Correction:
An earlier version of this story included a photo from a paper mill near Port Angeles Harbor in Port Angeles, Wash. That plant, a recycling facility, does not generate the paper-making byproduct known as “black liquor” or use it to generate power.
W hen Maryland and the District set floors requiring electric utilities to use increasing amounts of renewable energy, environmentalists cheered the prospect of money going to new solar and wind projects.
But today, several years after the legislation went into effect, it has had an unexpected outcome.
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The paper industry has been able to claim billions in tax credits for burning a byproduct of the pulping process.
Paper companies thwart Congress's will with the help of the IRS.
Thanks to a wrinkle in the definition of renewable, the lion’s share of the money used to meet those standards is flowing to paper companies that burn “black liquor,” a byproduct of the wood-pulping process. Paper mills have been using black liquor to generate most of their power needs since the 1930s.
Environmentalists are up in arms over what they see as a perversion of the intent of the law. Instead of encouraging new clean technology, they say, it is rewarding an old practice that emits as much carbon dioxide as burning coal.
“When the renewable portfolio standard first passed, it was unknown how much [black liquor] would get into it,” said Mike Tidwell, head of the Chesapeake Climate Action Network, who appeared smiling in a photo of the signing ceremony when the measure first became law. “It turned out to be a lot, and it’s time for it to come out.” He added, “It’s time for Maryland to stop contributing to that rip-off. Black liquor is the pink slime of energy in this state.”
But lobbyists for the paper companies say that black liquor should be treated the same as any other biofuel.
“It’s biomass. If you don’t burn it, you put it in a landfill or throw it in the ocean,” said Bill Pitcher, who, as a lobbyist for the Luke mill in western Maryland, helped negotiate the language in the bill. “It’s not a pollution thing. It’s an energy thing.”
The dispute echoes an earlier fight in Congress over black liquor. In 2009 and 2010, the country’s largest paper companies were able to get black liquor qualified as an “alternative fuel” and the Treasury ended up paying out several billion dollars to some of the country’s biggest paper companies. International Paper alone received $1.7 billion in cash in 2009 from the refundable tax credit, which expired at the end of that year. Paper companies later collected more federal tax breaks for biofuels, another provision that ended.
The amounts of money at stake in state renewable portfolio laws are tiny by comparison. But paper companies have managed to take advantage of renewable energy laws in many states around the country, and Maryland and District electricity rate-payers are effectively funneling several million dollars a year to paper companies that burn black liquor.
Maryland’s complex renewable energy law, adopted in 2005, requires utilities to buy certain minimum percentages of their electricity from renewable sources, starting at 2 percent and rising to 20 percent by 2020. Utilities can meet those minimums, or quotas, by buying electric power from renewable sources or by buying credits from companies that generate power from renewable sources.
The D.C. version of the law, known as renewable portfolio standard law, is virtually identical.
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