“Black Liquor” Helps Polluters and Hurts the Economy

In order to lower carbon emissions, the 2005 Transportation bill provides a $1/gallon subsidy to companies that reduce their use of fossil fuels. For example, mixing ethanol with gasoline reduces the amount of fossil fuels used, which in turn reduces carbon emissions. Paper companies have found a loophole in the law that allows them to increase their fossil fuel use, increase their carbon emissions, and still get the $1/gal subsidy.

For over fifty years, paper companies have been burning the organic and chemical byproduct of the pulping process, “black liquor,” as fuel to power their mills. Since black liquor is not a fossil fuel, paper companies must add diesel fuel to the mixture in order to be eligible for the subsidy. By doing so, the paper companies have increased their carbon emissions and received billions in tax payer dollars for their polluting ways.

A paper industry insider who goes by the nom de guerre “D. Eadward Tree” and posts to the Dead Tree Edition blog, reports that more than $4.7 billion tax-payer dollars have been awarded to paper companies that have increased their greenhouse gas emissions through the first three quarters of this year. The total cost to tax-payers is on track to be between $6-8 billion before the end of the year, dramatically exceeding the $61 million estimate for the credit. While the loophole is scheduled to close at the end of this year, U.S. Representative Steve Kagen has introduced H.R. 4066 that would continue the tax credits in perpetuity.

So let’s recap: the federal government is financially rewarding paper companies with billions of tax dollars for a decades-old practice that hurts the economy and the climate.

One repercussion of this is that by giving tax breaks to polluters, the government is disadvantaging environmentally friendly paper mills. Producing pulp from recovered paper doesn’t use as many chemicals as virgin fiber production, nor does it have the same type of organic matter waste, therefore it does not produce black liquor and has no byproduct to burn that would allow for the tax break. This polluter subsidy puts recycled paper manufacturers at a financial disadvantage and threatens the jobs of workers at mills like the Catalyst mill in Arizona, the FutureMark Paper Company mill in Illinois, and the Cascades mill in Maine.

Which leads us to the obvious question: what can a paper purchaser do about this? The easiest way that you can fight back against this perverse misuse of public funds is to ask your paper supplier if they support the black liquor tax loophole and encourage them oppose it. You can also purchase recycled paper, which sends a strong message of demand to the mills to increase recycled paper production, or participate on the www.BetterPaper.org website to receive more environmental paper information like this. (Joining the site is free and focuses primarily on magazine grade paper.)

Imagine the impact of a $4.7 billion subsidy to build the recycled paper manufacturing infrastructure. How many jobs could be created? How much would the price of recycled paper drop? What reduction of chemical use and greenhouse gas emissions could we achieve? Wouldn’t it be more appropriate for the government to provide subsidies to the recycled paper manufacturing industries that tangibly reduce impacts on our climate and environment while driving innovation and creating jobs?

It was unfortunate that the government created this loophole, and they showed poor judgment by not closing it immediately. Will any of the pulp and paper manufacturers currently taking advantage of the tax-payer funded subsidy set themselves above the rest by advocating an end to the handout? Don’t hold your breath. That is why Congress must act definitively, and act soon. You can encourage Congress to take action and you should support recycled paper mills that are authentically and verifiably reducing their carbon emissions.

Additional Black Liqour reading:
1. Washington Post
2. Bloomberg.com
3. New York Times
4. The Paper Planet blog
5. Dead Tree Edition

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Tags: economics, environment


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