AF&PA Statement on the Alternative Fuel Mixture Tax Credit
Release Date: 05-23-2009Attributable to Scott Milburn, AF&PA Spokesman:
"As a bipartisan group of U.S. Senators and the United Steelworkers, Carpenters, and Machinists unions have said, maintaining this tax credit is about saving clean energy jobs and recognizing the green attributes of an industry that is a leader in renewable energy. The tax credit supports clean energy generation at a critical time as our nation seeks to increase its current supply of renewable energy in the face of the most difficult economic picture in 70 years. Revoking the forest products industry’s eligibility for the tax credit before it expires later this year, despite the industry’s efforts to comply with the rules, could have serious consequences for our companies and our nearly one million employees at a time of unprecedented economic challenges.”
MYTHS VERSUS THE FACTS
MYTH: “By mixing black liquor with diesel, the paper companies end up creating a fuel that burns more fossil fuel than they would have done by using the black liquor substance on its own, thus creating the opposite effect which the legislation was intended to achieve.”
FACT: The law requires alternative fuels to be mixed with gasoline, diesel or kerosene as a condition of eligibility for the credit. Many mills already use multiple fuel sources, including diesel, natural gas, or fuel oil. These fuels may be used to light boilers and regulate combustion. In many mill configurations, companies are able to displace fossil fuel in other parts of their process which results in no net increase in fossil fuel use at a facility. Any fossil fuel amounts that are added are minimal compared to the significant amounts of energy that papermakers generate from carbon-neutral renewable biomass.
MYTH: “The tax credit provides significant incentive for U.S. kraft chemical producers to overproduce pulp at a time when producers around the world are operating at significantly reduced capacity-utilization levels as result of the economic downturn.”
FACT: Year-over-year U.S production is down by approximately 18 percent, exports are down by approximately 20 percent. These statistics demonstrate that the claim of trade distortion from the tax credit is unfounded.
MYTH: “The credits amount to actionable subsidies and that any adverse effects caused by them could be subject to remedies in the WTO or through domestic countervailing duty investigations.”
FACT: The tax credit is not a prohibited subsidy under WTO rules because it is not designed to incentivize exports nor replace imports. Furthermore, it is not specific to a fuel, enterprise or industry, as evidenced by fish and vegetable oil qualifying, and its use by animal rendering and meat processing facilities.
FACTS ABOUT RENEWABLE ENERGY AND THE PAPER INDUSTRY
For More Information:Scott Milburn
(202) 463-2466
scott_milburn@afandpa.org |