The Finnish paper industry and electricity-consumption

The Finnish public broadcaster Yle has an on-line news item called ‘The electricity consumption of the Finnish forest industries dropped in six years by roughly the amount produced by the Loviisa nuclear plant’.

I think this article is a bit lazy in its use of ‘forest industries’ vs. ‘paper industries’ and doesn’t really distinguish between the paper and pulp industries (of course, as there are many integrates in Finland, this is maybe understandable). I am on the train right now, so I can’t provide other/more detailed statistics from my usual source, the Finnish Statistical yearbook of Forestry.

The gist of the article which I link to is that the Finnish government is in the process of finalizing its climate- and energy policy, to which the energy consumption of the pulp and paper industries is quite relevant, as it alone accounts for about 25% of total electricity consumption. The ‘news’ is that the estimate used by the governmental working group preparing the strategy is quite much higher than what the head of the Finnish Forest Research Institute (METLA) estimates. The difference in estimates is argued to relate to the differing visions of what happens to the paper industry in the near future.

This is by the way exactly where it is quite annoying that the use of different terms is confused, because at some point the article talks about the run-down of the Finnish pulp and paper industry, the ‘wild ride of the paper industry, an implied quote referring to the run-down of the forest industries and an expert from Pellervo Economic Research who refers only to the potential impact of change in the paper industry (in relation to electronic services). What are we talking about here?

 

I probably don’t have as good data as Professor Hetemäki, the Jaakko Pöyry Group or other business analysts, but this is my view: at the moment, the Finnish pulp and paper industries produce roughly 75% of their own energy needs, therefore buying the remaining 25% in the form of oil and electricity. I think (at least on the basis of what is said in this article) that any run-down of the forest industries in Finland will mostly concern non-specialized paper (i.e. LWC, SC, that sort of grade). There is demand for specialized paper products, and the continuing demand for pulp seems quite obvious. So, the run-down of the paper-business does present a huge potential decline in energy consumption, and on that I definitely agree with Professor Hetemäki. This also further opens up the potential for selling surplus electricity. But I think the article as a whole, as also exemplified by the quote of Matleena Kniivilä of Pellervo Economic Research, is that the structural change going on in the forest industries is being underestimated. Both Stora Enso and UPM-Kymmen have been actively rebranding themselves as energy companies, and their restructuring processes have started to show what this means. Here, UPM-Kymmene CEO Jussi Pesonen for example states

Pesonen said that the company’s growth businesses (energy, biofuels, pulp, label paper, label) had continued to perform well in a difficult environment.

So what we should be discussing, rather than the predicted use of electricity by the forest industries, is the potential for energy production, and to what extent the Finnish forest industries’ companies (mainly Stora Enso and UPM-Kymmene) are going to contribute to Finland’s energy challenges. Energy produced by the forest industries can be labeled renewable energy, so this area of growth will become more important in the future. The major forest industry companies have, as said in the article as well, stakes in various electricity producing companies. So I would say rather than what they use it is relevant to discuss what they produce, and what strategic implications this potential for electricity production has for the government’s energy policy.

After all – the Finnish forest industries’ companies have lobbied for years for new permits for nuclear power plants, for the stated reason of producing reliable, cheap’ electricity, but I still see a second motive here: to enable becoming active players on the electricity market – because if the companies use nuclear energy, what will they do with their home-produced electricity? Precisely: sell it.

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