Rising energy costs and poorly aligned energy policies are threatening the future of Australia’s pulp and paper industry, according to the latest edition of Pulp & Paper Edge from analyst IndustryEdge.
There can be no doubt that Australia has an energy problem. It’s a mess, in many ways, including for pulp and paper manufacturers. Although it is not alone in facing a threat to its existence from the latest energy price rises and supply challenges, the pulp and paper manufacturing industry is different to many industries.
There are very few major energy using industries producing significant amounts of their own renewable energy. The pulp and paper industry does just that, but much of the industry receives little recognition and precious little return for the contribution it makes to the production and supply of renewable base load electricity, let alone its supply of renewable industrial heat.
The Pulp & Paper Edge Intelligence Report says the issues facing local pulp and paper mill include:
Securing baseload electricity supply
Access to affordable gas from conventional and unconventional sources
Renewable Energy Certificates under the RET for thermal heat generation
Investment in energy efficiency and lower emissions production
Adoption of an emissions intensity target that rewards efforts to increase the efficiency of energy production
Maintenance of quality and consistent electricity supply
“Energy policy in Australia is way beyond a political issue,” says Industry Edge. “It’s a serious issue for households and businesses across the nation."
Base load electricity – or continuous supply – is largely produced from coal in Australia. Coal-fired electricity generation is supplemented by some quality hydro-electricity generation and a relatively small amount of self-sufficient electricity generation, at the firm level. This last group includes major pulp and paper manufacturers.
Most of the new energy infrastructure, especially the non-combusting renewables such as solar and wind, can deliver only peak capacity at least until battery technology develops further.
Peak capacity electricity production does not have to be a problem, but it needs to be structured into electricity supply so that it does not on the one hand, make base load capacity generation so inefficient that it ends up being closed, and then, on the other hand, fail to replace the former base load supply on the days when the sun doesn’t shine or the wind fails to blow.
The impact of inaction or poor policy settings could, at its worst, bring the pulp and paper sector to its knees. That’s not in the national interest, meaning concerted action is required, urgently.
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