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.
In the fine print, the laws say that “mill residue” is a “qualifying biomass” to be counted as a renewable energy source. That means paper mills that burn black liquor to run their operations can simultaneously make money selling renewable-energy credits to utility companies.
Although the amount of money at stake is small now, some experts say that payments could grow tenfold or more in the next few years.
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Many environmental activists want the law revised to plug what they see as a gaping loophole, and Maryland Sen. Robert J. Garagiola (D-Montgomery) and Del. John A. Olszewski (D-Baltimore County) have been working on a fix.
“This situation is undesirable both because the energy from these sources is not significantly cleaner than that from the burning of fossil fuels, and because the facilities that supply these credits were all in existence for years before the law was enacted, with the result that purchase of credits from these sources is not encouraging investment in new more efficient renewable energy facilities,” said Maryland Assistant Attorney General Kathryn M. Rowe in a Jan. 3 letter to Olszewski.
A complicated system
A bill to change the law has 13 co-sponsors in the Maryland House, including a majority of the Economic Matters Committee, which has scheduled a hearing March 7. The Senate Finance Committee has a hearing scheduled March 5. The District hasn’t yet drafted a new measure.
The Maryland changes would immediately curtail benefits for all but two of the seven paper mills that have benefitted from the program. The Luke mill, which employs 860 people, is the only one located in Maryland. The revised law would phase out benefits for the Luke mill and a mill in Covington, Va., in 2018. Given that assurance, Luke mill manager Richard J. Watro said in a letter that the company “does not intend to oppose” the bill.
The revised law would alter a complicated system that has two levels — or tiers — of requirements, with the first including wind and solar. The second, lower-priority category, includes hydroelectric power. But the top category also includes a grab bag of other sources, including methane from landfills, ocean tidal projects and “qualifying biomass.”
“Our industry is an important part of the renewable energy story, which 22 other states in the country recognize by qualifying our biomass-based energy in their Renewable Portfolio Standards or goals,” said Jessica McFaul, a spokesman for the American Forest and Paper Association.
But the share of renewable-energy credits going to paper companies is much higher in Maryland and the District than in other states. In Maryland in 2010, paper mills burning black liquor provided 42.8 percent of credits used to meet the tier-one requirements, according to a report by the state. And 58 percent of the new credits purchased to meet future standards came from those paper mills.
In 2011, a third of the credits used to meet the top category’s standards came from black liquor.
In the District, 70 percent of the credits in 2010 and 42 percent in 2011 used to meet tier-one renewable standards came from black liquor operations.
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