April 16th, 2009

I’ll refrain from a strong temptation to weave several amusing references to the term “black liquor” and simply state that my preference in liquor tends more toward a golden color. Let’s define what it is and why it is important.

Black liquor is a byproduct of the papermaking process.

Pulp mills use caustic chemicals to boil wood which separates pulp from combustible chemicals in the wood. What is left after the pulp is removed is called black liquor, which is then refined and burned as an energy source in the mill. Nothing new about it; been going on for decades.

What IS new is that the US taxpayer is now subsidizing it through a loophole in the 2005 Highway Bill which was intended to encourage the use of alternative fuels in cars and trucks by crediting the excise tax when a taxpayer blended at least 0.1% of a taxable fuel (kerosene, diesel or gasoline) with the qualified alternative fuel.

This credit never applied to the paper industry, until the powerful paper lobby managed to get it applied to them in December 2007. What was estimated to be a $61 million cost to taxpayers could balloon to $10 BILLION according to Kevin Mason of Equity Research Associates. Just as maddening, mills must blend fossil fuels with the black liquor to be eligible for the credit.

Understandably, Canadian mills are crying foul, because the credit changes the economics of production, with the potential to cover perhaps 60% of pulp production costs.

We’ll leave those points to be debated by others, while focusing on this related issue:

This legislation is environmentally bankrupt. It discourages recycling.

Recycled corrugated is mechanically pulped and does not create the black liquor byproduct. The tax credit changes the economics of pulp production in favor of virgin pulp over recycled pulp.

The result: more trees cut down (aka carbon dioxide gatherers) more energy used, and more pollution created. This is going in the WRONG direction.

At least two U.S. containerboard mills recently switched from recycled corrugated to wood chips as their fiber source (source: Dead Tree Edition), with more on the way.

Commodity prices for recycled paper have crashed during the past year, (discussed in a previous blog “Freefalling Recycled Paper Prices“) raising fears that environmentally friendly practices driven by economics may falter. Ill conceived tax policy only adds (alternative) fuel to that fire.

Sound off about the environmental effect, or the other ramifications of this law by posting a comment below.

Tags: Carbon Sequestration, environment, green movement, paper recycling
Posted in Business |

Comments

One Response to “Black Liquor Bungling”

1. business lending Says:
   August 15th, 2010 at 2:20 am

   good site!

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