Wednesday, November 16, 2011

Production as a by-product of government subsidies

Paper manufacturers can qualify for an "alternative fuels" subsidy by adding a little bit of diesel to black liquor soap, a by product of paper manufacturing, and then burn the mixture to make electricity. The subsidy is so valuable that paper has become a by-product of the subsidy:
“The problem for pulp producers is the tax credit encourages them to run at higher rates, which is putting pressure on already weak pulp prices,” said Mike Richmond, a paper and forest-products analyst at Salman Partners Inc., a Vancouver stock brokerage.

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