6.4°C Not observed 
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Canadian pulp and paper producers, including Howe Sound Pulp and Paper (HSPP), finally got some good news this week.
On Wednesday, the federal government announced a $1 billion Green Transformation program. The program is being set up to identify and take advantage of new opportunities in energy efficiency and environmental performance and to help ensure long-term viability of pulp and paper mills. According to the announcement, a $0.16 per litre credit will be provided between Jan. 1, 2009 and Dec. 31, 2009 to black liquor producing mills, which HSPP is. HSPP is already looking at projects that could fit this funding model and are working on their applications for the funding. The financial shot in the arm for HSPP couldn’t have come at a better time. Last week the company announced a further newsprint production curtailment, which means that for 10 days a month until the foreseeable future, 100 to 120 workers will be off the job. That’s not good news for the employees, their families or this community. HSPP is the Coast’s largest non-government employer. Without this company, hundreds of people would be out of a job and the economy on the Coast could be in further peril.
While the funding program is good news for the industry, is it enough?
Some U.S. forest products companies with kraft pulp mills are manipulating their black liquor tax credit, providing some U.S. chemical pulp producers with significant financial benefits — up to 60 per cent of the total cost of production. These companies have discovered that by adding at least 0.1 per cent of diesel to black liquor, a by-product of the chemical pulp making process, they may qualify for the $0.50/gallon tax credit because the resultant mixture qualifies as a bio-fuel.
This tax credit is having disastrous implications for HSPP and pulp and paper makers worldwide, because the tax credit distorts normal competitive conditions in favour of a few U.S. producers in an already oversupplied market.
It’s perverse that the U.S. government is allowing some companies to manipulate the system and get a bigger tax credit. It’s not a level playing field, and HSPP simply can’t compete.
The funding program is a step in the right direction, and hopefully HSPP will find the projects that fit and get the funds to keep the mill sustainable for years to come. In the meantime, our federal government has to continue to lobby the U.S. government and end the imbalance.
There may be some relief in sight, but the pulp and paper industry, and the forest industry in general, aren’t out of the woods yet.
