[] TL: Transition Planning for the Chlorine Phase-Out (GP) Economic Benefits, Costs, and Opportunities SO: Joe Thornton, Jack Weinberg, Greenpeace (GP) DT: October 1993 Keywords: toxics chlorine alternatives pulp paper production greenpeace reports gp us canada organochlorines / A Chlorine-Free White Paper by Joe Thornton, Jack Weinberg, and Jay Palter October 1993 GREENPEACE Printed on totally chorine-free paper Copyright 1993 by Greenpeace USA 1436 U Street NW Washington, DC 20009 For further information, contact: Greenpeace 1017 W. Jackson Blvd. Chicago, IL 60607 312-666-3305 Greenpeace 185 Spadina Ave, #600 Toronto, ON M5T 2C6 416-345-8408 Greenpeace is an international environmental organization dedicated to preserving the earth and all the life it supports. This publication is made possible by more than four million supporters around the world. CONTENTS SUMMARY BACKGROUND: WORLDWIDE CALLS TO SUNSET CHLORINE INDUSTRY'S RESPONSE: PUBLIC HYSTERIA, PRIVATE PLANNING Public fearmongering Acknowledging inevitable change Protecting capital INDUSTRY OVERESTIMATES COSTS OF THE TRANSITION Prioritizing will lower costs Using the best alternatives will lower costs Alternatives will preserve most jobs and create others ECONOMIC BENEFITS OF THE CHLORINE PHASE-OUT Pulp and paper Dry cleaning and solvents Pesticides Avoided costs for health and remediation Economic stimulus and job creation caused by the transition PROTECTING WORKERS AND COMMUNITIES RECOMMENDATIONS: ELEMENTS OF A TRANSITION PLAN Priority sectors: Pulp and paper, solvents, PVC, and pesticides Second-tier sectors Chlorine tax Transition fund Transition planning PROCEED WITH OR WITHOUT INDUSTRY'S COOPERATION REFERENCES SUMMARY The purpose of this document is to show that society can realize significant economic gains in the transition to a chlorine-free economy, if the process is guided by careful planning to minimize costs, maximize benefits, and insure that both are distributed equitably. The chlorine industry has argued that phasing-out chlorine will result in exorbitant costs to the U.S. and Canadian economies and massive job losses. The industry's scenario, however, is based upon invalid assumptions that drastically overestimate the costs and underestimate the benefits of a well-planned transition. The industry's calculations are based upon a methodology that assumes the chlorine phase-out will be implemented instantaneously, without thought, planning, or prioritization. The industry assumes that the alternatives that will replace chlorine will be processes that perform poorly, are unreasonably expensive, or are not the cost-effective substitutes the market would select: in fact, chlorine-free alternatives are frequently more efficient and productive than the chlorine-based processes they replace. Finally, the industry's scenario looks only at costs and burdens and fails to explore the benefits and savings associated with the transition to a chlorine-free economy. The actual costs of phasing-out chlorine are likely to be only a small fraction of those calculated by the industry, and the benefits of the transition are expected to outweigh these costs. Implemented with careful planning, the transition to a chlorine- free economy can be economically beneficial and socially just. It can save money and create new jobs. Further, it can provide a model for how to undertake major economic change -- especially that driven by an environmental imperative -- in a way that is humane and equitable for those most directly affected. A complete estimate of the economic benefits of the transition is beyond the scope of this document, but opportunities include the following: By prioritizing major chlorine use-sectors, the cost of the phase-out can be substantially reduced. Even according to the industry's own cost estimates, 97 percent of chlorine use could be phased-out for just $22 billion per year. Current health care costs associated with the effects of persistent organochlorines in the U.S. and Ontario have been estimated at $50 to $100 billion per year. These costs to societies would be saved if chlorine were phased-out. In the pulp and paper industry, converting to totally-chlorine free bleaching process would save the industry $185 - 370 million per year in chemical costs; $108 to 189 million per year in energy costs; and additional millions or billions in reduced expenditures for water use, effluent treatment, disposal of contaminated sludge; and reduced costs for lawsuits, remediation, and liability. Mills that adopt chlorine-free bleaching process can realize additional cost savings by installing a closed-loop system for chemicals and effluents. Such a system can be built for $40 million less capital than a conventional mill; if all U.S. and Canadian mills built such systems, savings on water, energy, and chemical costs would total $1.4 billion per year. As the international paper market increasingly demands chlorine- free paper, European producers are converting their production processes to meet this demand. Industry analysts have noted that if the North American industry continues to refuse to change to meet a changing market, it will be left permanently behind with lower market share; revenues and jobs will be jeopardized. In dry cleaning, a recent U.S. EPA report shows that chlorine- based solvents can be replaced with a water-based system that is equally effective and results in a 42 percent lower capital investment to install, a 78 percent better return on investment, a 5 percent increase in profits, and a 21 percent increase in jobs. Implemented throughout the U.S., this system would create 33,170 new jobs with wages of $606 million per year. Manufacturing industries can replace chlorinated solvents with cleaner production processes that have been shown to result in large savings -- as much as several million dollars per company -- due to reduced costs for chemical procurement, control, and disposal. Often these processes also substitute new jobs for chemicals. Alternative agricultural systems that reduce or eliminate pesticide use have been shown to increase crop yields, lower farmers' costs, increase financial returns, and create new jobs by substituting labor for chemicals. Estimated cost savings associated with the chlorine phase-out in this sector are up to $8 billion per year in the U.S. and Canada. About half of the jobs associated with chlorine are in the fabrication of PVC plastic products. Because flooring, toys, pipes, and other such products will continue to be made when chlorine is phased-out -- but simply with traditional materials or non-chlorinated plastics -- no net reduction in jobs is expected in this large sector. For workers producing the feedstocks or resins for these plastics, growth in production of the alternative materials -- frequently in the same facilities or regions -- are expected to offset reductions in the PVC sector. Because there may be some job displacement in this area, however, careful transition planning is necessary to insure that new investment, job creation, and assistance funds are targeted specifically to minimize the dislocation. Phasing-out chlorine and organochlorines will substantially reduce industry's costs for pollution control and disposal, which can represent a major drag on the economy. Estimated savings from the chlorine phase-out are estimated at $22 billion to $43 billion per year. Phasing-out chlorine will prevent the continuation of a legacy of contaminated sites with clean-up costs estimated at up to $1 trillion. Preventing organochlorine discharges that would occur over a 20-year period are estimated to result in $20 to $100 billion in obviated remediation costs. The transition to a chlorine-free economy would require an investment in new construction and new technologies that would provide a powerful economic stimulus. Based on the chemical industry's estimate of this investment at $67 billion, the transition would create about 925,000 job-years of new employment, or 92,500 permanent jobs over a ten-year period. In order to insure an effective transition, the chlorine phase- out should include the following steps: 1. Priority phase-out sectors. Timelines should be immediately set for the phase-out of chlorine in the following large sectors for which alternatives have been proven effective and affordable: pulp and paper, solvents and dry cleaning, PVC, and pesticides. These sectors account for about 55 percent of all chlorine used in the U.S. and Canada. 2. Secondary sectors. Timelines to sunset other uses should be established based on the quantity of chlorine used and the availability of alternatives. Special attention should be paid to the following sizable sectors for which alternatives are feasible: chlorinated intermediates used to produce isocyanates and propylene oxide; chlorine used to produce titanium dioxide; and chlorine used in wastewater disinfection. Together with the priority sectors, these uses consume 68 percent of all chlorine now produced. 3. Chlorine tax. The U.S. and Canada should institute a tax on the chlor-alkali process and on off-shore imports of chlorine- containing products and alkali produced through the chlor-alkali process. Chlor-alkali plants should no longer be allowed to purchase government subsidized electric power, to purchase regulated electric power at less than average market rates. 4. Transition Fund to protect workers and communities. Revenues equal to those generated by the chlorine tax should be held in a fund to aid the transition to a chlorine-free industrial society. In particular, the fund should be used for exploring and demonstrating economically viable alternatives and for easing dislocations among affected workers and communities -- particularly those associated with the chemical manufacturing industry itself. Funds should be targeted so that investment in cleaner production processes is concentrated in locations where chlorine-based processes have been phased-out, so that new jobs are created where old jobs are eliminated. Funds should also be used to insure income protection, health care coverage, and educational opportunities for workers whose jobs are eliminated in the transition. A board should be established to help set the policy of the fund and should include representatives of the various stakeholder groups. It has been established that organochlorines pose a severe hazard to human and the environment. It has been established that the only effective policy to address this hazard is to treat these thousands of chemicals as a class and to phase-out the chlorine feedstock from which they are produced. These questions need no longer be revisited by the IJC or the governments of the U.S. and Canada. By admitting that alternatives are available for all major chlorine uses, the chemical industry validates the feasibility of a society without chlorine. By raising the specter of job loss and economic dislocation, the industry declares itself concerned with the interests of chlorine workers, users, and communities where facilities are located. With this declaration of concern, the chlorine industry opens up a new debate about the most effective and equitable way to implement the transition. With a careful planning process, the transition to a chlorine-free future can provide a model for truly sustainable development, and all the environmental, economic, and social benefits that accompany it. BACKGROUND GLOBAL CALLS TO PHASE-OUT CHLORINE In 1992, the International Joint Commission on the Great Lakes (IJC) recommended that the U.S. and Canadian governments begin a timed and consultative process to phase-out chlorine and chlorine-containing chemicals due to the hazard this class of compounds poses to the environment and human health. Charged under the Great Lakes Water Quality Agreement with achieving Zero Discharge of persistent toxic substances, the IJC found that organochlorines dominated its critical and secondary lists of persistent pollutants in the Great Lakes, were primary contributors to the epidemic health effects apparent in more than a dozen Great Lakes species, including humans. The IJC thus placed top priority on this class of compounds. Following the recommendations of its Science Advisory Board and its Virtual Elimination Task Force, the IJC concluded in its Sixth Biennial that it is prudent and reasonable to treat organochlorines as a class, since its members tend to be persistent, bioaccumulative and/or toxic. Moreover, the IJC found that it is not practical to regulate the thousands of organochlorines produced by industry on a substance-by-substance basis. Thus the IJC recommended that organochlorines be sunset as a class and that the sources of these compounds -- industrial processes that use chlorine and organochlorines as feedstocks -- be subject to a timed phased-out. Since that time, a growing group of scientists, environmental organizations, communities, and other international fora have made similar recommendations. In 1992, the Paris Commission on the North Atlantic -- a ministerial level meeting of 15 European governments and the European Community -- agreed to eliminate all discharges of substances that are toxic, persistent, and liable to bioaccumulate -- "particularly organohalogens." The parties agreed "to adopt further measures for the prohibition of the use of organohalogen substances which are unnecessary for the intended use or process, and do not therefore need to be substituted for, and to compile a list of processes and substances which are suitable for substitutes." On October 15, 1993 -- less than one week prior to the IJC's Seventh Biennial meeting, the 21 nations party to the Barcelona Convention on the Mediterranean also called for an organohalogen phase-out. The parties agreed: "To recommend that the Contracting Parties reduce and phase-out by the year 2005 inputs to the marine environment of toxic, persistent, and bioaccumulative substances ...., in particular organohalogen compounds having those characteristics. In this framework, high priority is to be given to both diffuse sources and industrial sectors which are sources of organohalogen inputs." INDUSTRY'S RESPONSE: PUBLIC HYSTERIA, PRIVATE PLANNING Despite these international developments, the U.S. and Canadian chemical industries moved quickly following the IJC's Sixth Biennial to begin a concerted effort to discredit the Commission's recommendation to phase-out chlorine. Industry's public relations budget for this campaign is estimated at $5 million. In Public, Economic Fearmongering The chemical industry's argument focuses on the aggressive assertion that phasing out chlorine will have devastating effects upon the economies of the U.S. and Canada. In 1993, the Chlorine Institute, the North American representatives of the industry, commissioned and released a report by Charles River Associates (CRA), an American consulting company. The CRA report asserted that the IJC recommendation would cost the U.S. and Canadian economies $102 billion (US) per year, would impact 1.4 million jobs, and would severely disrupt local and regional economies. (1) As the IJC's Seventh Biennial Meeting approached, the industry began a series of briefings and press events around the Great Lakes region, in which chemical industry representatives argued that the "economy, which is still struggling, will suffer enormously if these recommendations go forward." Professing concern for the well-being of the nation's citizens, the industry argued that "consumers will bear the brunt of the expense ... Communities across the country would suffer the loss of tens of billions of dollars already invested in chlorine production, including the loss of hundreds of thousands of jobs." [2] In Private, Acknowledging Change While the industry seeks with this strategy to stir up fear and hysteria in public, chemical industry leaders admit in private that, at minimum, the majority of chlorine-based chemicals can and will be phased-out. The chlorine industry's own economic consultants are predicting that chlorinated chemicals will be phased-out, especially those with the lowest phase-out costs. In a speech to the American Chemical Society, Charles River Associates vice president Ronald Whitfield told the industry to "shake their denial" and prepare for "sea changes" in chlorine markets. According to Whitfield, many large chlorine uses "will be restricted," and top phase-out candidates include PVC products and the use of chlorine in pulp bleaching, chlorinated solvents, water disinfection, and agricultural chemicals. These sectors alone consume about 7.3 million tons of chlorine each year -- about 54 percent of all chlorine use in the U.S. and Canada. Whitfield predicted a combination of product bans, taxes, building code changes, labelling and reporting requirements that will lead to severe reductions in use of PVC and other chlorinated products. [3] Investing to Protect Capital Meanwhile, major chemical companies have begun to protect their own financial interests by investing in alternatives to chlorine. For example: DuPont Chemicals, the chlorine producer that hosted the "briefing" in Niagara Falls, NY, is working to eliminate chlorine from its chemical synthesis processes. Leo Manzer, associate director of DuPont's central science and engineering laboratory, told another recent Chemical Society meeting that although "hazardous and toxic materials" have been important reagents in the chemical industry to date -- including chlorine, hydrochloric acid, the chlorinated intermediate phosgene, and others - "future business practices must avoid or minimize the inventory and transportation of these materials." DuPont has developed a way to produce isocyanates without phosgene. At present, six percent of all chlorine in North America is used to produce isocyanates, which serve as intermediates in the production of chlorine-free plastics and other products. "This trend ... is clearly the way of the future," Manzer said. [4] Monsanto, another important manufacturer of chlorinated and other chemicals, is also working to eliminate chlorine from its processes. Michael Stern, corporate research fellow at Monsanto, told the same conference that his company had developed "several promising advances ... that avoid the use of halogenated compounds, including chlorine," as well as chlorinated benzenes and phosgene in the manufacture of rubber chemicals, plastics, and synthetic fibers. [5] Dow Chemical, the world's largest chlorine producer, has begun to produce chlorine-free plastics to replace PVC. Dow has begun to invest heavily in retrofitting its plastics plants to produce chlorine-free polyolefins using new "Insite metallocene catalysis technology." According to Anthony Carbone, head of Dow's global plastics group, "Plastics have been replacing traditional materials, and now we'll go into applications where other plastic materials are used. Insite will replace PVCs, elastomers, and in some cases, engineering thermoplastics," Carbone said. [6] While some companies position themselves to take advantage of opportunities, others move to cut losses. Until recently, B.F. Goodrich, the chemicals and aerospace giant, was one of the world's largest producers of PVC plastic resins. Seeing the handwriting on the wall, Goodrich took steps to minimize its exposure and liability in this declining business. Last April, B.F. Goodrich spun off its PVC division, sold half of its interest, and created an independent publicly-traded company called GEON with headquarters in Cleveland, Ohio. The chemical industry is aware that society will not much longer endure the damage to health and the environment from persistent toxic pollution. Chemical industry executives understand that there will be growing pressure to eliminate the sources. The important issue facing both these corporations and the larger society is not WHETHER these changes will occur, but HOW. INDUSTRY'S INFLATED COST ESTIMATES The estimates of the costs of phasing out chlorine presented in the CRA report are far from valid and drastically overestimate the actual costs that would be associated with a well-planned transition. In fact, the study's well-publicized quantitative conclusions are based on the wild assumption that the transition to a chlorine-free economy will occur instantaneously by bureaucratic fiat, without any intelligent thought or planning. First, although CRA projects that costs will continue over a 20- year period, it assumes that all chlorine use sectors will be phased-out instantly and simultaneously. Second, the alternatives to chlorine that CRA considers are frequently ones that perform poorly, that are unreasonably expensive, or are not those the marketplace would select. Finally, the CRA report looks only at costs and burdens and fails to explore or identify the potential benefits and savings associated with the chlorine- free transition. Significantly, the CRA report does admit that alternatives are available for all uses of chlorine. Its summary concludes, "The transition to a chlorine-free economy would take 10 to 20 years, during which time prices for existing products would likely be significantly higher than today." The report thus validates the feasibility of a society without chlorine and begins a new debate about the best way to implement the transition. There is little doubt that the transition to a chlorine-free economy will take at least a decade to complete. As CRA points out, chlorine and organochlorines are used in a large number of industry sectors throughout the economy. The phase-out will require careful planning and should be carried out through a timed process that prioritizes those major sectors that can and should be phased out first. Prioritizing will lower costs. A few use sectors that use very little chlorine account for a disproportionately large percentage of CRA's estimated cost of the chlorine phase-out. The bulk of chlorine used in industry can be phased-out for a much lower price. If the transition plan prioritizes for phase-out those use sectors with the most affordable alternatives, a near-complete transition can take place at much lower cost. For instance, of the $102 billion annual price tag CRA predicts, over one-half -- or 53.6 billion U.S. dollars -- is projected to come from a single industrial sector: pharmaceuticals. According to CRA's estimate, phasing out chlorine in this sector is estimated to cost $335,000 per year for every ton of chlorine, while all the other sectors combined carry a price tag about one hundred times lower. The per-ton sunset costs associated with some large use sectors -- such as chlorinated solvents -- are less than 1/2,000 of that for pharmaceuticals. Many of the pharmaceuticals now made with chlorine could be made through chlorine-free processes. Still, some essential medicines are organochlorines -- precisely because these compounds are so biologically active. Any real world chlorine phase-out program would certainly make exceptions for essential medicines that could be synthesized in no other way. The CRA report, however, makes the absurd assumption that all pharmaceuticals now produced with chlorine would be banned and removed from the market. On the assumption that most essential medicines now in used would be banned, the CRA concludes that diseases would become more debilitating, hospital stays would be longer, doctor bills would be higher, disabilities would be greater, and so forth. Based on this far- fetched chain of reasoning, the CRA derives a whopping $53.6 billion per year drain on the economy. Most other uses of chlorine are far less expensive to phase-out. Even according to CRA's own cost estimates: Over half of all chlorine use examined could be phased-out for only about $4 billion per year; 85 percent of the chlorine could be phased-out for $11.6 billion per year; Over 95 percent of the chlorine could be phased-out for $17 billion per year; 97.6 percent of the chlorine could be phased-out for less than $22 billion per year. When compared with other expenses -- such as the $100 billion to 200 billion annual price for health care costs associated with the effects of persistent toxic substances, or the $90 billion per year that industry spends to "manage" pollution after it has been created -- the chlorine phase-out seems far less daunting. Using the best alternatives will lower costs. CRA assumes that very expensive, inefficient alternatives will be used instead of chlorine and organochlorines, even when more affordable and effective processes are available. The result is a drastic overestimation of the costs associated with the chlorine phase-out. For instance, CRA assumes that dry cleaners will replace perchloroethylene with Stoddard solvent, a flammable and toxic chemical that will require dry-cleaners to replace all their existing equipment at a cost of $4.6 billion. However, a recent EPA pilot study found that a solvent-free alternative cleaning method that eliminates toxic chemicals is equally effective, requires a very low initial investment, results in decreased operating costs, higher profits, increased employment and wages, and better return on investment than chlorine-based dry cleaning. Another example of CRA's unrealistic cost assumptions is the prediction of a $24 billion per year cost from the phase-out of chlorine-dependent pesticides. CRA derives this number by rejecting the effectiveness of alternative pest management strategies and assuming that the phase-out of these pesticides will result in a 20 to 70 percent decline in agricultural yields and the forced cultivation of tens of millions of additional acres to offset massive crop loss. A recent report from the U.S. National Academy of Science, however, reached a far different conclusion. The Academy's Board on Agriculture surveyed alternative farming practices and found that farmers who have reduced or eliminated their use of pesticides have maintained or even increased their yields, have lowered production costs and increased financial returns. [7] CRA's estimate of a $53.6 billion/year cost associated with phasing-out pharmaceuticals is similarly unrealistic. CRA assumes that all pharmaceuticals that involve chlorine in the manufacturing process will be immediately phased-out and that the result will be greater disease, longer hospital stays, and astronomical national costs. But this nightmare scenario is unrealistic for at least three reasons: First, all proposals for phasing-out chlorine have included provisions to exempt minor chlorine uses that serve a compelling need and for which alternatives are not available. Second, CRA overestimates the number of pharmaceuticals that would be affected even by a total chlorine ban. CRA calculates that 85 percent of all pharmaceuticals are chlorine-dependent, but only 20 percent actually contain chlorine; the rest involve chlorine, organochlorines, or chloride salts in the manufacturing process but not in the final product. Many of these -- such as the 7 percent containing hydrochloride salts or additional quantities made with other inorganic chlorides or acids--would not be affected by a chlorine phase-out policy. Third, the majority of pharmaceuticals now made with chlorine could be produced through alternative means. In CRA's analysis, pharmaceuticals that do not contain chlorine but are made in processes that use chlorinated solvents, intermediates, coating agents, or extractants account for 58 percent -- of all pharmaceuticals. Chlorine-free alternatives are available or can be developed for these in-process uses. For instance, up to 65 percent of chlorinated solvent use in the pharmaceutical industry can be feasibly eliminated using available technologies, according to a recent report by the Metropolitan Water District of Southern California and the Environmental Defense Fund. [8] Water or other chemicals can replace chlorinated coating agents, as demonstrated when Rikker Laboratories of the 3M corporation, a major American manufacturer, replaced organic solvents with a water- and heat-based system for coating tablets. This system now saves the company $15,000 per year and has allowed the company to avoid the purchase of $180,000 in pollution control equipment. [9] Alternative processes are already in use in other industries for extraction, including substitutes that use pressurized water or gases. Alternatives are even available or in development even for chlorinated intermediates in this industry: the French firm Sipsy has substituted a hydrocarbon catalyst for an epoxidation process in the manufacture of chiral pharmaceuticals that used formerly relied on a chlorinate intermediate. [10] Industry overestimates job displacement. CRA asserts that there are 370,000 jobs "directly dependent" on chlorine and an additional 950,000 jobs created indirectly when the directly employed workers spend their wages. Rather than calculating the employment effects of implementing alternatives to chlorine, CRA simply presents these totals, implying that all of these jobs will be lost. Industries that now use chlorine and organochlorines to produce other goods or services, however, will not shut down as chlorine is phased-out; they will adopt alternatives. Phasing out chlorine does not mean that no one will purchase or produce food, cars, flooring, or even plastics and many other chemicals- - it simply means they will use chlorine-free materials and processes to do it. In general, jobs in these industries will not be eliminated. Of the 370,000 "directly chlorine-dependent" jobs in the CRA study, almost half are workers in plants that fabricate PVC products. Even in this industry, many or even most jobs will be preserved, since most products now made of PVC (with the conspicuous exception of unnecessary packaging) will still be made, but with other materials. And jobs lost from production of the raw PVC resins and its feedstocks would be offset by job gains in the manufacture of the substitute raw materials, often in the same plant or area. According to an economics consultant's report prepared for the IJC's Virtual Elimination Task Force, a program to phase-out PVC would result in no net decrease in jobs: "The impacts on employment would be expected to balance out between the PVC and the substitute sectors." [11]. For instance, one of the world's largest flooring manufacturers, Tarkett AG, recently announced it will phase-out all PVC products from its line and substitute chlorine-free plastics and other materials. Tarkett workers will continue to be employed, they will simply use a different raw material to produce flooring. As noted above, Dow Chemical has begun to produce alternative chlorine-free plastics for products now made with PVC, presumably creating new jobs in the process. Because this is such a large chlorine-use sector, there is still some potential for economic dislocation among those employed in the production of PVC raw resins and feedstocks, however. As described later in this report, careful transition planning is thus essential to insure that investment in new job creation is targeted for those areas in which dislocation may occur and additional programs are available to provide for incomes, benefits, and educational opportunities for any workers whose jobs are lost. ECONOMIC BENEFITS OF PHASING OUT CHLORINE Conspicuously absent in the CRA report is any mention of the economic benefits associated with phasing-out chlorine. Many chlorine-free alternatives are more efficient, create new jobs, and lower production costs in comparison to chlorine-dependent processes. A complete evaluation of the economic benefits of the chlorine-phase-out is beyond the scope of this document, but a few examples illustrate potential cost savings and job creation. In many cases, implementing chlorine-free alternatives actually creates large numbers of new jobs, since the alternatives often substitute labor for the "convenience" of chemicals, as discussed further below. And since the wages paid to these workers will also indirectly create substantial numbers of jobs, the positive employment effects of these alternatives will be multiplied. According to an economic consultant's report for the IJC's Virtual Elimination Task Force on the economic instruments and impacts that could be associated with a phase-out of industrial products and processes that generate persistent toxic substances, particularly PVC: "On balance, the actions really substitute one set of human activities for another. In the absence of adaptation and innovation by the sectors targeted for economic instruments towards the "new" activities, there will be sectoral shifts to balance out. Given the relative capital and labour intensities of the alternatives, the net employment impacts are likely to be positive, both in terms of number and quality of jobs. The virtual elimination strategy, and the general pollution prevention actions that implement it, involve creative, knowledge-intensive activities that are emerging as economic strengths. The new activities will spur sustainable development, which is a form of economic development that enhances the resource base rather than degrades it. There will likely be a substantial netting out or balancing of the long-run adjustment costs, as there is a need to account for the opportunity cost-savings involved in the "capital switching" (capital accumulation in the new activities and capital decumulation in activities that generate persistent toxic substances) that will occur." [11] Pulp and paper. The pulp and paper industry consumes about 16 percent of all the chlorine produced in the U.S. and Canada. Meanwhile, 27 mills worldwide -- most in Europe -- now produce totally chlorine-free (TCF) bleached pulp using primarily oxygen, ozone, hydrogen peroxide bleaching methods. The TCF product is of sufficient strength and brightness to satisfy the most demanding markets. [12] The highest-profile newsweekly published in Germany -- Der Spiegel, often called the "Time Magazine of Germany" -- is now printed on TCF paper. CRA estimates that the transition to a chlorine-free pulp industry would require an investment of $9 billion and result in increased costs of $2.36 billion per year. But the facts suggest that following an initial investment, TCF pulp is actually far less expensive to produce than chlorine-bleached pulp. The savings come in a number of ways. TCF mills reduce their chemical costs by an estimated $5 to $10 per ton. Based on current U.S. and Canadian production of 37 million tons of bleached pulp per year, total potential savings in the U.S. and Canada would total $185 to 370 million per year. [13] TCF mills require only one-eighth to one-half the energy of a chlorine-bleaching mill. [13] Potential energy savings in U.S. and Canadian mills would total 2.4 to 4.2 billion kilowatt-hours per year, with a financial savings of $108 to $189 million per year, assuming a median industrial electricity rate of $.045 per kWh. [14] Additional savings include substantially reduced costs for water use, effluent treatment, and disposal of contaminated sludge. Costs for lawsuits, remediation and liability for organochlorine contamination are also eliminated. One major U.S. pulp mill is facing lawsuits with up to $10 billion in damages for dioxin contamination of a receiving stream. Once a pulp mill eliminates chlorine bleach, it can then pursue even greater savings by creating a closed-loop system. Closed- loop mills are currently considered technically feasible and clearly the wave of the future for the paper industry, but they can only be achieved when chlorine -- and its corrosive by- products -- are entirely eliminated from the process. [15] Closed-loop mills offer even greater opportunities for cost savings: A new closed-loop mill can be built for $40 million less capital than a traditional mill. A closed-loop mill can realize massive savings on chemical, water, and energy costs. Savings are estimated at $35 per ton of pulp, or about $1.4 billion per year if the entire U.S. and Canadian industry converted to such systems. [16] The failure of North American mills to adopt TCF technologies also jeopardizes their future viability in the global marketplace. European markets are increasingly demanding TCF paper, and North American markets are following quickly behind. [17] As European mills change their production technology to meet this changing demand, U.S. and Canadian mills risk losing substantial ground with their refusal to adapt. Industry analysts have warned that the North American industry is at risk of losing market share to European and other mills, with potential severe effects on the viability of the industry and the security of its workers' employment. According to a major U.S. newspaper: "The truth is, the world market for chlorine-free paper is growing rapidly, and our international competitors are already ahead of American producers in the development and installation of chlorine-free technology," one major newspaper wrote recently. [18] According to the editor of a leading paper industry magazine: "Let's face reality. Whether we like it or not. Whether we worry about the cost and the cashflow - it is going to happen. Those who make those big decisions for their companies can't defend a chlorine position by saying, "The hell with you dumbbells, you customers, you merchants, you governments officials, we'll take you all on. We'll stuff our products down your throats!" It reminds me of the arrogant U.S. automobile industry approach But guess what? The auto industry had it's clock cleaned, as will some major U.S. pulp and paper companies, if they think they can buck the trend." [19] According to another trade report: "Market pulp producers using chlorine and its compounds are in danger of remaining on the defensive for a long time to come. For that reason, we believe that the tide will sweep the market pulp industry towards the final elimination of chlorine from its bleacheries. Whether or not you believe that organochlorine effluent from pulp mills is harmful to humans, a failure to respond to the rising environmental tide of the 1990s could well lead to an ebb in your company's fortunes." [12] Dry cleaning and solvents. A recent U.S. EPA study considered the economic implications of converting dry-cleaning facilities that currently use perchloroethylene (PERC) to a solvent-free method based on spot cleaning, steaming, and pressing.[20] EPA began the project because future regulations are expected to require dry cleaners to reduce their emissions of PERC by installing costly pollution control equipment, at costs that could put many small operators out of business. The study found that multi-process wet cleaning was equally effective and associated with significant economic benefits. Compared with a PERC-based system, the solvent-free system: Required 42 percent less capital investment to install; Offered a 78 percent better return on investment; Resulted in approximately equal operating costs by eliminated costs for chemical procurement and disposal, but required additional labor; Increased profits by 5 percent; Increased total employment by 21 percent; Increased total wages by 38 percent, and because the jobs in a solvent-free facility require more skill. Based on these figures, a national program to convert all the nation's dry cleaners to the solvent-free method could result in significant economic benefits. Based on current estimates of 158,000 jobs in the dry cleaning sector in the U.S. alone, a conversion to multi-process wet-cleaning would result in: The creation of 33,170 new jobs; A net increase in wages of $606 million per year. An even larger quantity of chlorinated solvents are used in industrial settings, such as in the manufacture of electronics equipment, automobiles, and other equipment. As in the case of dry cleaning, chemical solvents in these industries carry significant costs for chemical procurement and management. Solvent-free alternatives are available now for virtually all uses of chlorinated solvents. Many companies have already realized significant cost savings by substituting mechanical or aqueous cleaning or coating processes, by redesigning the process to eliminate the need for a solvent entirely, or by substituting labor for chemicals. In most cases, companies report cost savings; in some cases, jobs are created. [21,22] For instance, a medium-sized Swedish manufacturer of lighting fixtures for interior and exterior use employing about 350 persons successfully replaced chlorinated solvents for degreasing, painting and coating with aqueous cleaning and powder-based paints. Through improved material and energy efficiency and reduced waste disposal costs, the company's savings have been estimated at 2.4 million SEK per year, or about 300,000 US dollars. [23] According to one U.S. electronics company that recently eliminated its use of chlorinated solvents entirely, "Waste management is an unproductive drain on company resources.... Waste elimination avoids waste management cost. As a result, waste elimination conserves company funds for productive investment in new products and improved product quality.... Waste elimination is a necessity for competitive survival. " [24] Pesticides. The widespread use of pesticides since 1950 replaced labor with the apparent efficiency of chemicals. As the financial and economic costs associated with pesticide-intensive agricultural have become more apparent however, alternative chemical-free methods of agriculture have been developed or rediscovered. These methods include including improved choice and rotation of crops, mechanical methods of weed and pest control, introduction and maintenance of natural predators, and use of biological pesticides. [7] As noted above, a comprehensive review of alternative farming practices by the National Academy of Sciences [7] found that fanners who have reduced or eliminated their use of pesticides have benefited economically. Pesticides can account for as much as 20 percent of the variable costs of producing a crop, and chlorine-dependent pesticides carry an annual price tag of about $8 billion to U.S. and Canadian farmers. [1] Pesticide-free alternatives eliminate this cost entirely, substituting labor or other methods. In every case studied, the Academy found that yields on farms practicing alternative agriculture increased or stayed constant, that costs declined, and profitability increased. Further, because these farms were typically more diversified, their owners reduced the risk and variability of net returns. The major economic barrier to wider implementation of these processes was found to be federal programs that encourage the use of pesticides and fertilizers. The academy did not attempt to calculate the potential cost savings of a national program to phase-in pesticide-free agriculture. Figures presented in the report suggest the savings opportunities may be large: a program to reduce pesticide use on just 9 crops in a 15 state area yielded a net savings of $578 million in additional returns to farmers, for instance. Total U.S. and Canadian savings from the reduction or elimination of pesticide use would likely be in the billions of dollars. The Academy also found that alternative agriculture typically requires more labor with greater skills and knowledge. The Academy did not calculate the number of jobs that might be created by a national program to move towards pesticide-free agriculture. In the period from 1947 to 1985, pesticide use nationwide increased from near zero to about 250 million pounds per year. In the same period, farm employment dropped from 10 million (about 17 percent of the total work force) to 2.5 million (2 percent), due to increased use of pesticides, fertilizers, and more efficient machinery. Health and remediation costs. Phasing-out chlorine will virtually eliminate discharges of organochlorines to the environment, with a subsequent decline in expenditures associated with this pollution. The cost of pollution is seldom included in economic models but includes health care costs and lost productivity due to health effects among the general population, and the workers and communities most directly exposed, environmental clean-up, and pollution control, management and disposal. A recent report for the IJC's Virtual Elimination Task Force estimated that health care costs associated with the effects of persistent toxic substances in the U.S. and Ontario range from $100 to $200 billion per year. If organochlorines account for half of these costs, eliminating these expenditures would result in savings of $50 to $100 billion, largely offsetting the costs of a chlorine phase-out, even according to CRA's estimates. [25] The Environmental Protection Agency has estimated that U.S. pollution control and disposal costs about $90 billion per year. These costs are expected to reach $171 billion annually by the year 2000. [26] When chemical use is eliminated, the cost of inefficient control and management is also eliminated. The portion of total pollution control costs attributable to chlorine-based compounds is unknown, but is likely significant, considering the quantity of these chemicals used and their dominant presence on lists of regulated chemicals. If organochlorines account for only one-fourth of total pollution control expenditures, the chlorine phase-out would result in savings of $22 billion annually, with savings increasing to $43 billion per year by the year 2000. Continued production and discharge of persistent toxic substances will also result in increased future costs for site remediation. Preventing these discharges will obviate such potentially massive expenditures. The cost of cleaning-up just 10 of the 43 Areas of Concern in the Great Lakes has been estimated at up to $3.4 billion. [27] Clean-up costs for just the four largest hazardous waste sites along the Niagara River are $6 billion over the next 30 years and $19 billion over the next 100 years [28] Published estimates to remediate the hazardous waste legacy of the last four decades in the U.S. are in the range of $480 to $1,000 billion, with $750 billion the most likely [29] By preventing continued discharges of persistent organochlorines, the chlorine phase-out would result in savings in remediation costs, conservatively estimated over a two-decade period at $20 to $100 billion. Economic stimulus of the transition. CRA has estimated that the transition to a chlorine-free economy would require a one-time investment of $67 billion in new equipment to produce the alternatives in necessary quantities. Such an investment in construction of new equipment in manufacturing industries, in water treatment plants, and other sectors would provide a powerful stimulus to the economy, creating a large number of direct jobs and an even larger number of indirect jobs. In manufacturing industries, an investment of 37.7 dollars creates one hour of labor. The $67 billion capital investment in the transition to a chlorine-free economy would thus create approximately 925,000 job-years of new employment -- or an average of 92,500 constant jobs during a ten-year transition period. [30] PROTECTING WORKERS AND COMMUNITIES As it faces the chlorine phase-out, the industry has begun a long-range strategy to protect its financial interests. But its plans have provided no protection for the workers and communities who will be affected and for whom the industry has professed such concern in public. Although a chlorine-free economy will create new jobs and economic cost savings, there are some workers employed in the manufacture of chlorine and organochlorines whose jobs will be lost in the transition. Communities dependent on these industries will also be affected. These workers and communities should not be forced to bear the economic burden of the transition to a chlorine-free economy. It is essential that the phase-out be implemented so that dislocation is minimized, costs and benefits equitably distributed, and opportunities for new employment and investment maximized. A rational planning process can reduce and mitigate the economic disruption associated with the transition. First, efforts should be made to locate new investment and job creation in the same communities in which the most dislocation is likely. Transition planning should place priority on keeping people employed by directing new development to those areas in which it is most needed. Second, workers whose jobs are eliminated should be offered the opportunity for meaningful new employment. One proposal to insure that displaced workers are protected is the GI Bill for Workers, advocated by the Oil Chemical and Atomic Workers International Union. [31] This program would provide full income protection, up to four years of higher education and health care coverage to all workers whose jobs are lost because of phase- outs of industries that are incompatible with environmental concerns. The program would be funded by taxes on the activities of polluting industries themselves. Funds should also be provided so that communities affected by the chlorine phase-out can re-invest in clean, chlorine-free development to reinvigorate their local economies. Worker and community protection program should be funded by a tax on the chlor-alkali process. The tax should begin at a modest level and rise over time. This way, funds can be built up to provide for the transition while creating an economic incentive for user industries to more quickly phase-out chlorine and organochlorines. Revenues equivalent to those generated by the chlorine tax should be placed in a dedicated Chlorine-Free Transition Fund by the U.S. and Canadian governments. The fund should be used to aid the transition to a chlorine-free industrial society: for protecting and assisting displaced workers, for redevelopment programs in affected communities, and to explore and demonstrate economically viable alternatives in those sectors in which further research and development is necessary. A board should be established to set the policy of the fund. It should include full participation by all interested parties, particularly workers and communities. RECOMMENDATIONS: ELEMENTS OF A TRANSITION PLAN Transforming our current chlorine-dependent economy into a chlorine-free industrial base is clearly a major social and economic undertaking. Implemented with careful planning, the transition can be economically beneficial and socially just. It can save money and create new jobs. Further, it can provide a model for how to undertake major economic change in a way that is humane and equitable for those most directly affected. In implementing the IJC's chlorine sunset recommendations, the governments of Canada, United States and the Commission should begin a transition planning and implementation process to begin a rational and equitable phase-out of chlorine and organochlorines. The process should include the following measures: 1. PRIORITY PHASE-OUT SECTORS. The IJC and the U.S. and Canadian governments should begin by identifying priority phase-out sectors for early attention. Realistic goals and timetables should be established for each sector. There are four that should be given the highest priority: paper bleaching, solvents, PVC and pesticides. These sectors consume about 7 million tons of chlorine each year, more than half of all the chlorine used in North America. With proper planning, they can be sunset with relatively low economic cost. This will eliminate major sources of organochlorine pollution to the Great Lakes ecosystem. In particular, the IJC should propose: a) Paper bleaching. Sunset chlorine-based bleaching by the pulp and paper industry -- with a target of completion by the year 2002. b) Chlorinated solvents. Sunset production and use of chlorinated solvents with a target of completion of 1998 for the majority of applications. Allow the possibility of extensions for individual applications that prove to be difficult but essential. c) Polyvinyl chloride plastic. Rapid phase-out of PVC that is used in disposable products or products with a short life expectancy. Establish a plan and time-table for the phase-out of PVC used in durable products that achieves the goal as rapidly as possible while avoiding unnecessary economic dislocations. d) Pesticides. Establish a rapid phase-out for those pesticides that are most persistent in the environment and for all non- agricultural uses. Establish a longer term process for other pesticides that includes technical assistance, training and incentives for the agricultural sector. e. Incinerators. In addition to these use sectors, there should be an immediate ban on the introduction of organochlorine- containing wastes into all combustion facilities, including incinerators for garbage, hazardous waste, hospital waste, and sewage sludge, as well as any boilers, furnaces, and kilns that also burn such wastes. Such a measure will eliminate a major source of organochlorine discharges and serve as an incentive for reductions in the use of chlorinated products and feedstocks. 2. SECOND-TIER SECTORS FOR SUNSET. After addressing these priority sectors, programs should be developed to sunset other uses based on the following prioritization criteria: Industrial process that use large quantities of chlorine or chlorine-containing compounds should get precedence for phase- out over those that use small amounts; Processes or products associated with releases of persistent toxicants that are especially large or especially potent should be given precedence; Processes for which readily available alternatives are in commercial use in some countries or by some companies should be given precedence " especially where there are phase-outs or phase-downs elsewhere in effect; Processes with alternatives that have the lowest long-term cost to the end-user should be given precedence. Using the above criteria, the following additional uses of chlorine should get special scrutiny: chlorohydrins used in the production of propylene oxide and epoxy resins; phosgene used in the production of isocyanates and polycarbonates; chlorine used in the manufacture of titanium dioxide; and chlorine used for wastewater treatment. Each represents a large use of chlorine for which economical alternatives exist. These four uses together consume over 3.1 million tons of chlorine per year in North America. When combined with the four priority uses listed earlier, we have identified eight uses that together consume more than 73 percent of all chlorine now produced. 3. CHLORINE TAX. The U.S. and Canada should institute a tax on the chlor-alkali process that begins at a modest level and rises over time. An equivalent tax should also be collected on all off-shore imports of both chlorine-containing products and also alkali that has been produced by the chlor-alkali process. At the same time, chlor-alkali plants should no longer be allowed to purchase government subsidized electric power or purchase regulated electric power at less than average market rates. 4. TRANSITION FUND. Both federal governments should set up transition funds in amounts equivalent to what the chlorine tax generates. These funds should be used to aid the transition to a chlorine-free industrial society and in particular: for exploring and demonstrating economically viable alternatives and for easing dislocations to affected workers and communities -- particularly those associated with chemical manufacturing itself. A board should be established to help set the policy of the fund including representatives of the various stakeholder groups. 5. TRANSITION PLANNING. The IJC should call upon both federal governments to establish a transition planning process for implementation of the Great Lakes Water Quality Agreement. The goal of this process is to minimize costs, maximize benefits, make certain both are equitably distributed, and mitigate negative impacts on workers and communities. The IJC should call upon governments to integrate pollution prevention with industrial policy so that business modernization initiatives, research, technology assessment programs and the like-are consistent with pollution prevention. The IJC should expand the sunsetting strategy defined in the Sixth Biennial Report to include: 1. Realistic and measurable timetables for action; 2. Transition planning mechanisms that provide input from representatives of communities, labor, environmentalists, chemical producers and chemical users. In addition to making recommendations to the governments, the IJC should also sponsor its own bi-national transition planning process. A number of planning exercises should occur under the following general guidelines: Planning exercises should be organized around the proposed phase-out of specific industrial processes or clusters of industrial processes (including production, use, disposal or others) responsible for releases of persistent toxicants to the ecosystem. Each planning exercise should work within a framework that has already been defined. This framework could be a proposed timeline for a phase-out or could be some other specific objective. Participants should be asked to help define ways to achieve the objective that avoid unnecessary economic or social burden. Based on the discussion, however, the specifics of the objective can be amended or modified for good reason. While all participants need not endorse the objective of the planning exercise, it will be organized and facilitated to discuss and plan how the objective is to be accomplished -- not to revisit or challenge its desirability or necessity. Each planning exercise should involve representatives of a spectrum of affected interests. These include not only industry, environmental advocates and government agencies; but also representatives of workers, affected communities and the users or purchasers of affected commodities or services. Participants should have access to technical and economic expertise and everyone's input should be given serious, thoughtful consideration. The group should explore alternatives, obstacles and opportunities. Various scenarios can be explored including elements such as bans, taxes, market forces, procurement policies, labelling requirements, building codes, and so on. Consensus will be sought, but it will not be required. LTC Commissioners or their designated representatives will prepare and approve the final report. PROCEED WITH OR WITHOUT INDUSTRY'S COOPERATION Several of the recommendations the IJC made in its Sixth Biennial call upon industry to consult in developing and planning implementation. In the Seventh Biennial Report, the IJC should again -- and more strongly -- urge the chemical industry to actively cooperate. The chemical industry, however, should no longer have the power to block or veto implementation of the Great Lakes Water Quality Agreement. The IJC must now define a program to move forward, with or without voluntary cooperation from the chemical industry. In particular, the IJC should declare that some issues have been debated long enough and should now be put to rest. IJC boards and task forces should no longer provide a forum to continue debating: Whether the evidence linking toxic pollution to ecosystem and human health disorders is sufficiently strong to justify precautionary public policy conclusions; Whether a "Zero Discharge"/"Virtual Elimination Strategy" is appropriate, or what these terms mean; The validity of the Sixth Biennial recommendations and its selection of individual substances and specific classes of chemicals as sunset candidates, particularly organochlorines. The International Joint Commission has already spoken very clearly on these issues. It has been supported communities in the Great Lakes, scientists, and at least two other major international fora representing the agreement of over 20 European governments. There is no reason that the IJC should be compelled to revisit the same ground, again and again, risking paralysis and a loss of utility to the societies and agreements to which it is accountable and the ecosystem it is bound to protect. To fulfil its mission, the IJC must now move forward the discussion on implementation. REFERENCES (omitted here; unscannable, please see paper version)