Lawmaker proposes $19M for ‘green energy’ mills

U.S. Rep. Mike Michaud introduced a House bill Wednesday that would grant federal energy tax credits worth $19 million annually to Maine biomass boilers such as the one that powers the East Millinocket paper mill at which he once worked.

Michaud’s bill would extend to biomass boilers used at mills and other industrial sites the 3-cent per kilowatt hour tax credit already given to wholesale biomass electricity producers that transmit power onto regional systems like the New England power grid.

“The bill’s intent is to equalize the treatment of all biomass producers, whether they sell electricity on the grid or use it more locally. It makes sense,” Michaud, D-Maine, said Wednesday. “I hope we can get it done next year.”

State and national forest products industry leaders and spokesmen hailed Michaud’s effort. Yet some doubted the bill would pass in 2009, given Congress’ preoccupation with a proposed $25 billion bailout of the automotive industry and the slumping economy.

“It will strengthen the industry,” said Patrick Strauch, executive director of the Maine Forest Products Council of Augusta, which represents about 300 industry businesses and associations.

“His bill also encourages renewable energy production at a time when there is growing support for clean energy and greater energy independence,” said Donna Harman, president of the American Forest & Paper Association in Washington.

In 2005, the forest products industry accounted for 82 percent of biomass energy generated by all industries, producing more that 28.5 million megawatt-hours of electricity — enough to power nearly 2.7 million homes for one year, AF&PA surveys have indicated. More recent estimates were not available.

Biomass usage precludes the consumption of more than 200 million barrels of oil annually, replacing energy that would otherwise be derived primarily from fossil fuel and other pollutants, Harman said.

Michaud said he crafted the bill with an eye toward the East Millinocket and Millinocket mills. The East Millinocket mill has had a biomass boiler for decades; the Millinocket mill, which burned 200,000 barrels of oil in 2007, will get one, if a partner is willing to operate it.

Since it was enacted in 1992 and amended in 2004, the tax credit helped wholesale biomass electricity providers to buy biomass — typically bark and other wood wastes — without aiding other biomass buyers such as his mill, said Keith Van Scotter, owner of Lincoln Paper and Tissue LLC.

“It was discriminatory,” Van Scotter said.

Previous legislative efforts to correct this and the law’s provision limiting the credit to energy sellers have failed, however.

“There are so many things going on in Washington right now. Everybody wants money,” Van Scotter said. “The issue that has prevented this from going forward before is the people at [the U.S. Treasury Department] saying that it’s too expensive. We can’t afford it.

“It’s a matter of economic priorities,” he said. “I would like to see it happen, but at this point I am not optimistic.”

Michaud introduced the bill now to give the incoming Obama administration and Congress something to work on immediately in January. “I know it’s not going to get done now,” he said.

“All throughout the presidential and congressional campaigns, people talked about creating a national energy program to get this country off its dependence on foreign oil, to create jobs and improve the economy,” Michaud said. “This falls into that category.”