Norway's package of measures to deal with electricity situation may not benefit timber industry, says Treindustrien; under current plan, wood processors could fall outside new fixed-price agreement scheme and cannot use industrial power agreements

OSLO, Norway , October 7, 2022 (press release) –

The arrangement of the Government's package of measures for companies in the electricity situation may cause the timber industry to fall between two chairs. Companies risk falling outside the new fixed-price agreement scheme and cannot use industrial power agreements.

The Government pointed out today that the most important measure for predictability in the electricity situation going forward will be a better opportunity to enter into favourable fixed-price agreements. In the proposed regulatory changes to the tax regime that will facilitate this, it is proposed that activities in the production of lumber and goods of wood should not be included.

"It is crucial that the Government and the Ministry of Finance ensure that the timber industry also falls under the fixed-price agreement scheme. It is disastrous as the proposal from the Ministry of Finance now exists, says Heidi Finstad, CEO. in the Wood Industry.

The Ministry of Finance has pointed out that activities in the production of wood can get industrial power agreements, but this requires both a 7-year lock-in period and a very high electricity consumption. For many of the companies in the timber industry, such agreements are therefore not available or a real alternative.

"In other words, we risk that our companies will be left without offers of favourable long-term agreements, as the Government is planning for the power companies and electricity suppliers to offer businesses," says Finstad.

"This creates uncertainty that is completely unsustainable, as a result of increased electricity costs that both have a severe impact on operating costs and jeopardise the investments that are underway for a green industrial boost. The Ministry of Finance must urgently clarify that the tax changes for the fixed-price agreements will also apply to wood-based industry," says Finstad.

Nor does the arrangement of the electricity support scheme meet the needs of companies in the timber industry because raw material costs are so high. When the support scheme is based on electricity costs as a share of turnover, it does not affect the timber industry.

"By using other operating expenses in accordance with accounting legislation, the scheme would have affected the actual situation far better. Higher electricity costs are now having a severe impact on the bottom line of many companies in the timber industry. When suppliers are affected in this way, it also affects the construction industry indirectly," says Finstad.

Read our consultation response to the Ministry of Finance on resource rent tax and fixed-price agreements here