Several Maine paper mills are using an obscure tax credit as an unofficial bailout. They’re adding a little diesel to a homemade energy source, a wood byproduct called “black liquor,” to qualify as blended biofuel, getting 50 cents on every gallon from the government.

The Androscoggin Mill in Jay got nearly $30 million from this credit in the first quarter of this year. The mill in Lincoln will get around $10 million this year, according to president Keith Van Scotter, who in the same breath calls these funds a “lifeline” during this economic downturn.

This practice has raised the ire of environmentalists and members of Congress, who view this as a corruption of the credit. The idea, they say, was to reduce industrial consumption of fossil fuels by encouraging mixture with biofuels — not the other way around.

Mill managers say they’ve done nothing wrong. The credit was available and they qualify according to the Internal Revenue Service. Don’t blame us for shortsighted legislation. It’s not a loophole in the law that allows this — it is the law.

Both sides are right. The mills shouldn’t claim they’re aligned with the intention of the tax credit, because to qualify, they must add diesel to black liquor. Adding a fossil fuel is not cutting its consumption.

Yet Congress is not blameless. Maybe federal lawmakers were hoodwinked or misdirected; it is possible. What is more likely is Congress didn’t think this one through.


The credit dates back to 2005, after all, when energy policy could be summed in four words: Throw Money at Ethanol. Biofuel subsidies were the rage, as the phrase “energy independence” started and stopped with swapping petro products for those grown from biological sources.

Worldviews and administrations have changed since then. The ethanol craze and its spiraling effect on food prices have shown its folly. Biofuels are an energy solution, not the energy solution. We, as a nation, must generate our energy from a variety of sources.

With this understanding should come, well, greater understanding. About the only thing Congress could do is cap future payments under the credit, but the precedent would be grim. The right action is to do nothing. The credit should be allowed to expire as planned on Dec. 31. Its estimated cost of perhaps $3 billion is steep, but it’s a mere fraction of the resources already allocated for the U.S. economy, including a $787 stimulus and trillions of anticipated debt.

It’s hard to say taxpayers should pay for congressional errors. But right now, it is harder to say a struggling industry, that’s done nothing wrong, should be denied its credit because it was unplanned, when other industries in the past months have received bailouts and subsidies with far less forethought.

Much about this tax credit was wrong — the thinking behind it, its drafting and its implementation. If Congress tries to make things “right,” it will only make things worse.

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