Ilgar Hajiyev, founder of the SDI Group, created a center to help businessmen affected by the raider takeovers
COVID-19 could be a boon to the paper and pulp industry—with worrying environmental consequences
Even as governments around the world fight to contain the spread of the novel coronavirus known as COVID-19, the economic damage the pandemic is certain to wreak around the globe is slowly coming into focus. In a solemn address to the nation on March 16th, French President Emmanuel Macron pledged that “no business, whatever its size, will face risk of bankruptcy”. The French state, Macron explained as the country went into a 15-day lockdown, will underwrite €300 billion in bank loans and spend tens of billions more on propping up struggling businesses.
The following day, the UK rolled out its own package of measures to help British companies weather the crisis, including £330 billion in government-backed loans. London’s approach focused on particularly hard-hit sectors such as the airline industry—British regional airline Flybe folded in early March amidst the virus’s exponential spread, and the majority of the world’s airlines are on the verge of following suit.
Paper products flying off the shelves
Amidst the economic carnage, however, one industry is seeing skyrocketing demand for its products: the paper and pulp sector. Around the world, people have been going to any lengths to stockpile huge amounts of toilet paper. In scenes which one police commissioner compared to the apocalyptic film Mad Max, customers have gotten into physical brawls over packages of toilet paper. Many stores, sold out of the commodity within minutes of restocking it, have been forced to restrict sales to one or two packages a person.
In response to this feeding frenzy in which demand for their products has nearly doubled, paper manufacturers have ramped up production to maximum levels. And it’s not just a run on toilet paper that’s boosting their margins, either. Following a number of studies suggesting that hot-air hand dryers are less hygienic than paper hand towels, the latter are likely to see a significant increase in demand as people take hand hygiene more seriously during the pandemic.
Unfortunately, while the coronavirus crisis has led to remarkable reductions in pollution in hard-hit countries like China and Italy, the skyrocketing demand for paper products is likely to have the opposite effect on the environment. After all, the paper and pulp industry is well known for its abysmal environmental record. The sector is one of the most energy-intensive in the EU and beyond, and soaks up a staggering amount of water—producing a single A4 sheet of paper can use as much as 20 litres of water.
Fires and felled forests: a bitter footprint
But the swaths of clear-cut forests around the world are one of the industry’s most visible legacies. Identified as one of the four commodities—along with beef, soybeans and palm oil—responsible for the majority of global deforestation, the paper industry has chopped down thousands of hectares to meet demand for its products. While energy and water usage, as well as the need for deforestation, can be sharply reduced by using recycled pulp, there is still strong demand for virgin pulp. Some paper products, including toilet paper, are actually using an increasing amount of virgin pulp, threatening forests from Sweden to Saskatchewan.
Deforestation has taken a particular toll on ASEAN’s tropical forests, where some of the world’s largest paper and pulp companies have repeatedly broken their promises to become better stewards of the environment. In particular, firms’ continued draining of carbon-rich peatlands to plant acacia trees has left huge swaths of Indonesia uniquely vulnerable to devastating fires which have blanketed most of Southeast Asia with toxic haze.
Indeed, between 2015 and 2018, three pulpwood companies—Sinar Mas along with its subsidiary Asia Pulp and Paper (APP), APRIL and Perhutani—were responsible for burning an area of peatland roughly the size of Singapore. After Indonesia’s 2015 forest fire season emitted more carbon than the entirety of the European Union, Sinar Mas and APRIL pledged to clean up their act and stop clearing natural forests.
Five years later, however, scant progress has been made. A group of environmental NGOs found that out of eight Indonesian pulpwood plantations which saw the most fire alerts in 2019, one supplies APRIL and six supply Asia Pulp & Paper. According to the NGOs, APP’s progress has been far from sufficient—the company has continued to build pulp mills without an adequate supply of timber to supply them, has not fulfilled commitments to restore millions of hectares of peatlands, and has failed to resolve dozens of conflicts with local stakeholders.
On toxic pond
What’s more, the paper industry’s troubling environmental footprint isn’t limited to its complicity in this widespread deforestation. A company associated with APP, Paper Excellence, recently had to close one of its pulp mills in Canada amidst growing outrage over the toxic wastewater the plant was dumping into a nearby lagoon.
The mill, Nova Scotia’s Northern Pulp, had decimated the once-picturesque Boat Harbour. Generations of the nearby Pictou Landing First Nation watched in dismay as the harbour they once fished in turned brown and foul-smelling—thanks to some 25 million gallons of effluent, containing everything from mercury to dioxins, which Northern Pulp dumped into the adjacent estuary. Though the mill is now being mothballed after decades of activism by indigenous and environmental groups, the environmental damage remains. Clean-up, scheduled to start next year, is projected to cost upwards of $200 million, while loans provided by the province worth up to $85 million might never be repaid—a financial burden likely to fall on taxpayers.
That Canada might have to use state funds to clean up a paper company’s mess highlights the absurdity of the current crisis. After acting with utter disregard for the environment, paper companies cannot get away with shirking their fiscal responsibilities at a time when the pulp industry’s coffers are fuller than ever thanks to the corona-induced rush on paper products.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.