Black Liquor Absurdities – Tying Up Loose Ends, part two

Its a Mad, Mad, Mad, Mad World is not just a movie. For whatever reason, madness seems to infect those who fly too close to the black liquor subsidy. We will comment on three instances of this epidemic and them rate them according to level of absurdity. We then offer a very brief update on the prospests of pulp subsidies in 2010.

Third Place Runner-Up: The U.S. lumber lobby (humorously named The U.S Coalition for Fair Lumber Imports) expressed deep concern over the Canadian aid package (C$ 1 billion) designed to counter the $10 billion black liquor subsidy in the United States. Canadian lumber producers already pay tariffs when selling in the United States. Nevertheless, the U.S. lumber lobby is still concerned that a portion of this C$ 1 billion subsidy will find its way to the lumber side of some Canadian companies. According to a Forestweb report, the coalition “is deeply disappointed that Canada chose a path that may harm the U.S. softwood lumber industry and workers…”

For the record, the Canadian subsidy does not provide a huge, and immediate financial gift for doing nothing, as is the case in our country. Kraft pulp producers in Canada can receive, within limits, remuneration for capital expenditures that are approved in advance, and have some energy or environmental impact. The differences in the two programs provide an enormous competitive advantage for U.S. companies. Sure, I suppose its possible that this Canadian subsidy may have a minor positive impact on lumber divisions of companies receiving the subsidy. But what about kraft pulp companies in the U.S. that also have lumber operations? This is that pot-calling-the-kettle-black thing. Besides, excessive complaining is counter-productive. One might get the impression that the Coalition for Fair Lumber Imports isn’t fair at all.

Second Place Runner-Up: What type of organization would you think made the following statements?

“There is no greater hypocrisy than to have the paper industry, widely regarded as being culpable for an element of global warming through commercial deforestation, putting its hand out for billions of taxpayer dollars from the remnants of dead forests, under the guise of alternative fuel production.” And…

“Not only is our environment in turmoil….yet many paper manufacturers are taking advantage of taxpayers’ dollars and are being rewarded with a bonus for pillaging our forests.”

If I did not already know the answer, I would have guessed Greenpeace or Forest Ethics. Probably most of you as well. These quotes are nonsense, of course. Deforestation is not occurring in North America, or in any significant part of the developed world. Forest products companies do not pillage the forests, but rather protect them. In fact, forest products companies do a better job of protecting forests than environmental organizations that are stewards over certain forest lands.

And speaking of hypocrisy, few of us would turn down tax credits that the government decided to give us, whether we deserved them or not. I am quite sure that the author of those statements has not turned down any free government money.

These statements came from Tim Spring, who is CEO of Marcal Papers, “a leader in manufacturing paper from 100% recycled paper”. In my view, MR. Spring has a legitimate complaint to the degree that his company has being negatively impacted by the black liquor subsidy. But it seems that MR. Spring does not want to insult politicians responsible for the subsidy – he might need them later. Instead he libels companies that he is dependent on for his companies survival. If there were no virgin paper companies, recycled paper companies would soon be out of business as well.

You can talk with MR. Spring directly if you want. According to the October 23rd Forestweb report, MR Spring is available to discuss the black liquor subsidy, and “also is available to discuss the company’s line of high performing, affordable bath tissue, paper towels, napkins, and facial tissue…” (617-569-6269)

First Place Winner: On November the 4th, Maryland Representative (D), Chris Van Hollen, introduced a bill that would restrict the paper industry from eligibility for the 2008 farm bill program. This program will offer a $1.01-per-gallon tax incentive for some alternative energy fuels. Keep in mind that this bill is completely unrelated to the current black liquor subsidy that will expire at the end of the year. Pulp companies have never received a dollar from this “farm bill”, and for reasons we won’t go into here, were not going to be eligible for the program anyway. So even if Hollen’s bill were passed, it would have no impact one way or the other. Of course this is not a bad thing – congressional bills having no impact are generally preferable to those that do have an impact. But I digress.

Congressman Hollen did not win first place in our little Mad, Mad, Mad, Mad World contest for sponsoring a bill of no consequence. It was the claim made afterward that made him stand out from the crowd. Hollen suggested that $24 billion of “savings” would accrue to the treasury as a result of his bill, and that this $24 billion could be used to help fund the health care bill. Excuse me. This is, purely and simply, a lie. No tax dollars from this bill were ever given to, or budgeted for, pulp companies. No savings will ever accrue to the treasury because there never were going to be any tax credit costs – whether budgeted or not. Even though Hollen’s claim was fantasy, stenographers printed what he said as if it were an absolute truth. For example, the Dow Jones wire wrote, WASHINGTON -(Dow Jones)- House lawmakers may have found an additional $24 billion to help offset the cost of their health-care bill, by blocking pulp and paper makers from using a tax credit for biofuels.

This kind of behavior is truly reprehensible. Representative Hollen carried out a fraud on the public, and none of his peers called him on it. Our government representatives should not be con artists. My dad would have said, “He has no scruples”.

Future Prospects:  We have run out of time. At least I have. The bottom line is that neither a continuation of the current black liquor subsidy, nor any new pulp subsidies are likely to be in force in 2010.

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