Sen. Olympia Snowe urged Congress today to keep in place the alternative fuel tax credit for the paper mill industry.  The tax credit, designed to encourage companies to reduce their dependence on fossil fuels, has been a windfall for paper mills which already operated using an bio-fuel byproduct of the pulp-making process.

The tax credit is available only to companies that use a blend of fossil fuels and bio-fuels. After the credit was passed, paper companies discovered they would also be eligible if they added small amounts of diesel fuel to the “black liquor” they used to power the mills.

Because of the paper companies’ participation in the program, the cost of the program is expected to rise from the initial projection of $61 million to more than $3 billion.

Snowe called for the credit to remain in effect through 2009, citing the amount of money already spent in the economic stimulus package to create jobs. “We have spent $789 billion on an economic stimulus package because we rightly decided it must be our national public policy to save and create at least 3 million jobs,” Snowe said.

Snowe said that the paper industry has lost $2.1 billion in the fourth quarter of 2008 alone, and 44 paper mills have announced temporary closings.