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Dutch company Best Wool Carpets, James and Bond Textile Research have developed Erutan, a process that creates a 100% natural carpet that can be recycled.
That process initally involves a chemical-free wool-scouring process that also uses just 10% of the energy of a traditional scour, and then a new process to bind the woollen fibre to linen backing without the use of synthetic backing materials or glue.
At the end of its life, the carpet can be recycled back to the soil or reprocessed and seeded with grass to help return despoiled land back to productive use.
Best Wool Carpets has chosen Wool Partners International's Laneve wool as its principal fibre supplier.
Best Wool Carpets managing director Yvar Monasch said in a statement the potential for Erutan was huge.
The technology would be licensed to carpet makers throughout the world who would also pay royalties to Wool Partners International (WPI).
WPI chief executive Iain Abercrombie said the company had developed Laneve as a brand backed by proof of being natural, traceable, sustainable and ethically produced.
"This is a game-changing opportunity for New Zealand wool growers and fits our overall strategy of positioning Laneve and Wools of New Zealand brands as fulfilling the needs of consumers who demand a luxurious natural carpet," Mr Abercrombie said.
"We can only guess at the volumes of wool that might be required for carpet with all the natural and sustainable qualities consumers say they want, and that are demanded by architects and designers who have to meet stringent environmental standards when specifying floor coverings for commercial buildings."
Erutan is to be officially launched in the Netherlands next year, but Mr Monasch said it was already attracting the interest of carpet manufacturers.