The Green Eyeshade Boys, by Jim Petersen

Jim Petersen's article on International Paper's position relative to woody biomass from federal timberlands draws response from IP

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The Green Eyeshade Boys
By: Jim Petersen, Co-founder and Executive Director, the non-profit Evergreen Foundation

Rebuttal: By Richard J. Shaw Director of Fiber Supply and Global Sourcing International Paper

International Paper is one of the oldest paper companies in the United States. Founded in 1898 with the merger of 17 pulp and paper companies in the Northeast, it is today the largest pulp and paper manufacturer in the world.

It is also one of the most callous and hypocritical in its complete disregard for the ecological health of publicly owned federal forest lands. The reasons why in a moment.

International Paper was once one of the most admired forest products manufacturers on earth. In its heyday, the company made about 60 percent of the newsprint used in the United States. It grew through acquisition, eventually gobbling up several other widely respected companies including Hammermill Paper Company, Union Camp Corporation and Champion International Paper

I got acquainted with IP in Oregon in 1988, two years after we published our first issue of Evergreen. They donated the coated paper stock for two issues of our magazine, a doubly generous act considering the fact that we had not asked for the donation.

IP eventually sold its lands in western Oregon and southwest Washington. To this day, I don't know why. There is no better place on earth to grow Douglas-fir than in the coastal rain shadow of the Pacific Northwest.

But IP had changed. Gone were the days when it was run by foresters and mill men who were closely tied to the mainly rural communities in which they lived and worked. Now the company is run by what a friend and IP shareholder calls "the green eyeshade boys," lawyers and bean counters whose only goal is to look good on Wall Street.

To some extent this is understandable. Wall Street is to companies like International Paper what oxygen is to a drowning man. But it is Wall Street that has mercilessly driven the nation's vertically integrated forest products companies over a cliff - and it was Wall Street that decided that timberland was "a non-performing asset" that had no place in the go-go world of quarterly reports and whisper numbers in the trading pits.

The result of this smoke and mirrors routine is that only one publicly traded forest product company in the United States - Weyerhaeuser - still owns timberland. The rest have sold their timberlands to real estate investment trusts that get more favorable tax treatment from Uncle Sam than did the old vertically integrated companies. Why they do is a mystery to me; but then federal tax policy is a mystery to me too.

All of this brings me to my reason for wanting to push International Paper over a cliff. Sometime in the not too distant past it clandestinely crawled into bed with the Natural Resources Defense Council as part of a quiet lobbying effort designed to make sure that federal biomass is excluded from the renewable energy standard in the new energy bill now winding its way through the House of Representatives.

NRDC's opposition to including federal biomass in the new energy standard is easy to understand. The organization loves to hate the forest products industry. No surprise here.

But International Paper?

It turns out that IP - among other pulp and paper producers - is scared silly over the possibility that having federal biomass in the marketplace will drive up pulpwood prices in the Southeast. They should have thought about this before they bought into Wall Street's goofy idea about timberland being a no-performing asset.

But what do Southeast pulp prices have to do western biomass? Nothing really, except that IP executives got sucked into the whole "sustainability" debate that NRDC has been peddling for years. Gee whiz, if private landowners in the Southeast can charge more for their pulp - because biomass producers might want to pay more for it - doesn't that mean the federal government will want to "chop down all trees out West."

Hell no, it doesn't mean that it all.

In the South, it means that biomass producers might be willing to pay landowners a buck or two more for their pulpwood than IP is willing to pay. We call this competition, and so far as I know, it's still pretty much a bedrock idea in our economic system.

As for the West, it means there might finally be a viable market for the lowest quality wood in our federal forests - the very deadwood that plays host to insects and diseases and fuels disastrous forest fires.

If I could take International Paper's executive wing to the proverbial woodshed, I would. Intentionally or not, what the company is saying via it's cadre of Washington lobbyists is that their profitability is more important than the country's national forests. I don't buy it and I don't think most Americans would either if they knew what was going on in the private offices of House members who will decide the fate of our national forests..

I went on to IP's website to have a closer look at their hypocrisy. Here's how the company defines sustainability in its own words:

Caring for the environment and our business

Caring for present and future needs

Continuing to use resources wisely

Creating a smaller footprint

I would think that a company as sophisticated as International Paper would aspire to the same goals for the public's forest land. But I would be wrong. Because if they cared their lobbyists would be crawling the congressional hallways beating the drum for including federal biomass in the new energy standard.

Here's my question: why isn't the pulp and paper industry leading the biomass-to-energy charge? Somewhere I read recently that it isn't all that difficult to convert these old mills to power plants. I'm no engineer, but if converting these factories from energy consumers to energy producers is cost effective, why isn't anyone doing it?

The answer may be that no one down in the Beltway fever swamps has correctly read the handwriting on the wall. In 2005 and 2006, IP sold 6 million acres of timberland it owned here in the United States. Then in 2008 it paid a whopping $6 billion for Weyerhaeuser's North American packaging, recycling and containerboard operations. Then the global economy tanked, and with it the stock price of every publicly traded pulp and paper producer, including IP. No wonder the company is worried about southern pulp prices.

Increasingly, the pulp and paper industry is deploying its investment capital in South America, where pulp trees reach harvestable size in five to seven years and paper mills are often located in the middle of plantations, not 60 or 70 miles away. Were I in the pulp and paper business I'd want to be there too. (Remember competition?)

But I'd also like to think I'd be honest enough to publicly admit that I was headed for more profitable pastures for reasons having to do with my fiduciary responsibility to my shareholders. And I sure as hell wouldn't embarrass myself by crawling into bed with the Natural Resources Defense Council.

If the House and Senate vote to exclude federal biomass from the new energy standard they will also sign the death warrant for somewhere between 60 and 80 million acres of federal forest land that are in desperate need of some tender loving care. Removing dead and dying trees that host insect and disease infestations - and eventually wildfire - is the first step in a very long process of renewal that needs to start immediately.

Why is this so hard to understand? The problem and its solution are both plainly visible in every western national forest: trees crowded so close to one another that they cannot get the sunlight, soil nutrients or moisture they needed to survive. Unless we thin these forests they are going to die and burn in wildfires like none we've ever before seen. This is not rocket science. It isn't even debatable among fire ecologists who are most familiar with the deplorable state of western federal forests.

IP's green eyeshade boys need to immediately remove themselves from this ridiculous debate. The company - not its lobbyists - needs to tell Congress they support including federal biomass in the energy standard. If they're worried about pulpwood prices in the South, fine, say it, but they ought not to be dragging federal lands in the West into the debate to cover their tracks.

There is not a rural western community that is near a forest that would not benefit both economically and environmentally from including federal biomass in the new standard. I can see a small biomass-fueled power plant in every community that had or still has a sawmill. I can see local loggers - most of them now unemployed - doing the clean up work in our forests (it will take decades). And I can see renewable woody biomass contributing to our nation's growing energy need.

This seems like such a no-brainer to me. We clean up our forests, reduce the risk of habitat-destroying wildfires, protect our watersheds, improve the quality of our forests and take a bite out of the billions of tons of carbon and methane these god-awful wildfires spew into our atmosphere. And isn't improving air quality by reducing carbon dioxide levels supposed to be the major goal in the new energy standard Congress is considering?

REBUTTAL

IP Does Not Oppose Federal Woody Biomass

By Richard J. Shaw
Director of Fiber Supply and Global Sourcing
International Paper

Sometimes rumors take on a life of their own. This was demonstrated in a recent article in Timber Harvesting & Wood Fiber Operations which alleged that IP is opposed to using biomass from federal lands for renewable energy, and furthermore, that IP worked behind the scenes with the Natural Resources Defense Council (NRDC) to exclude biomass from federal lands in the definition of renewable biomass. The allegations in that article couldnt have been more incorrect, and we appreciate the opportunity to set the record straight with an audience that includes our respected suppliers, colleagues and long-time friends:

IP supports including biomass from federal lands in the renewable biomass definition. In fact, IP has strongly advocated for a biomass definition that includes both private and public lands.

IP has not been lobbying federal biomass issues in conjunction with the NRDC. Our support of a broad definition of biomass including both private and public forests is in direct conflict with NRDCs support for a narrow definition.

IP supports woody biomass being developed under sustainable forest management practices. As the nation moves toward more energy from renewable sources, IP supports a broad biomass definition but also believes its important to manage Americas forests sustainably. We have suggested that any legislation creating demand for fiber must also consider if the total fiber demand placed on forests aligns with their ability to grow it. To keep Americas forests healthy, it is also important that underutilized forests both private and public are managed to their full potential and allowed to contribute biomass to the growing demand for fiber.

IP is concerned about unintended consequences from government policies promoting bioenergy and biofuels. The proposed government standard for renewable electricity, the cellulosic biofuel tax credit, and mandates in the Renewable Fuels Standard collectively have the potential to increase demand for wood fiber in some regions beyond the ability of the land to produce it. IP believes renewable energy targets should be based on sound science and periodically reviewed for modification. We also believe that government efforts to promote sustainability must respect landowner rights and not restrict their ability or that of wood suppliers to compete in all fiber markets.

IP believes that the existing forest products industry and the economic benefit it provides to landowners, communities, suppliers and employees are important. As the government
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establishes renewable energy incentives and mandates, there must be careful consideration for the consequences of those policies on existing industries. Unlike other renewable energy sources (wind, solar, geothermal), woody biomass is not only a source of energy, but an essential raw material for the forest products industry. Renewable energy policies that reduce our ability to compete fairly for raw materials and remain competitive in global markets can yield unintended consequences for landowners, communities, suppliers, and employees.

IP believes renewable energy incentives and mandates must treat existing renewable power generation equally with newly created energy generation. IP produces more than 70% of the power needed for our U.S. mills through efficient combined heat and power plants that run on renewable biomass. IP did not push for incentives and mandates for new renewable energy to be created, but believes there must be a level playing field which doesnt have government picking winners and losers.

As we move into a new energy world, International Paper is doing its part to increase its energy efficiency and reduce fossil fuel use. We value the contributions from renewable biomass and understand that woody biomass will be an increasing part of our nations renewable mix in the coming years. Striking the right balance will be important. IP is committed to working toward legislation with a broad biomass definition that includes biomass from public and private lands, addresses sustainable management of working forests, respects the rights of landowners and wood suppliers, and ensures that existing industries receive equal treatment and eligibility for renewable energy incentives and credits.

Finally, we want to thank Jim Petersen and the non-profit Evergreen Foundation for extending to us the opportunity to share our views directly with the visitors to evergreenmagazine.com

Additional Information

Category: Forestry>Biomass Energy

Region: Montana

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