Paper and Pulp industry leaves Sweden blaming energy prices

Sweden, although at the forefront of the drive to oil independence, sits powerless when industry finds national energy prices a little too high. The Swedish daily Svenska Dagbladet reports on Thursday the 31 August 2006 that Rottneros, one of the world’s five largest makers of paper pulp, is closing its plant in Utansjö, in Northern Sweden. The plant will be dismantled and shipped to a country offering lower electricity prices. The move demonstrates the energy vulnerability of many industries, and how a permanent hike in energy prices, stimulated e.g by scarcity of oil, is likely to affect developed countries at least while there are countries offering cheaper energy. Capital and industry simple leave, while whole communities remain behind, unemployed.

The mechanical process used by Rottneros is energy intensive, and uses twice as much energy as the alternative chemical process. On the other hand, less raw timber is used and the process has environmental benefits. The plant is one of the most modern in the group, and can be easily moved and set up elsewhere.

The Utansjö community, which has hosted the paper and pulp industry since 1897, will be absorbing 150 jobless.

Other paper and pulp producers like SCA and the Swedish-Finish StoraEnso may soon follow suit. Both state to the newspaper that they have no plans to invest any further in Sweden. ITPS, the Swedish Institute for Growth Policy Studies - the Swedish Government's agency for understanding growth and for evaluating government policies - estimates 2-4 thousand jobs will disappear every year.

This is at a time when national supplies are unable to meet industry demand. Wood is in short supply, and Sweden is importing 10 of the 90 million m3 of forest it uses.

The move demonstrates that we cannot rely on industry to come up with a solution in the short term to higher energy costs. As managing director, you are bound by the terms of your contract to find a cheaper solution in the first place, not to apply all ingenuity to rework business processes and technology to find a less energy intensive or less environmentally challenging solution. And Government is not allowed to interfere according to EU competition rules. It also shows how any approach to a sustainable use of timber supplies is far off. If consumers demand paper products to a level where forests are depleted, the global force of industry is willing to supply it – without taking any responsibility for future generations ability to use the infrastructure and local natural resources.

Of those countries offering cheaper energy, we can only speculate as to the environmental risks associated with this “cheap” energy. Consumers get no say in the matter as they are left unaware of the environmental and social costs of the paper they are holding in their hands, as little as they are informed of the situation of thousands of workers in the oil industry in the long supply chain from the desert to their local petrol filling station.
-