda Mills Conversion CostsRadian: ADVANCED LOW EFFLUENT TCF

Technology: Oxygen Delignification, Medium Consistency Ozone Bleaching,

Hydrogen Peroxide-Totally Chlorine Free

PULP CAPITAL COST (US$)

OUTPUT AVERAGE

(METRIC) ADJUSTED FOR SCALE O & M TOTAL

RADIAN TONS ECONOMY ADJUSTMENT ADJUSTED PER PER PER

GROUP PER SCALING RADIAN TO RADIAN CAPITAL TOTAL METRIC METRIC METRIC

FACILITY NAME TYPE DAY) FACTOR (1) DATA DATA COST FIXED ANNUAL TON TON (2) TON

CANADA

Avenor (former CPFP) 3 755 S 1.21 17,300,000 -225,000 17,075,000 20,649,582 2,714,879 9.99 3.52 13.51

3 755 H-S 1.21 17,300,000 -225,000 17,075,000 20,649,582 2,714,879 9.99 3.52 13.51

E.B. Eddy 4 500 S 0.94 7,200,000 0 7,200,000 6,799,812 893,997 4.97 18.68 23.65

4 500 H 0.94 7,200,000 0 7,200,000 6,799,812 893,997 4.97 18.68 23.65

James River- Marathon 3 499 S 0.94 17,300,000 -225,000 17,075,000 16,105,745 2,117,483 11.79 3.52 15.31

Kimberly-Clark 3 880 S 1.33 17,300,000 -225,000 17,075,000 22,637,721 2,976,267 9.39 3.52 12.91

3 380 H 0.80 17,300,000 -225,000 17,075,000 13,677,706 1,798,260 13.15 3.52 16.67

UNITED STATES

Champion International 4 1,043 H 1.47 7,200,000 0 7,200,000 10,571,916 1,389,930 3.70 18.68 22.38

International Paper Co 2 885 H 1.33 21,200,000 -225,000 20,975,000 27,893,772 3,667,300 11.52 4.72 16.24

Mead Corp. 3 794 S 1.25 17,300,000 0 17,300,000 21,560,232 2,834,605 9.92 3.52 13.44

3 962 H 1.40 17,300,000 0 17,300,000 24,189,791 3,180,323 9.19 3.52 12.71

Potlatch Corp. 3 91 S 0.34 17,300,000 0 17,300,000 5,867,439 771,414 23.62 3.52 27.14

3 399 H 0.83 17,300,000 0 17,300,000 14,273,163 1,876,547 13.06 3.52 16.58

S.D. Warren Co. (Scott) 2 227 S-H 0.59 21,200,000 0 21,200,000 12,459,550 1,638,104 20.06 9.11 29.17

TOTALS & WEIGHTED AVERAGES 8,669 224,135,823 29,467,983 9.44 7.36 16.80

Without Champion & E.B. Eddy 10.60 4.91 15.51 NOTES: (1) (output/550)^0.6(2) O&M: Operating and Maintenance Costs, H: Hardwood, S: SoftwoodValues displayed here are not rounded to significant digits in order to make calculations transparent.

TABLE V-A.6(1): Great Lake Kraft & Soda Mills Conversion CostsPaper Task Force: ADAPTED TRADITIONAL ECF-1Technology: Chlorine Dioxide-Elementary Chlorine Free

PAPER PULP CAPITAL COST (US$)

TASK FORC OUTPUT AVERAGE

GROUP (METRIC) ADJUSTED FOR SCALE O & M TOTAL

TYPE TONS ECONOMY PAPER ADJUSTMENT ADJUSTED PER PER PER

CAPITAL- PER SCALING TASK FORCE TO PTF CAPITAL TOTAL METRIC METRIC METRIC

FACILITY NAME O & M (2) DAY) FACTOR (1) DATA DATA COST FIXED ANNUAL TON TON (2) TON

CANADA

Avenor (former CPFP) 1 755 S NC NC NC NC NC NC NC NC NC

3 755 H-S NC NC NC NC NC NC NC NC NC

E.B. Eddy 3 500 S 1.00 18,000,000 0 18,000,000 18,000,000 2,366,528 13.15 8.70 21.85

3 500 H 1.00 16,800,000 0 16,800,000 16,800,000 2,208,759 12.27 6.40 18.67

James River- Marathon 2 499 S NC NC NC NC NC NC NC NC NC

Kimberly-Clark 1 880 S 0.93 28,900,000 0 28,900,000 26,766,245 3,519,059 11.11 8.70 19.81

3 380 H 0.85 16,800,000 0 16,800,000 14,249,428 1,873,426 13.69 6.40 20.09

UNITED STATES

Champion International 4 1,043 H NC NC NC NC NC NC NC NC NC

International Paper Co. 3 885 H 1.41 16,800,000 0 16,800,000 23,656,482 3,110,207 9.77 6.40 16.17

Mead Corp. 1 794 S 0.87 28,900,000 0 28,900,000 25,160,704 3,307,973 11.58 8.70 20.28

3 962 H 1.48 16,800,000 0 16,800,000 24,873,157 3,270,168 9.45 6.40 15.85

Potlatch Corp. 2 91 S 0.36 NC NC NC NC NC NC NC NC

3 399 H 0.87 NC NC NC NC NC NC NC NC

S.D. Warren Co. (Scott) 2 227 S-H 0.62 18,000,000 0 18,000,000 11,201,460 1,472,698 18.04 8.70 26.74

TOTALS & WEIGHTED AVERAGES 8,669 160,707,476 21,128,819 11.45 7.48 18.93

: Type 1 & 4: (output/1000)^0.6; Type 2 & 3 (output/500)^.6(2) O&M: Operation and Maintenance Costs. H: Hardwood; S: Softwood. NC: No Change. PTF: Paper Task ForceValues displayed here are not rounded to significant digits in order to make calculations transparent.

TABLE V-A.6(2): Great Lakes Kraft & Soda Mills Conversion CostsPaper Task Force: MODERN ECF-2

Technology: Oxygen Delignification, Chlorine Dioxide-Elementary Chlorine Free Bleach

PAPER PULP CAPITAL COST (US$)

TASK FORC OUTPUT AVERAGE

GROUP (METRIC) ADJUSTED FOR SCALE O & M TOTAL

TYPE TONS ECONOMY PAPER ADJUSTMENT ADJUSTED PER PER PER

CAPITAL- PER SCALING TASK FORCE TO PTF CAPITAL TOTAL METRIC METRIC METRIC

FACILITY NAME O & M (2) DAY) FACTOR (1) DATA DATA COST FIXED ANNUAL TON TON (2) TON

CANADA

Avenor (former CPFP) 1 755 S 0.84 35,800,000 0 35,800,000 30,244,833 3,976,402 14.63 -2.40 12.23

1-3 755 H-S 0.84 35,800,000 0 35,800,000 30,244,833 3,976,402 14.63 1.70 16.33

E.B. Eddy 4 500 S NC NC NC NC NC NC NC NC NC

4 500 H NC NC NC NC NC NC NC NC NC

James River- Marathon 2 499 S 1.00 25,100,000 0 25,100,000 25,068,563 3,295,859 18.35 -2.00 16.35

Kimberly-Clark 1 880 S 0.93 35,800,000 0 35,800,000 33,156,802 4,359,250 13.76 -2.40 11.36

3 380 H 0.85 25,100,000 0 25,100,000 21,289,324 2,798,988 20.46 1.70 22.16

UNITED STATES

Champion International 4 1,043 H NC NC NC NC NC NC NC NC NC

International Paper Co.* 1-3 885 H 0.93 35,800,000 0 35,800,000 33,258,749 4,372,653 13.73 1.70 15.43

Mead Corp. 1 794 S 0.87 35,800,000 0 35,800,000 31,167,931 4,097,766 14.34 -2.40 11.94

1-3 962 H 0.98 35,800,000 0 35,800,000 34,969,278 4,597,543 13.28 1.70 14.98

Potlatch Corp. 2 91 S 0.36 25,100,000 0 25,100,000 9,013,881 1,185,089 36.29 -2.00 34.29

3 399 H 0.87 25,100,000 0 25,100,000 21,927,213 2,882,854 20.06 1.70 21.76

S.D. Warren Co. (Scott) 2 227 S-H 0.62 25,100,000 0 25,100,000 15,619,813 2,053,596 25.15 -2.00 23.15

TOTALS & WEIGHTED AVERAGES 8,669 285,961,222 37,596,402 15.76 -0.26 15.50: Type 1 & 4: (output/1000)^0.6; Type 2 & 3 (output/500)^.6(2) O&M: Operation and Maintenance Costs. H: Hardwood; S: Softwood. NC: No Change. PTF: Paper Task ForceValues displayed here are not rounded to significant digits in order to make calculations transparent.

TABLE V-A.6(3): Great Lake Draft & Soda Mills Conversion CostsPaper Task Force: ADVANCED LOW EFFLUENT ECF-3

Technology: Oxygen Delignification, High Consistency Ozone Bleaching,

Chlorine Dioxide - Elementary Chlorine Free

PAPER PULP CAPITAL COST (US$)

TASK FORC OUTPUT AVERAGE

GROUP (METRIC) ADJUSTED FOR SCALE O & M TOTAL

TYPE TONS ECONOMY PAPER ADJUSTMENT ADJUSTED PER PER PER

CAPITAL- PER SCALING TASK FORCE TO PTF CAPITAL TOTAL METRIC METRIC METRIC

FACILITY NAME O & M (2) DAY) FACTOR (1) DATA DATA COST FIXED ANNUAL TON TON (2) TON

CANADA

Avenor (former CPFP) 1 755 S 0.84 50,800,000 0 50,800,000 42,917,250 5,642,493 20.76 -1.70 19.06

1-3 755 H-S 0.84 50,800,000 0 50,800,000 42,917,250 5,642,493 20.76 5.70 26.46

E.B. Eddy 4 500 S 0.66 15,000,000 0 15,000,000 9,896,309 1,301,105 7.23 0.60 7.83

4 500 H 0.66 15,000,000 0 15,000,000 9,896,309 1,301,105 7.23 0.60 7.83

James River- Marathon 2 499 S 1.00 35,000,000 0 35,000,000 34,956,164 4,595,819 25.59 -1.10 24.49

Kimberly-Clark 1 880 S 0.93 50,800,000 0 50,800,000 47,049,316 6,185,751 19.53 -1.70 17.83

3 380 H 0.85 35,000,000 0 35,000,000 29,686,309 3,902,971 28.53 5.70 34.23

UNITED STATES

Champion International 4 1,043 H 1.03 15,000,000 0 15,000,000 15,386,154 2,022,876 5.39 0.60 5.99

International Paper Co. 1-3 885 H 0.93 50,800,000 0 50,800,000 47,193,979 6,204,771 19.49 5.70 25.19

Mead Corp. 1 794 S 0.87 50,800,000 0 50,800,000 44,227,120 5,814,707 20.35 -1.70 18.65

1-3 962 H 0.98 50,800,000 0 50,800,000 49,621,210 6,523,888 18.85 5.70 24.55

Potlatch Corp. 2 91 S 0.36 35,000,000 0 35,000,000 12,569,157 1,652,515 50.60 -1.10 49.50

3 399 H 0.87 35,000,000 0 35,000,000 30,575,795 4,019,915 27.97 5.70 33.67

S.D. Warren Co. (Scott) 2 227 S-H 0.62 35,000,000 0 35,000,000 21,780,616 2,863,580 35.07 -1.10 33.97

TOTALS & WEIGHTED AVERAGES 8,669 438,672,939 57,673,988 18.48 1.78 20.26

: Type 1 & 4: (output/1000)^0.6; Type 2 & 3 (output/500)^.6

(2) O&M: Operation and Maintenance Costs. H: Hardwood; S: Softwood. NC: No Change. PTF: Paper Task Force

Values displayed here are not rounded to significant digits in order to make calculations transparent.

TABLE V-A.6(4): Great Lake Draft & Soda Mills Conversion CostsPaper Task Force: ADVANCED LOW EFFLUENT TCF

Technology: Oxygen Delignification, High Consistency Ozone Bleaching,

Hydrogen Peroxide Bleaching-Totally Chlorine Free

PAPER PULP CAPITAL COST (US$)

TASK FORC OUTPUT AVERAGE

GROUP (METRIC) ADJUSTED FOR SCALE O & M TOTAL

TYPE TONS ECONOMY PAPER ADJUSTMENT ADJUSTED PER PER PER

CAPITAL- PER SCALING TASK FORCE TO PTF CAPITAL TOTAL METRIC METRIC METRIC

FACILITY NAME O & M (2) DAY) FACTOR (1) DATA DATA COST FIXED ANNUAL TON TON (2) TON

CANADA

Avenor (former CPFP) 1 755 S 0.84 52,800,000 0 52,800,000 44,606,905 5,864,638 21.58 -2.20 19.38

1-3 755 H-S 0.84 52,800,000 0 52,800,000 44,606,905 5,864,638 21.58 4.00 25.58

E.B. Eddy 4 500 S 0.66 17,000,000 0 17,000,000 11,215,817 1,474,586 8.19 0.10 8.29

4 500 H 0.66 17,000,000 0 17,000,000 11,215,817 1,474,586 8.19 0.10 8.29

James River- Marathon 2 499 S 1.00 36,300,000 0 36,300,000 36,254,536 4,766,521 26.54 -1.50 25.04

Kimberly-Clark 1 880 S 0.93 52,800,000 0 52,800,000 48,901,651 6,429,285 20.29 -2.20 18.09

3 380 H 0.85 35,000,000 0 35,000,000 29,686,309 3,902,971 28.53 4.00 32.53

UNITED STATES

Champion International 4 1,043 H 1.03 17,000,000 0 17,000,000 17,437,641 2,292,593 6.10 0.10 6.20

International Paper Co.* 1-3 885 H 0.93 50,800,000 0 50,800,000 47,193,979 6,204,771 19.49 4.00 23.49

Mead Corp. 1 794 S 0.87 50,800,000 0 50,800,000 44,227,120 5,814,707 20.35 -1.50 18.85

1-3 962 H 0.98 50,800,000 0 50,800,000 49,621,210 6,523,888 18.85 4.00 22.85

Potlatch Corp. 2 91 S 0.36 36,300,000 0 36,300,000 13,036,012 1,713,894 52.48 -1.50 50.98

3 399 H 0.87 36,300,000 0 36,300,000 31,711,468 4,169,226 29.01 4.00 33.01

S.D. Warren Co. (Scott) 2 227 S-H 0.62 36,300,000 0 36,300,000 22,589,611 2,969,941 36.38 -1.50 34.88

TOTALS & WEIGHTED AVERAGES 8,669 452,304,981 59,466,244 19.05 0.89 19.94: Type 1 & 4: (output/1000)^0.6; Type 2 & 3 (output/500)^.6(2) O&M: Operation and Maintenance Costs. H: Hardwood; S: Softwood. NC: No Change. PTF: Paper Task ForceValues displayed here are not rounded to significant digits in order to make calculations transparent.

V-81

Table V-A.7: TCF Operational Cost Competitiveness with ECF

Scenario 3a: Capital and operational cost competitive with best ECF but lower brightness

Scenario 3b: Operational cost and brightness competitive with best ECF, but additional capital expenditure for retrofits

PARAMETER Modern Advanced Advanced AdvancedTCFScenario 1 Scenario 2 Scenario 3A Scenario 3B

ECF-1 ECF-2B TCF-A TCF-B

Bleaching Sequence ODEopD(ED) OAZEopD OAZEopP OQP(ZQ)(PO)

Brightness %ISO 90 90 82 90

AOX kg/metric ton pulp 0.80 0.05 0.00 0.00

Total chemical costs US$/metric ton pulp* 1) incl. ClO capital costs 28 25 22 202

2) excl. ClO capital costs 21 20 22 202

Notes: See Tables V-1 and V-5 for abbreviations. ClO : Chlorine dioxide; A: Acid stage; Q: Metal2

chelating stage. * Oxygen delignification precedes each scenario with identical costs (US$1.30/metric ton pulp) and is notincluded in chemical costs comparison presented in table.* Ozone capital costs included in its chemical costs (US$1.56/kg) for purposes of comparisons. Chlorine dioxide costs are calculated for two cases:

1) Capital costs included - reflects the cost comparisons for a mill without ClO capacity.2

2) Capital costs excluded - reflects the cost comparisons for a mill with preexisting ClO capacity. 2

Costs calculated for 1000 metric ton pulp per day mill.

Source: Thomas R. Govers, Air Liquide, “Ozone in the Pulp Mill: Alternatives and Cost,” Proc. Int’l Non-chlorine Bleaching Conf., March 1994.