Black Liquor and Unintended Consequences

If you’ve not had a chance to read about the alternative fuels rules (particularly with reference to the subsidy given to those who use such fuels in blended form with others) this piece in the Wall Street Journal lays out the details:

Back in 2005, Congress passed a highway bill. In its wisdom, it created a subsidy that gave some entities a 50-cents-a-gallon tax credit for blending “alternative” fuels with traditional fossil fuels. The law restricted which businesses could apply and limited the credit to use of fuel in motor vehicles.

Not long after, some members of Congress got to wondering if they couldn’t tweak this credit in a way that would benefit specific home-state industries. In 2007, Congress expanded the types of alternative fuels that counted for the credit, while also allowing “non-mobile” entities to apply. This meant that Alaskan fish-processing facilities, for instance, which run their boilers off fish oil, might now also claim the credit.

What Congress apparently didn’t consider was every other industry that might qualify. Turns out the paper industry has long used something called the “kraft” process to make paper. One byproduct is a sludge called “black liquor,” which the industry has used for decades to fuel its plants. Black liquor is cost-effective, makes plants nearly self-sufficient, and, most importantly (at least for this story), definitely falls under Congress’s definition of an “alternative fuel.”

It only gets more interesting as the story unfolds.