Södra Cell pulp mill in Tofte, Norway, to receive 100M Norwegian kroner in state environmental aid, enabling mill to replace use of fossil fuels with self-produced bioenergy, increase electricity production to be sold on power exchange

BELGIUM , April 20, 2012 (press release) – The Authority has today adopted a decision approving environmental aid to Södra Cell Tofte (“SCT”) AS under the Norwegian Energy Fund Scheme[1]. SCT will receive NOK 100 million (approximately EUR 12.8 million) and the measure therefore had to be notified to the Authority for a detailed assessment under the State Aid Guidelines for Environmental Protection.

SCT is a leading producer of bleached sulphate pulp. The aid will enable SCT to replace the use of fossil fuels with self produced bio energy, and thus eliminate the use of conventional energy. The aid measure will also somewhat increase SCT's electricity production; the excess electricity will be sold on the power exchange Nord Pool Spot.

The Authority has examined the aid measure on the basis of the Energy Fund scheme and the State Aid Guidelines for Environmental Protection. The Guidelines allow for state support to environmental objectives where, on balance, the environmental benefits of such support outweigh the potential distortions of competition. In particular, support to renewable energy production may be granted to compensate for high investment costs.

The Authority has found that the positive effect of increasing renewable energy production outweighs the limited effect on trade and competition. The aid is proportional as it is limited to the amount necessary to trigger the investment. The aid also provides an incentive effect since the project would not be commercially viable without the aid. Finally, the market power of the aid recipient is limited and hence the structures of the relevant markets are unlikely to be altered by the grant of the aid.

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