Tuesday, April 13, 2010

Grandson of Black Liquor: Congress Milks Another Pulp Byproduct for Bogus Savings

For the second time this year, Congress plans to “pay” for a new program partly by closing a non-existent loophole involving a pulp byproduct.

The House-passed version of the “Small Business and Infrastructure Jobs Tax Act of 2010” counts on nearly $1.9 billion in revenue from making crude tall oil ineligible for Cellulosic Biofuel Producer Credits (CBPC). As with the $23.6 billion Congress recently “saved” by closing the mythical Son of Black Liquor loophole, the crude tall oil savings are a mirage because the chemcial probably could not qualify for the credits anyway.

Crude tall oil starts as a substance skimmed off of black liquor at kraft pulp mills that use pine as their wood source. In theory, it can be burned as a fuel, but it is almost always refined into more valuable chemicals that are used in such products as soaps, inks, adhesives, lubricants, and rosin. (Yes, baseball and fiddle fans, that kind of rosin.)

The legislation, which has been referred to the Senate Finance Committee, states that “The term ‘cellulosic biofuel’ shall not include any processed fuel with an acid number greater than 25.” (Acid number, rather than pH, is the measure of acidity commonly used for oils.)

“The normal acid number for crude tall oil is between 100 and 175,” says an explanatory document from Congress’ Joint Committee on Taxation. “Since the acid number for crude tall oil exceeds 25, crude tall oil would no longer qualify for the credit under the provision.”

Current law already states that a substance must be approved by the EPA as a motor fuel or fuel additive to qualify for CBPC payments. Crude tall oil’s high sulphur content and acidity make it an unlikely candidate for such approval. There has been some testing of turning crude tall oil ingredients into motor fuels, but those would not be affected by the proposed legislation because of their lower acid numbers.

Note to Congress: If you want to look as if you are slapping the forest-products industry around while generating some savings for the federal government, you should know that turpentine, bark, branches, sawdust, and firewood are also cellulosic biofuels that the industry produces. None, of course, can qualify for CBPC, but that hasn’t stopped you before. If you pay me 1% of the estimated savings from closing these non-existent loopholes, I will reveal my true identity so that you know how to write out the check.

Question for horror-movie fans: If there is another loophole related to black liquor, whether real or imagined, what should the sequel to Grandson of Black Liquor be called? Maybe “Black Liquor Meets Godzilla”? (Or does that sound too much like Hideki Matsui following in the footsteps of Mickey Mantle?) A commenter suggested "Creature From the Black Liquor Lagoon": I love it!

For those not familiar with how the once-obscure pulp byproduct known as black liquor led to multibillion-dollar payouts to the pulp industry last year (the original black liquor tax credits) and a convenient source of funding for healthcare reform (Son of Black Liquor), these articles provide a quick chronology:

1 comment:

Papyrus said...

How about: "Creature from the Black Liquor Lagoon Part IV" !!