Finnish paper firms fear renewables reform-report

HELSINKI, April 16 (Reuters) - Finnish forestry companies UPM-Kymmene and Stora Enso fear that the government's plan to subsidise use of wood as a source of renewable energy will increase its price and serve another blow to the struggling industry. "If there is a fixed price for burning wood, it means that tax euros will be used to kill the pulp industry," UPM-Kymmene's Chief Executive Jussi Pesonen told Finnish economic magazine Talouselama on Friday.

He said it would be better to make products from wood such as biofuels than just burn it to generate energy. The government is in the coming weeks due to decide on financial support for energy plants using renewable sources, before deciding if and how many new nuclear reactors will be built in Finland, as it aims to slash CO2 emissions. The paper industry has for almost a decade struggled with low prices and overcapacity in global markets. UPM-Kymmene and Stora Enso have cut capacity and thousands of jobs in Finland during the past five years. But the industry still has a strong presence in the Nordic country.

"Nobody else but the society itself is killing the forestry industry in Finland," Juha Vanhainen, head of Stora Enso's Finnish operations, told the magazine.

"If one starts to prepare for a declining role for the forestry industry and channels more wood to the energy side, it will start a vicious cycle," he added. (Reporting by Terhi Kinnunen; Editing by Jon Loades-Carter)