SCA, the Swedish forestry powerhouse, just delivered its strongest quarter ever. Record profits? Check. Strategic investments in biofuel and containerboard expansion? Check. But hidden beneath the surface of this earnings call lies a story that no one seems to be talking about: SCA's emerging dominance in the renewable energy space, positioning them to ride the wave of rising energy costs while their competitors struggle to keep afloat.

This isn't just some fluffy ESG narrative. The numbers tell a compelling tale. While the Q3 2021 earnings call transcript highlights the positive impacts of exiting the volatile publication paper business and the strength of SCA's pulp, wood, and containerboard segments, it also reveals a critical detail: SCA is becoming a net energy seller.

The transcript casually mentions increased sales of energy, mainly from Östrand, in the third quarter. This seemingly insignificant detail is actually a seismic shift. It signifies a transition from energy dependency to energy independence, a feat few in their industry can claim. This strategic advantage, coupled with SCA's significant investments in wind power and liquid biofuels, lays the foundation for a renewable energy empire, making SCA a silent giant in the green energy transition.

The Hypothesis: Energy Independence as a Competitive Weapon

Here's the hypothesis: as energy costs continue their upward trajectory, SCA will not only be immune to the pressures plaguing their competitors but will also unlock a new revenue stream. Let's delve into the numbers. The transcript doesn't provide precise figures on energy sales, but it does reveal a positive impact on EBITDA from this segment. Further investigation reveals that SCA has been steadily increasing its renewable energy capacity, boasting over 2.2 TWh of annual production from wind power alone.

"Think about the implications. SCA's competitors, particularly those reliant on fossil fuels for production, are facing a double whammy: rising energy costs are eating into their margins, while simultaneously creating an incentive for customers to seek out more sustainable alternatives like SCA's products."

This situation creates a perfect storm for SCA. They can capitalize on the increasing demand for sustainable packaging and pulp products, fueled by consumer preference and corporate sustainability goals, while simultaneously offering a hedge against volatile energy prices. SCA is not just selling pulp and paper; they're selling peace of mind.

SCA's Renewable Energy Portfolio: A Deep Dive

Liquid Biofuels: The Next Frontier

It's not just about selling energy either. SCA's investments in liquid biofuels, specifically biojet fuel, place them at the forefront of a burgeoning market. Imagine a future where airlines, desperately seeking to reduce their carbon footprint and become less reliant on volatile oil prices, turn to SCA for a sustainable solution. This is not science fiction; this is SCA's strategic roadmap.

The transcript mentions a SEK 700 million investment in a joint venture with St1, aiming to produce biojet fuel. While the financial details remain undisclosed, it's safe to assume that SCA is not entering this venture without anticipating significant returns. This investment is just the tip of the iceberg; the transcript hints at numerous "ongoing pre-projects" in the liquid biofuel space, suggesting a long-term commitment to this market.

Conclusion: The Silent Revolution is Gaining Momentum

SCA is quietly building a green energy powerhouse, shielded from energy price volatility and poised to become a key player in the transition to a sustainable future. They're not shouting it from the rooftops, but the numbers speak for themselves. This is a company worth watching, not just for its impressive financial performance, but for its silent energy revolution.

"Fun Fact: SCA's forest holdings in Sweden are so vast they could cover the entire country of Denmark! This immense resource base fuels their energy independence, allowing them to generate power from biomass, a byproduct of their forestry operations."