This is the third Insight in our series on heavy industry.
The pulp and paper industry has good options to cut emissions—if it can capitalize on them.
Meeting Canada’s climate goals is not only a matter of emissions; it’s also a matter of long-term competitiveness, community resilience, and regional fairness. Such is the case with Canada’s pulp and paper industry.
Canada’s pulp and paper industry is responsible for a comparatively small 7.6 megatonnes of emissions, which at first glance might make it a lower priority than larger emitters like oil and gas. But the case for reducing emissions from pulp and paper is also about the importance of these facilities to many small, remote communities.
Emissions from pulp and paper are lower than they once were, since the industry has faced substantial headwinds as demand for some of its products, like newsprint, has fallen
These trends have made it hard for the sector to invest in significant decarbonization, but as analysis from 440 Megatonnes shows, there are good options to reduce emissions in the sector.
Pulp and paper emissions are down but for the wrong reasons
The pulp and paper industry consists of pulp mills, paper mills, and paper product manufacturers that make newsprint, cardboard, toilet rolls, kraft paper, wood pulp, and other products. The bulk of its emissions comes from the pulp and paper mills, a collection of around 80 facilities that employ around 20,000 people.
These mills transform forest products into wood pulp, and pulp into paper. They are largely located in remote areas, and most of them are in five provinces: Quebec, Ontario, British Columbia, Alberta, and New Brunswick.
The industry is much smaller than it was two decades ago. Over that time, many facilities have closed, and employment has dropped significantly.
As a result, emissions have also declined dramatically. As Figure 1 shows, declining economic activity has driven the largest change in pulp and paper emissions since 2005. Meanwhile, the other two drivers of emissions are headed in the wrong direction. Energy intensity and emissions intensity have trended upwards over time, counteracting some of the downward pressure on emissions. This is partly because the industry has started producing some of its own electricity through cogeneration, thereby increasing direct emissions.
The picture looks different when comparing emission trends from the 1990s—since that time, the pulp and paper industry has significantly improved its energy and emissions-intensity. Regardless, the recent trends will need to reverse to put the industry on a path to net zero.
Pulp and paper has practical options to decarbonize
There are two main sources of emissions in the industry: combustion emissions from boilers used to generate steam and electricity; and process emissions, including from lime kilns that produce inputs for the pulp- and paper-making process. The industry uses a combination of fossil fuels and biomass for these processes—mostly natural gas, pulping liquors and wood waste.
However, only some of the emissions from these fuels count toward the industry’s total in Canada’s National Inventory Report. Carbon dioxide emissions from biomass combustion—which amounted to 30 megatonnes for pulp and paper in 2021—are not attributed to the industry. Under international rules for emissions accounting, those emissions are treated as part of the forest carbon cycle, whose emissions are recorded in a separate part of the inventory and are not added to Canada’s total emissions.
To reduce fossil fuel emissions, the pulp and paper industry is likely to rely on a mix of electrification, fuel switching, and efficiency. Industrial heat pumps could be used for some of the moderately high temperature processes at pulp and paper facilities, and electrified dryers could replace some fossil fuel use, if economically viable. Where electrification is more challenging, switching to lower-emission fuels like biomass or renewable natural gas can reduce emissions (though the pulp and paper industry is already a major user of biomass, and not all facilities can scale up their use of these energy sources). Finally, enhanced efficiency measures, like greater recovery of waste heat, could reduce the energy inputs that mills need, and therefore their emissions.
Given the feasibility of these solutions, and their relatively low cost compared to some solutions in other heavy industries, our analysis finds that current climate policies, alongside market drivers, will reduce emissions from pulp and paper by nearly 3 megatonnes by 2030. Click on the projected tab of Figure 1 to see how these solutions can drive down emissions. Figure 2 shows how these reductions compare to the sector’s net zero pathway.
In addition, because biomass is sometimes considered to be carbon-neutral, pulp and paper could theoretically go beyond net zero and achieve net negative emissions. However, some proposed solutions, like bioenergy with carbon capture and storage, would be expensive to deploy, and there is disagreement about whether biomass fuels should be considered truly carbon neutral.
Climate policy can keep pulp and paper on a net zero path
The reductions projected in Figure 2 would put the pulp and paper industry on an emissions pathway aligned with net zero. But to deliver those reductions, an industry facing economic headwinds would still need to invest in decarbonization. And to stay on that pathway after 2030, emissions reductions would need to deepen.
Though the pulp and paper industry is projected to reduce emissions in the coming years, it has not been a significant focus of climate policy. Though some facilities have won grants from larger funding envelopes, the industry has received less funding than some others. That is partly a matter of scale. Compared to other industries, pulp and paper is a small emitter, and the dispersion of emissions among many small facilities means that no single project will deliver major emissions reductions.
Yet there are other reasons to pay attention to pulp and paper. Perhaps the most important is that pulp and paper facilities have outsized economic importance in their regions, since they are often located in remote or small communities. Interventions that improve the long-term competitiveness of these facilities—and minimize their impacts on the local environment—would have disproportionately positive impacts on their host communities.
The fact that the pulp and paper industry has received less funding from public decarbonization programs may be partly due to funding guidelines that privilege projects with a low per tonne cost of emissions reductions. There may be a case for broadening those metrics, considering the pulp and paper industry’s combination of structural economic challenges and regional importance. At the same time, industrial carbon pricing can provide a continuing incentive for facilities to shift to lower-emitting energy sources and use their inputs as efficiently as possible. Given the achievability of emissions reductions, some facilities could be well placed to earn saleable carbon pricing credits.
Though the path behind the pulp and paper industry has been marked by obstacles, the data suggest that there is a pathway ahead to a more prosperous future.
Ross Linden-Fraser is a Senior Research Associate at the Canadian Climate Institute.