Italy's paper industry confronts a deepening contradiction: while domestic consumption climbed 3.3% to reach 10 million tonnes in 2025, national production fell 2.2% to just 7.8 million tonnes. The shortfall has opened the floodgates to imports, which surged 7.5%, even as Italian exports contracted 3.5%. The result is an industrial sector hemorrhaging competitiveness to foreign producers despite growing local demand.
Why This Matters
• Manufacturing decline: Revenue dropped 5.2% to €7.9 billion, signaling financial stress across the sector.
• Energy crunch: Gas costs now represent 11.6% of turnover, projected to rise toward 15-20% in 2026 amid geopolitical tensions.
• Trade imbalance: Italian producers are losing ground at home, with imports filling the gap left by shrinking domestic output.
• ETS squeeze: Carbon permit costs reached nearly 4% of revenue in 2025, with potential increases to 10-13% of value-added in coming years.
Segment-Specific Pain Points
The contraction has not been uniform. Graphic paper manufacturers bore the brunt, with production collapsing 10.3% as digitalization accelerates the shift away from print media. Tissue paper (hygiene and sanitary products) fell 2.2%, while packaging—typically the sector's most resilient category—edged down 0.3%. Only specialty papers managed marginal growth at 1.4%, though this modest gain does little to offset broader losses.
Lorenzo Poli, president of Assocarta, the national paper industry federation, framed the challenge during the association's Rome assembly: Italy remains a European heavyweight in the sector, contributing 2.4% to national manufacturing value-added—a share that exceeds both Germany and France. Yet the country's second-place ranking among EU paper producers (behind only Germany and level with Sweden) is under threat.
What This Means for Residents and Investors
For consumers, the shift toward imports may translate to subtle changes in product availability and pricing. Imported tissue, packaging, and specialty papers could gradually replace Italian-made equivalents on supermarket shelves, potentially affecting quality perceptions and brand loyalties built around local production.
For industrial buyers and investors, the data signals structural vulnerability. Companies reliant on domestic paper supply chains—publishers, packaging firms, hygiene product manufacturers—face supply-side uncertainty. The sector's €7.9 billion turnover represents meaningful economic activity, and further erosion could ripple through logistics, employment, and regional manufacturing hubs concentrated in Lombardy, Tuscany, and Veneto.
The IBISWorld consultancy projects the Italian paper and cardboard manufacturing market will reach €9.6 billion by the end of 2026, implying 4.8% annual revenue growth. Yet ReportLinker forecasts a far more cautious compound annual growth rate of just 0.44% through 2028 for pulp, paper, and cardboard production value, suggesting stagnation rather than expansion.
The Energy and Carbon Cost Trap
The Italian paper sector is energy-intensive, with approximately 80% of its power needs met through high-efficiency cogeneration. While this positions the industry as a leader in circular economy practices—Italy is the second-largest user of recycled paper in Europe—it also magnifies exposure to volatile gas markets.
Between 2023 and 2025, a persistent price differential between the Italian PSV gas hub and the European TTF benchmark cost the sector an estimated €55 million annually—roughly 5% of total energy bills. That's a structural disadvantage baked into geography and infrastructure, one that competitors in France or Germany don't shoulder to the same degree.
Carbon pricing under the EU's Emissions Trading System (ETS) compounds the problem. Italian mills operate at just 75% of installed capacity, yet the system's benchmark reductions—set to cut allowances by 50%—threaten to push CO₂ costs toward 13% of value-added within five years. Poli's advocacy focuses on this imbalance: 76% of Italian manufacturers subject to ETS bear direct costs, while competitors in other member states enjoy up to 60% competitive advantage thanks to greater reliance on biomass fuels, which receive more favorable treatment under current rules.
"We've invested concretely in circularity and decarbonization," Poli told the assembly, "yet the ETS no longer acts as a decarbonization incentive—it simply penalizes competitiveness."
European Context and Competitive Drift
Across the EU, paper production fell 1.5% in 2025 to 77.6 million tonnes, continuing a downward trend since 2021. Germany, representing 24.12% of regional output, remains the continent's dominant producer, though its own industrial production slipped 1.1% last year and declined a further 1.2% in Q1 2026.
France lacks granular paper sector data for this period, but its overall industrial production rose 2.8% year-on-year in April 2026, with manufacturing accounting for 86% of total industrial output. French mills benefit from a more stable policy environment and lower exposure to gas price volatility.
Italy's 2.4% contribution to national manufacturing value-added is impressive, yet the country's producers are caught in a vise: elevated input costs at home and aggressive pricing from international competitors, particularly in Asia, where production costs run significantly lower.
Industry Response: Efficiency, Advocacy, and Adaptation
Italian paper companies are not passive. Since 2020, the sector has cut final energy consumption by 23% through efficiency upgrades and process optimization. Investment in biofuel alternatives—including biomethane and hydrogen—is accelerating, though scaling these technologies remains capital-intensive.
Digitalization and Industry 4.0 adoption is widespread, with mills deploying sensors, real-time data analytics, and automated systems to wring productivity gains from aging infrastructure. The shift toward packaging and tissue production, away from collapsing graphic paper demand, represents pragmatic reorientation toward more stable markets.
Assocarta's political strategy is equally aggressive. The federation has called for emergency tax credits for energy-intensive industries, structural reforms to gas pricing mechanisms, and a temporary ETS suspension to stabilize operating costs. The association also advocates for a European Industrial Pact and stronger trade defense instruments from the European Commission's Directorate-General for Trade, aimed at countering what it describes as unfair competition and global overproduction.
Poli highlighted a "recycling paradox": Italy exports raw recycled pulp abroad, then imports finished paper products made from that same material. This circular absurdity, he argues, underscores the need for policy interventions that protect value-added production within EU borders.
Outlook Through 2026
The Assocarta 2025-2026 Report, presented on June 25, 2026, offered no dramatic turnaround narrative. Weak demand, persistently high energy costs, and intensifying global competition will continue to pressure margins. Geopolitical instability and raw material volatility add further unpredictability.
For a sector employing thousands across Italy's industrial heartland and serving as a cornerstone of the circular economy, the stakes are high. Whether policy reforms at the EU level—or accelerated domestic innovation—can arrest the slide remains the central question as the calendar turns toward 2027.
