We are committed to reducing our greenhouse gas (GHG) emissions by increasing energy efficiency at our manufacturing sites and in the distribution of our finished products. This is one of the focal points of our Vision 2010 program.

Our emissions are calculated using factors endorsed by the U.S. Environmental Protection Agency Climate Leaders Partnership and based on the World Business Council for Sustainable Development/World Resources Institute Greenhouse Gas Protocol. Mills participating in the European Union Emissions Trading Scheme use its approved factors.

We have a system in place to calculate and track carbon dioxide equivalent (CO2-e) emissions from fossil fuels consumed on-site as well as purchased electricity. We also track emissions from distributing finished product in the U.S., leased vehicles and corporate aircraft flights. We track our absolute GHG emissions and emission intensity (per metric ton of production).

GHG emissions from manufacturing decreased from 1.29 tons of CO₂-e per unit of production in 2005 to 1.25 in 2007, a 3.1 percent reduction.

U.K. Climate Change Agreement (CCA) and the European Union Emissions Trading Scheme (E.U. ETS)

In 2007, our U.K. facilities continued to participate in the government-led Climate Change Agreement for reducing industry GHG emissions. Participating mills have contributed to the U.K. paper sector meeting its CO₂ reduction targets, entitling them to claim a discount on the Climate Change Levy (a U.K. tax on business energy use).

Our European sites again complied with the mandatory E.U. ETS program. Each facility received an allowance of carbon credits based on its past emissions. Facilities with excess credits can sell them back to the market. If actual annual CO₂ emissions exceed the credits granted, additional credits must be purchased. We ended 2007 and Phase I of the ETS with approximately 38,000 excess credits, approximately 6 percent of our total credits.

Phase II began on January 1, 2008 and will run for five years. It is mandatory for all our tissue mills in the E.U., including those in the U.K. Due to the oversupply of carbon credits in Phase I, allowances have been reduced in Phase II. However, we anticipate that our facilities will receive sufficient credits to cover their emissions.