MeadWestvaco announced its second quarter report to shareholders this week, and shareholders received a boost from US taxpayers thanks to the black liquor tax credit loophole, which pays 50 cents/gallon for burning qualifying, "alternative fuels." The IRS has been allowing paper companies to claim the tax credit under a 2007 loophole added to a 2005 highway transportation bill by former Alaska Senator Ted Stevens to bring US taxpayer aide to the fish processing industry.
Conservation groups disagree with the structure of this industry aid for its exclusion of recycled and groundwood mills, putting those generally more environmentally preferable at a market disadvantage. Only chemical, or "kraft," mills in the US qualify for the money. The groups also contend that when the tax credit expires later this year, jobs will still be lost because we have not invested in necessary recycling and energy efficiency infrastructure to compete in a low carbon economy. The current policy, made by loophole, results in overproduction, suppressed prices, trade disputes, and temporarily rising stock value. As an alternative, conservation groups support federal investment to create green jobs in recycled fiber collection and re-manufacturing in North America and energy efficient technology upgrades to existing mills.
Excluding a $112 million benefit for the use of alternative fuels and restructuring charges of $25 million, profit was 22 cents per share, topping the analysts' average expectation of 1 cent, according to Reuters Estimates.
In other company news, MeadWestvaco Consumer and Office Supplies recently earned Forest Stewardship Council "Chain of Custody" certification. A good first step, and hopefully the first of many steps through to improving management in the forest and the footprint of their entire operations. The Paper Planet will follow and report on how this "Chain of Custody" certification does or does not lead to changes in product lines and in the forest, and look forward to more good progress to come from MeadWestvaco.