‘Black liquor’ measure fails in Md. House panel

A measure before the Maryland legislature to roll back payments to paper companies burning a pulping residue known as “black liquor” failed by one vote in a state House committee Friday.

The bill, which passed the Maryland Senate by a bipartisan 33 to 13 vote, fell short of the 12 votes needed in the Economic Matters Committee — even after the bill’s sponsors agreed to guarantee continuing subsidies for Luke Mill, the one Maryland paper mill that was receiving the black-liquor payments.

But an energetic lobbying campaign by labor unions and out-of-state paper companies helped defeat the measure, opening further a rift between environmental groups and the United Steelworkers. The union has recently been leaning toward support for the Keystone XL pipeline, despite earlier skepticism.

The black-liquor proposal had broad support among Maryland lawmakers seeking to correct unintended consequences of the state’s renewable portfolio standard, which was adopted in 2004. That standard set slowly rising floors for renewable energy use by Maryland utilities. It said utilities without their own renewable energy sources must buy credits from companies generating power with renewable energy.

But while many lawmakers expected those funds to go to new solar and wind projects, the bulk of the payments have ended up going to the Luke paper mill in western Maryland and six paper companies in other states burning black liquor, a practice that has been used since the 1930s. The measure defeated Friday would have cut those payments.

Environmental activists vowed to try again next year.

“A year delay in passing the bill is another year that Maryland ratepayers are going to be shoveling money toward old polluting paper mills that don’t need our help when that same amount of money could be spent on clean renewable energy in and around Maryland and could create new jobs,” said James McGarry, a policy analyst at Chesapeake Climate Action Network.

But the United Steelworkers, which has been part of the Blue Green Alliance, took a stand in favor of the paper mills. “This is really a simple question about whether biomass should qualify as a renewable energy source,” Jon Geenen, international vice president in charge of the union’s paper sector, said in a recent interview. “I don’t think you can narrow this down to wind and solar. Our big pending question is about dependency on foreign energy. You can’t limit yourself to one or two categories and say this is the solution.”

Geenen added that the paper industry “gets a bad rap because it’s a smokestack industry, but it is a model that other people should be looking at.”

Though the amount of money flowing to the paper mills under Maryland’s renewable electricity standards has been modest, Maryland is one of 29 states with such standards. Moreover, the Power Plant Research Program of the Maryland Department of Natural Resources forecasts that prices of renewable energy credits could increase this year to a level several times that of 2011, the most recent year for which prices are available.

The USW position on black liquor comes at a time when the USW has been wavering on its position on the Keystone XL pipeline. Leo W. Gerard, president of the United Steelworkers, said he would back the pipeline as long as the steel used to make the pipes was produced domestically. But TransCanada has long since ordered and warehoused steel pipe for the project, with at least half of it coming from Canada and elsewhere.

The USW hailed President Obama’s decision to delay the permit decision in 2012, but recently the AFL-CIO has indicated that it supported pipeline construction as part of a broader infrastructure program.

Steven Mufson covers energy and other financial news.
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