Several large paper mills around the country are taking advantage of a biofuel tax credit that could send the recycling industry into a tailspin. The tax credit was initially designed to help spur biofuel usage in the transportation industry but was expanded last year to include other industries.
Virgin paper mills in the US have been using a byproduct known in the industry as 'black liquor' to fire their boilers for decades. At a virgin paper mill the wood chips are boiled to separate the fiber for milling. All the leftover components: sap, resin, dirt, etc becomes black liquor. A crafty accountant at one of the mills discovered that if they add diesel fuel to the black liquor before burning it, they can qualify for the biofuel tax credit. The credit gives the mills $.50 per gallon used and if it is not stopped, it is could cost the US tax payers between 4-6 billion by the end of ’09.
In short, the mills are being given financial incentive to cut down more trees for chips and burn diesel fuel that they otherwise would not have burned. Lots of people are up in arms about this and are fighting to close the loophole by October ’09. Articles and letters to the editor have appeared in newspapers across the country. Jerry Powell, the Executive Editor of Resource Recycling, wrote an excellent article in the May publication and had this editorial placed in the Oregonian.
The paper recycling industry depends on mills using recovered fiber rather than virgin wood chips. Most mills these days have the ability to run 100% recovered fiber. However, the more incentive mills get to use virgin materials the harder it will be to convince them to use recovered fiber. If we do not close this loophole, it will be impossible for the recycling industry to stay afloat.
Senator Max Baucus from Montana and Senator Chuck Grassley from Iowa have started a push to stop the credit as soon as possible. Please take some time to do more research on this subject and if you are so inclined, send a letter to your Senator to let him/her know where you stand on the issue.
