ABSTRACT
This chapter examines to what extent and how the Emissions Trading System (ETS) has influenced the climate strategies of major pulp and paper companies. It shows that although the European Union (EU) ETS has strengthened ongoing abatement efforts in the pulp and paper industry (PPI), emissions trading have had a rather limited effect on innovation activities in the industry thus far. Rising electricity prices are perceived to be the strongest influence of the EU ETS. Rising prices have led to strategic decisions to search for alternatives to being buyers on the deregulated electricity spot market. Electricity-intensive pulp and paper companies are showing greater interest in investing in power assets, on their own or in different constellations; in making bilateral agreements about long-term power contracts; and in engaging in other forms of energy contracting. The effect of the EU ETS is conditioned by various factors at the national and regional level, including access to biomass, electricity supply, and policy context.
