Emissions Trading Scheme Ramifications
07-07-2008
Whilst it is too early to know the Government final decision for the Emissions Trading Scheme (ETS), or the likely details of Cap and Trade, it will inevitably have a negative impact for a struggling paper manufacturer like Australian Paper (AP), whose share price is already under pressure at $1.69.  Government is sniffing the additional tax benefits and how they will generously pass back a percentage to some manufacturers and voters, but will ETS be the final nail in a mature industry which is already in decline in developed countries?
 
Australian Paper's largest competitors of any quality papers in China, Indonesia and Thailand will not face Cap penalties or abatement costs, which still remain undefined in Australia, and are not required before 2012 under Kyoto.  AP is already adversely affected with a strong and possibly over valued Australian Dollar, and any competitive advantage in ocean freight may be offset with increasing pulp prices due to higher freight costs which AP are still required to import.
 
Paperlinx Office may be overly influenced by their distribution chain.  Their UK merchant group achievements with Yo Yo.com (Copy Paper) could be duplicated and improved for Australia.
 
The industry seems obsessed with E - Mass and FSC which are all forest stewardship and do zero for keeping paper out of landfill which combines with wood and food to create Methane gas.  Hopefully the PIAA can influence paper manufacturers that extended responsibility can arrest paper consumption decline.