Forest industry leaders warn of consequences of new energy tax
Production and investments may slip out of Finland
Jouko Karvinen
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Anne Brunila
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Jussi Pesonen
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A number of leading figures in the Finnish forest industry predict that the branch’s production and investments will disappear to other countries if Finland realises its planned tightening of energy taxation for industries in 2011.
A higher energy tax is seen as yet another nail in the coffin of a sector that is already ridded with problems.
“From the forest industry’s perspective we are now entering the critical stage. We need a quick change of direction”, Stora Enso CEO Jouko Karvinen warns.
According to Karvinen, the Finnish forest companies already pay significantly more for their electricity than their Swedish counterparts. Each year the Finnish industries are burdened with a EUR 65 million energy tax bill for the use of electricity that they have produced in their own facilities.
Stora Enso has already directed its orders to other countries - although this is also partly because of the strengthening of the euro compared to other currencies.
Based on the government proposal from a couple of weeks ago, the forest industry’s outlay would increase by EUR 180 million per year.
Apart from the planned increase to the energy tax, the Finnish government is also preparing the introduction of the so-called windfall tax.
From the companies producing electricity - which includes the large forest industry firms - some of the undeserved profits generated through emissions quota trading would be collected by the government.
The pulp, paper, and plywood companies are vexed by this, for this will also add to their energy bill.
”I am asked to to keep the Finnish production units going, while maintaining employment and increasing investments. This is the worst possible time to add to our burden, when the problems within the industry are already so big”, Karvinen laments.
Karvinen calls for national efforts to rescue the country’s struggling paper and wood industries.
“If nothing is done, soon nobody will invest in the Finnish forest industry. In five years’ time it will be too late. Good equipment, machines, and people will not wait. They will go to waste”, Karvinen says.
UPM CEO Jussi Pesonen, in turn, threatens to freeze the company’s investments in Finland. He nevertheless refuses to specify which particular investments the company would postpone and where the company would invest instead, if not in Finland.
“Of course we do not advertise our future investments in public”, Pesonen says bluntly.
“Our field is extremely energy-intensive. First we have to observe where the country’s energy politics will take us and what our outlay will be like, before we can start commenting on future investments.”
According to Pesonen, in the future UPM will invest “wherever there is suitably-priced raw materials and the right kind of energy policy.”
Also the Finnish Forest Industries Federation President and CEO Anne Brunila calls for better understanding of the field from the political decision-makers.
“All the essential expenses such as raw materials, logistics, labour, and energy have risen in cost faster in Finland then anywhere else in Europe. We are not whining about anything related to the present market situation, only the political decisions”, Brunila emphasises.
The Ministry of Finance, in turn, stresses that with the energy taxation it is a zero-sum game.
“The energy tax will be introduced to compensate for social insurance payments. Certainly these changes will affect different firms in different ways, but how can we devise separate taxation practices for every single firm?” asks Leo Parkkonen, an official at the Ministry of Finance.
To Parkkonen the forest branch's protesting did not come as a surprise.
“The lowering of fees such as those social insurance payments is welcomed with no questions asked, but increased taxation is criticised. One must remember that this is part of a much larger package”, Parkkonen points out.
Previously in HS International Edition:
Energy, alcohol and housing costs to rise next year (25.3.2009)
Helsingin Sanomat
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| 7.4.2009 - TODAY |
Forest industry leaders warn of consequences of new energy tax
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