Paul MacDonald

Let’s get some action on the black liquor credit
The gears appear to be grinding ever-so-slowly in Ottawa on action to counter the situation with U.S. pulp mills receiving a windfall tax credit on their use of black liquor to generate energy.

Some estimates say the tax credit/subsidy gives U.S. producers a $200 a tonne advantage vs. Canadian producers—which is one heck of an advantage when pulp prices are bumping along.

The situation has spurred protests from—in addition to Canada—Europe, Brazil and Chile. The subsidy is said to be worth up to $7 billion to U.S. producers

While this may not have a direct immediate impact on logging and sawmill operations, anything that makes the pulp sector less competitive does more than just trickle down to the sawmills—which supply pulp mills with chips—and the logging in the bush, the source of all wood fibre for the industry. It has the potential to have more of a cascade effect, than a trickle.

The Canadian government is said to be working on a $1 billion package for pulp mills, crafting it carefully so it will not run afoul of the Softwood Lumber Agreement with the U.S.

But clearly the longer it takes to bring something forward to help the industry, the more damage is done.