Libs Talk Black Liquor

OTTAWA – The Conservative government must act immediately to ensure the Canadian pulp and paper industry is protected in light of a new $8-billion U.S. tax credit that is putting the competitiveness of the Canadian industry in jeopardy, said Jean-Claude D’Amours, Member of Parliament for Madawaska-Restigouche.

Iggy and co. are complaining about an alternative tax fuel credit contained in the 2005 U.S. highway bill that allows U.S. paper mills to cut production costs by $1,000,000,000s, thus undercutting operations in this country. The release is quite correct in noting that the subsidy could jeopardize Canada's pulp and paper industry.

Now, there are a couple of ways to proceed. One, which the Tory government has been pursuing, is to lobby the Obama administration/U.S. Congress to have the credit rescinded. There is support for this move South of the border, where the credit is seen as a bit of an embarrassment, although the U.S. paper lobby has killed action for the time being.

Another path forward is to replicate the subsidy here, which is an alternative proposed by NDP John Rafferty. Such a move would be lunacy, for the tax credit, though it is touted as a "green measure", actually pays companies to increase their carbon footprint by adding diesel to the cleaner fuels they already use to run their mills. (Although I should say that mirroring the tax credit here is only one of the measures Mr. Rafferty has taken into consideration with his private member's motion.)

So good on the party for bringing this one up. The pulp and paper industry doesn't have a whole lot of friends, and I don't usually count myself among them, but they are in this case getting screwed over in a most perverse manner.

A reader notes that the LPoC began agitating on this issue several weeks ago.

Member Motion On Black Liquor

From NDP MP John Rafferty:

April 21, 2009 — Mr. Rafferty (Thunder Bay—Rainy River) — That, in the opinion of the House, the government should move immediately to support the struggling forestry sector by: (a) extending and securing loan guarantees to companies in need; (b) countering the United States ‘‘Black Liquor’’ subsidy for the pulp and paper industry through negotiation prior to June 1, 2009 or by introducing similar supports in Canada as soon as possible; and (c) convening a national stakeholder summit to address the severe and ongoing crisis in the sector.

Since "introducing similar supports" means paying the P&P industry to increase their carbon footprint in the name of alternative fuels, that's not on (is crazy, in fact).

Nevertheless, the U.S. government has in effect introduced a protectionist measure worth $100,000,000s under the guise of green tech. It would be nice to see a more significant response from the Canadian government and the other opposition parties (or from Canadian environmentalists, or from U.S. ones, for that matter).

NDP Drinks The Black Liquor

A bizarre alternative fuel tax credit that actually subsidizes increased CO2 emissions at U.S. pulp mills could be "the final nail in the coffin for many struggling Canadian pulp mills."

This is a weird one, which I have written about here. Basically, pulp-and-paper mills can fuel many of their processes by making use of the by-products of these very processes, in particular a carbon rich sludge containing lignin (the structural glue that binds plant cells together) called black liquor. They've been doing things for years this way, and it keeps the production of pulp and paper relatively "green"(at least "greener" than it would otherwise be). However, in the 2005 U.S. highway bill law-makers introduced a provision that gave a 50 cent per gallon tax credit to industries using a taxable fuel/alternative fuel mix, and in 2007 this was extended to the pulp and paper industry. So clever heads thought "Hey, that money can be ours if we just add diesel to our black liquor!" even though this results in greater emissions and is entirely contrary to the purpose of the legislation.

Naturally, Canadian players in the industry are mad as hell, but the political response to has been most interesting, particularly from the NDP:

"The new U.S. administration is ensuring they are protecting American jobs," [NDP Trade critic Peter Julian] said. "Canada has to take similar tack and work with the U.S. administration to get a reciprocal arrangement that...[is] win-win for both countries."

...which sounds very much as though he is pushing for the tax credit to be extended to the Canadian side of the border, which means that, once again, the NDP is willing to sacrifice environmental interests for those of a dirty brown, heavily unionized industry. Ditching the green for the brown, as it were.

More sensibly, both the Liberals and the government are intent on having the credit killed in the U.S. rather than instituting something just as perverse up here.

The long, slow decline of the NDP as the party of the environment continues.

Oil Company Execs Think Peak Oil Is Real, Anthropogenic Global Warming Is Not

Some good news and some worse news in a recent KPMG survey of oil/gas company execs. The bad news is that:

Sixty-five percent of the respondents say that while they believe global warming is occurring, it is a natural weather cycle, and 11 percent say that they do not believe it is occurring. Just under a quarter believe CO-2- induced global warming is occurring.

The worse news is that 60 percent believe the current trend of declining oil reserves is irreversible:

"These executives are deeply concerned about declining oil reserves, a situation they see as irreversible and worsening," said Bill Kimble,National Line of Business Leader, Industrial Markets for KPMG LLP.

In other words, we're over the Hubble Peak of Peal Oil fame, and its downhill from here. Ah but that's good news, you might think, because we will be forced to transition into a alternative fuel/ low GHG emissions future. Well, not necessarily:


Although oil is the biggest single source of energy-related greenhouse gases, coal and gas combined are bigger still, and the expected growth in their emissions [after the hubble peak] would overwhelm any reduction from oil.

[...]

Soaring crude prices could tip the world into a depression deeper than that of the 1930s, and collapsing stock markets cripple our ability to finance the expensive clean energy infrastructure we need.

As the unemployment lines grow, the political will to tackle climate change may be sapped by the need to keep the lights burning as cheaply as possible.

If there is encouragement to be taken from the survey, it is that our oil execs support research into alternative energy sources as a means of combating the effects of a decline in oil reserves rather than climate change. Get your good news where you can, I suppose.
















Hubble Peak: We're Over
The Hump