By Matt Elhardt, Fisher International
In December 2015, the Chinese government issued its second “red alert” warning as smog levels reached ever-increasing dangerous levels. Indeed, some areas of Shenyang reached particulate levels 56 times the threshold considered safe by the World Health Organization. (i) In the same month, world leaders met in Paris to discuss climate change, ultimately settling on an agreement-in-principle to lower greenhouse gas emissions. The agreement calls on countries to reduce their output of carbon “as soon as possible” (ii) with each country tasked to publish and maintain carbon targets. It appears to many observers that the global community is marching (with greater urgency?) towards getting serious about carbon management. This article will touch on how efforts to reduce energy consumption might impact GHG emissions the global pulp and paper industry by region, and how analysts, with the right data and tools, can evaluate the possible disruption of regulation.
Imagine how such an exogenous change could suddenly change the dynamics of this marketplace. One need look no further than the U.S./Canadian newsprint markets to see just how disruptive a shock can be (in that case, foreign exchange). Such upheavals pose risks for some mills and opportunities for others. The same is certainly true for many suppliers. The question then is, how will the industry’s participants position themselves to take the most advantage of the prospect of tightening carbon policies worldwide? Since every mill and every supplier has a different set of assets and a different starting point, the question is an interesting and complex one. We at Fisher look forward to helping the industry navigate the challenge.
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