Lawmakers bristle at mill manager’s new stance on ‘black liquor’

A month ago, the manager of Luke paper mill in western Maryland pledged in writing to remain neutral on a bill in the state legislature that would curtail renewable energy payments to mills burning a residue called “black liquor.”

This week, he changed his mind.

The flip-flop irked key Maryland lawmakers, but the Luke mill manager was just one of a parade of people from the American Forest and Paper Association, the United Steelworkers and Dominion Resources who opposed the bill in hearings in Annapolis on Tuesday and Thursday.

The biggest surprise was the opposition of Luke mill manager Richard J. Watro, who on Feb. 4 had written a letter to two lawmakers who wanted to reduce payments to paper mills under a renewable-energy law adopted in 2004. Watro said that “Luke Paper Co. does not intend to oppose a bill to redefine ‘qualifying biomass’ ” in the new law.

“In all my years in the legislature, I’ve never had an agreement hammered out to the extent we had one hammered out,” said Del. John A. Olszewski Jr. (D-Baltimore County), a sponsor of the bill. He said the state was planning to help the mill with taxes and energy savings. “They walked away from the bill, and the chips are going to fall where they’re going to fall now,” Olszewski said.

Mike Tidwell, director of Chesapeake Climate Action Network, said Luke mill’s parent company, NewPage, was pressured by the industry group. He said, “It’s basically a Maryland company that had struck a deal on what’s best for Maryland now being told to back out of it.”

The issue is complicated. Maryland adopted a renewable-energy standard in 2004. It set quotas for renewable energy that utilities would have to buy. Those quotas are rising steadily through 2020. Utilities can buy renewable energy or credits from other companies using renewable energy.

Many Maryland lawmakers expected that payments would go to solar and wind projects. But in 2011, the most recent year studied, nearly half of Maryland’s payments went to paper mills that have been burning a pulp residue called black liquor since the 1930s. Critics cried foul, saying that burning black liquor was neither new nor particularly clean. But the payments were allowed under the law’s definition of “qualifying biomass.”

The new law would limit payments to plants built after the law took effect in 2005 and to biomass that meets an efficiency level of 65 percent.

But the road to passage grew complicated this week. The American Forest and Paper Association said the bill would raise costs for consumers. Greg Harvey, president of USW Local 676, said the 800 jobs at the Luke mill would be endangered, even though 85 percent of the renewable payments for black liquor in 2011 went to seven mills outside the state and Luke’s benefits would be phased out. Dominion complained that its new biomass facilities in Virginia wouldn’t be able to meet the new efficiency test.

Steven Mufson covers energy and other financial news.
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