• Mar 30, 2010
Buried in the health car reform legislation is a mention of a paper-making byproduct known as "black liquor." This substance, a wood-pulping byproduct, is utilized as a biofuel to generate electricity for paper-making companies throughout the U.S. Up until now, companies utilizing this black substance could claim a hefty tax credit related to the use of biofuels for production purposes.
The credits were granted in part due to the recycling nature of utilizing this "black liquor" as a means to reduce from-the-grid electrical consumption. However, the health care reform bills aims to change all of that. Black liquor has nothing to do with health care, but provisions in the bill will eliminate the associated tax credits completely.

Why eliminate the credits to companies doing the right thing by recycling their own byproducts? Its simple math. The credits account for a significant amount of spending on behalf of the U.S. government and government spending is one of the primary concerns that many politicians have over the health care reform bill. Eliminate spending from the bill here and there and many politicians become more accepting of the bill.

UPDATE: As it turns out, this "black liquor" legislation is complicated stuff, as is virtually all legislation coming from the government. Here's a breakdown of the legislation and possible "loophole" fix contained in the health care bill. The Internal Revenue Service made black liquor qualify for an alternative fuel credit when mixed with diesel and used to power paper plants. The IRS paid out some $7 billion in credits in 2009, but the alternative fuel credit came to a halt in December of last year. Now the health care bill has closed a potential "loophole" that some believe never existed to begin with. The loophole could have allowed paper companies to claim another credit termed a cellulosic producer biofuel credit. The IRS believed that paper companies could potentially qualify for this credit, but the Environmental Protection Agency disagrees. So, in conclusion, the new health care reform bill closed a black liquor loophole credit that may have never existed to begin with.

[Source: Green Car Advisor | Image: Chemrec - C.C. License 2.0]


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