Paper Industry Uses Loophole to Suck Billions from Taxpayers

Sunday, April 05, 2009
Black Liquor

What’s the easiest way to make a cool $8 billion this year? Take one part “black liquor,” add a dash of diesel fuel, and voila! In no time you’ll be receiving a fat check from the IRS—if you’re the paper industry, that is. Here’s how it works. In 2005 Congress approved an omnibus transportation bill that included an alternative fuel tax credit that rewarded companies for using fuels produced from biomass or ethanol. A provision of the tax credit allowed those blending alternative fuels with diesel to also reap the benefits of the fifty-cent-a-gallon credit. Enter the owners of paper mills, who use their own plant-based fuel derivative, known as “black liquor,” which comes out of processing trees into paper. Leaders of International Paper and other companies realized that if they added some diesel to their black liquor at their paper mills, they qualified for the tax credit even though the diesel was completely unnecessary. So far Congress hasn’t made any moves to close the loophole and save the U.S. treasury billions of dollars.

-Noel Brinkerhoff
Pulp Nonfiction (by Christopher Hayes, The Nation)


Gigi 15 years ago
$8 billion doesn't come close to the retooling costs to meet govt-sponsored standards for producing recycled stock, nor what the mills have lost in forest lands that can no longer be used commercially. Most mills are in the red, shutting down capacity, and pondering producing biofuels, not paper.
Caitlin 15 years ago
That is the total for all mills operated by the US's 10 largest paper companies, which is a lot of mills. The IRS and the EPA signed off on each mill participating. Mills only started doing this in 2008, and the addition of diesel has increased recovery boiler efficiency and paid workers, you fart.

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