The law of unintended consequences strikes again. This time unscrupulous bean counters in the paper industry are using a loophole in a 2005 alternative fuel tax credit law to turn red ink into black. The paper industry is already the third largest emitter of greenhouse gases and now it's even worse. The alternative fuel tax credit was meant to encourage blending alternative fuels with gasoline or diesel. Doing so would earn the blender $0.50 per gallon back from the IRS.
The paper industry uses one of its own by-products, a lignin rich sludge called "black liquor" as a fuel for heating the wood chips and separating the fibers. The industry, until recently, only used the black liquor but when someone realized they could get the tax credit, International Paper and other companies started blending in diesel. The diesel isn't needed, it's only there to get the government money. The tax credit could earn the paper industry $8 billion this year, turning it from loss to profit if something is not done to eliminate it. Thanks to Bill for the tip!

[Source: The Nation]

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