Environmental Regulation in the Pulp and Paper Industry : Impacts and Challenges

Purpose of Review: In this article, we review existing research addressing how environmental regulations have influenced the pulp and paper industry. These regulations appear in different forms and designs and address air and water pollution as well as climate change. The paper devotes particular attention to how various regulations have affected sustainable technological change and the prospects for inducing deep emission reductions without jeopardizing industrial competitiveness and future investments. Recent Findings: Experiences from key pulp and paper regions, not least the Nordic countries, suggest that gradually tightening performance standards have contributed to radical reductions in emissions, e.g., chlorine compounds and biological oxygen demanding agents, and without imposing excessive compliance costs. This outcome can largely be attributed to how the regulations have been designed—and implemented—in practice, as well as to the presence of efficient and legitimate institutions. Long-termemission reduction targets, in combination with extended compliance periods and trustful firm-regulator relationships, contributed to radical technological innovation and permitted radical emission reductions without excessive compliance costs. The development of alternative bleaching technologies is an apt example. In contrast, the impact of carbon pricing schemes, including the EU emissions trading scheme, on carbon dioxide emissions reductions and related technological change in the pulp and paper industry has however been modest. Self-regulation, certification, and community pressure have exerted relatively modest influences on the environmental performance of the industry. Summary: Important avenues for future research are identified. These include the following: (a) comparative research on how policy mixes in various countries have influenced environmental compliance and innovation; processes; (b) future studies of environmental regulations, their design and implementation, in emerging pulp and paper producing countries, not least China; and (c) research on how environmental regulations can affect ongoing restructurings in the industry towards a broader palette of products in biorefineries