Paper industry abuses alt-fuel tax credit to get some green and waste fuel
The law of unintended consequences strikes again. This time unscrupulous bean counters in the paper industry are using a loophole in a 2005 alternative fuel tax credit law to turn red ink into black. The paper industry is already the third largest emitter of greenhouse gases and now it's even worse. The alternative fuel tax credit was meant to encourage blending alternative fuels with gasoline or diesel. Doing so would earn the blender $0.50 per gallon back from the IRS. The paper industry uses one of its own by-products, a lignin rich sludge called "black liquor" as a fuel for heating the wood chips and separating the fibers. The industry, until recently, only used the black liquor but when someone realized they could get the tax credit, International Paper and other companies started blending in diesel. The diesel isn't needed, it's only there to get the government money. The tax credit could earn the paper industry $8 billion this year, turning it from loss to profit if something is not done to eliminate it. Thanks to Bill for the tip!
[Source: The Nation]
Reader Comments (Page 1 of 1)
Tim 1:37PM (4/07/2009)
If a fool and his money are soon parted, what about a fool with somebody else's money?
Liberal statists and their big gov't central planning SUCKS!
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OMSmedia 1:49PM (4/07/2009)
'The diesel isn't needed, it's only there to get the government money.'
Much like putting ethanol in petrol.
There is no requirement to publish the pro's and cons here, i realize that. But the 'it's only' is an opinion with no facts to back it up. Whats the generation cost of 'Black Liquor' is it less than Diesel costs?...more? Does mixing them lower or raise operating costs? (other than the credit of course....which of course...DOES LOWER OPERATING COSTS)
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PabloKoh 2:08PM (4/07/2009)
I was under the impression that blending ethanol into gasoline helped reduce air pollution in big cities.
Scorch 2:19PM (4/07/2009)
Burning it is obviously cheaper than having to pay to dispose of it so that obviously lowers operating costs. I'm sure the tax break is just the icing on the cake.
Rich 9:34AM (4/08/2009)
Pablo: no, you're thinking of biodiesel. Ethanol only exists as a fuel because it's "renewable". It's more polluting than gasoline; even more so when you consider the whole lifecycle. It's biodiesel's ugly step-sister.
I too would like more details about the paper industry's practices before slamming them for taking a tax credit. It could be better for the environment.
Gordio 2:08PM (4/07/2009)
That sucks. Why would this law allow black sludge? The law should have explicitly listed what alternative fuels are acceptable.
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bill 2:15PM (4/07/2009)
Dont worry about this "Black Liquor" as its called. It is the "juice" left over from digesting the wood into pulp. It is burned to heat the next process, along with the bark. It is not an enviro problem. In fact they generate almost all of their own energy. Its just called Black Liquor since....its black.
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paulwesterberg 2:26PM (4/07/2009)
This is bush/conservative/corporatist policy that was designed to funnel government money to sketchy business practices like spraying diesel fuel on coal before burning it.
This is greenwashed policy that was bought and paid for by corporate lobbyists.
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Tim 5:14PM (4/07/2009)
Two out of 3 is not bad. Yes, it was Bush, and yes, it was Corporatism but it was NOT truly conservative because it was Statist central planning from the NeoCon-Fascists and Democrat-Socialists that created this mess.
A TRUE conservative would have nothing to do with this BS!
You can learn what TRUE conservatives believe in here:
http://www.campaignforliberty.com/
We don't like redistribution or (un)Wel(not)fair of ANY kind, socialist or corporatist and we definitely don't like gov’t central planning or Washington bureaucrats screwing up our lives with Corporatism (pandering to corporations) or democrat-Socialism.
"A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine." -Thomas Jefferson
We ARE a Representative Republic where each person has their own individual (not collective) rights.
Gordio 5:25PM (4/07/2009)
Tim:
"You can learn what TRUE conservatives believe in here"
http://en.wikipedia.org/wiki/No_true_Scotsman
I don't care what "true" conservative does. What matters is what they *really* do.
Tim 8:12AM (4/08/2009)
Gordio; (learn first, them comment)
There is a difference between a Constitutional Conservative and NeoCon.
http://en.wikipedia.org/wiki/Neocon
"Neoconservatism is a political philosophy that emerged in the United States. Its key distinction is in international affairs, where it espouses an interventionist approach that seeks to defend what neo-conservatives deem as national interests. In addition, unlike traditional conservatives, neoconservatives are comfortable with a minimally-bureaucratic welfare state; and, while generally supportive of free markets, they are willing to interfere for overriding social purposes." [See Statist]
Now you know WHY there is no REAL difference between the 2 parties today.
Rich 9:42AM (4/08/2009)
Tim: I thought "trickle down" was a conservative principle?
Well, given that the rich sods who the poorest are supposed to be trickled down upon from don't exactly do a lot of trickling, taxation of the richest coupled with social welfare is the only way their wealth can trickle down.
Maybe if there was a little more voluntary trickling, you wouldn't need so-called "socialist" ideas to get people out of the gutter where they've been so firmly planted?
No, welfare and social reform are not the sole domain of the left.
jimgee 2:41PM (4/07/2009)
Congratulation to the "unscrupulous bean counters". They out smarted the fools that are making the rules. I think these "unscrupulous bean counters" deserve a raise.
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eliot 5:42PM (4/07/2009)
This is not cool. Somebody mentioned "Much like putting ethanol in petrol." I am under the impression that the ethanol was added as an MBTE substitute. MBTE being highly toxic and a carcenogen, where as ethanol is not toxic does not cause cancer and is actually drinkable in moderation (moonshine) though I wouldnt recommended, it tastes awful and will get you drunk off your ass right quick.
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Tohe 10:39PM (4/07/2009)
Buy a Kindle : )
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John Rowell 10:41PM (4/07/2009)
That makes me sick =.=
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Matthew 8:45AM (4/08/2009)
If the diesel isn't needed, what do they do with the surplus black sludge (that goes unused as a result of using some diesel in its place)? I would think that the cost of the diesel would be about equal to the rebate? I suppose they add only a tiny amount, much the same as spraying diesel on coal. Great I just answered my own question.
The best way to send a message to bureaucrats is to outsmart them. Nice one.
Someone made a comment about being more explicite about the types of fuels elegible. This would not be such a great idea because many bio fuels are yet to be conceived. We don't want to stop scientists from being creative. So the bureaucrats got that much right.
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afg350ci 9:00AM (4/08/2009)
To jimgee:
Hell yeah!
To OMSmedia:
Excellent points. Facts and logic are the only way to make a valid argument, however, they seem to be on the endangered list as of late.
To all you socialists, communists, etc. that are always trying to dictate how people should live their lives, don't complain if someone is profitting from a rule that you supported. I generally don't get involved the crap that you people send back and forth on this site, but this is ridiculous. You cannot punish people for being successful. That is UNAMERICAN. If I were you, I'd be more outraged at the hypocracy of the Washington and Hollywood elitist that waste their time and ours spewing propaganda about conserving enery by putting air in your tires and buying flourescent bulbs, but then keep their multi-million dollar homes lit up all night, warm all winter, and cool all summer. How much of difference is your 2 or 3 bedroom house making? Or your 1 car? Really? Do as I say, not as I do. That's their philosophy.
I applaud the bean counters find creative ways of earning money in a recession. If the government thinks it's so bad, then they should give them the same credit for using the pure "black liquor" in lieu of the blend. They would happily switch back to avoid having to buy the diesel.
Just my two cents.
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Caitlin 12:01PM (4/08/2009)
I'm tired of seeing that Nation article passed around like gospel, because it leaves some things out, including a lot of the better consequences of this.
First, although the bill was initially passed as a transportation bill in 2005, the 2006 addendum includes examples of other uses, like mixes in furnaces and boilers, which includes the recovery boilers used in kraft process papermaking, explicitly stated or not. Paper mills have only been involved since late 2008, when IP and Verso were approved by the IRS to start burning in their mills. Other companies have started up since in 2009.
The kraft process has been around since the 1870s and is the predominant pulping process the world over essentially because of black liquor. But while black liquor does provide for extremely efficient chemical recovery and quite a bit of energy for paper mills, it isn't perfect. Chemicals need to be added to make up for the loss in each cycle, and mills do need to purchase power. The added diesel, while only a very small amount (at least 0.1% by volume of black liquor, which mills involved are skirting as close to as possible), has had the effect of helping to stabilize combusion, increasing the Btu value of fuel used in the recovery boiler, and ultimately increasing that boiler's efficiency, reducing purchased power at many mills. So far, it seems to be a good addition to the process.
Beyond that, the companies that actually stand to benefit the most from this aren't the big companies with other ailing industries to support (like building materials), but independent mills. In all cases, this money is being used to keep mills afloat and pay workers. A lot of bad things have been happening lately with the economy the way it is; there have been large layoffs and permanent mill closings, effectively collapsing more than one small town's economy. There were reservations within mills in the industry as to whether this was the right thing to do, and ultimately it was more important to keep mills running and keep people employed.
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