"We fully support the objectives of IPPC, but we must consider the cost implications," said Luis Deslandes, CEPI chairman and chief executive of Portugal's Soporcel. "We face great additional expense compared to our competition."

Independent studies carried out for CEPI calculate that an average sized EU pulp mill, with an annual production capacity of 250,000 tonnes, will face additional costs of around $4 million a year once IPPC is fully in force, Deslandes told a press conference.

He said this represents a major chunk of their profits. The European benchmark price for pulp is currently around $480 a tonne, only marginally above production costs.

The IPPC directive, which was adopted in 1996, aims to reduce pollution from factories through a system of permits. It will apply initially to the paper and pulp, steel and cement industries, before being widened to cover other sectors.

Local authorities will set emission limits for each company, based on the best available environmental technology.

All mills with a daily capacity of more than 20 tonnes fall under the new law, which will apply immediately for new plants and eight years later for existing mills.

Deslandes said the industry had already invested as much as 8 billion euros ($8.52 billion) in new environmental protection measures.

CEPI is concerned that other EU legislation may contradict the ideas in the IPPC law and that plans to allow authorities to set environmental standards locally will mean that some of its members have to abide by much tougher targets than others.

"If different authorities adopt radically different approaches, we could be creating large distortions and higher implied costs," Deslandes said.

The European Commission, the architect of the law, claimed the adoption of less polluting techniques would save paper producers money in terms of reduced energy use and less wastage.

"We see a considerable cost saving when businesses invest in green technology," said Jean-Francois Verstrynge, deputy director general of the Commission's environment department.

"They become more energy efficient, less dependent on transport and can recycle more," he added.

($1=.9390 Euro).