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Finland Reports 8% Growth in Paperboard Production in Early 2016

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The Finnish forest industry produced 830,000 metric tons of paperboard in the early part of the year, according to the government's (the Finnish Forest Industries Federation) latest report released this past week. Output was up 8.4% from January-March 2015. Production of pulp and softwood sawn timber likewise increased in the first quarter, while paper production continued to contract. The report states that Finnish decision-makers can influence the operating conditions of the forest-based sector by pursuing an uncompromising E.U. policy.

Forest industry production figures for January-March were boosted especially by paperboard, but pulp production also developed favorably. Forest industry companies produced 1.9 million metric tons in the first quarter, up 4.1% from the corresponding period of 2015. New investments have affected pulp and paperboard production volumes quite clearly.

Softwood sawn timber production increased 3.8% to 2.7 million cubic meters. Paper production continued to contract in the early part of the year, however, coming to 1.8 million metric tons in January-March. This is down 4.9% from the first quarter of 2015.

Finnish producers continue to suffer from weaker cost competitiveness than companies located in the nation's most significant rival countries. This is slowing the recovery of exports and employment, making it imperative for Finnish decision-makers to support the business environment of the industry by influencing the decisions made by the European Union.

The E.U. is currently promoting several schemes that could affect the industry's operating prerequisite substantially. The risk of so-called carbon leakage – the transfer of production to countries with lower costs – still looms large.

"Finland's representatives need to be alert at the E.U. table next autumn. The E.U. is currently dealing with reform of the emissions trading system, forest-related sustainability policies and environmental regulations for large combustion plants. The role of forests in climate policy shall also be on the table. In its present shape, the proposed regulation for large combustion plants could lead to EUR 150-420 million in additional costs for the forest industry," said Director General Timo Jaatinen of the Finnish Forest Industries Federation.

"The commission is presently exploring means for the E.U. to ensure the sustainable utilization of forest biomass. The effort should take advantage of existing domestic and EU legislation to the maximum extent possible. Voluntary tools should also be exploited wherever possible. With regards to emissions trading, the key concern is ensuring that the starting points proposed by the Commission are held on to," Jaatinen continued.

The significance of national, competitiveness-enhancing decisions is emphasized in the European operating environment. This is why the government should have introduced so-called emissions trading compensation in full at its budget negotiations.

"Improving competitiveness requires ambitious decisions. Unfortunately, the Agreement on Competitiveness Pact falls short of its original objectives. The implementation talks necessitated by it are now ongoing, and the Finnish Forest Industries Federation will evaluate their outcome at the end of May," Jaatinen said.

"In this conjunction, we will also examine how satisfactory the Agreement on Competitiveness Pact's coverage is with respect to the delivery chain. The forest-based sector was Finland's biggest export industry in 2015 and it exports 90% of its output. The effectiveness and uninterrupted operation of the delivery chain are essential for forest industry corporations," he concluded.

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