Friday, April 17, 2009

Paper companies use creative interpretation of transportation bill to land $8 billion in subsidies

Check this out -- this The Nation article explains how the largest paper companies in the U.S. are reaping enormous profits from subsidies not intended for them. And they're doing it by using more petroleum products, not less.

Through a perfectly serviceable interpretation of a subsidy written into a Bush-era transportation bill (intended to encourage use of alternative fuels like Biodiesel), paper companies have become more profitable than possibly any time in their existence. The trick to being eligible for this subsidy is -- they add some diesel to their "black liquor" which is burned to provide power to their factories.

Black liquor is already a by-product of the paper making process, and already is used as a fuel source for the plants -- a great practice. In fact, upwards of 70% of their power can be provided by using their own by-product. But to qualify for this subsidy, standard petroleum fuels must be present.

As insidious as it sounds, it's still kinda legit. I mean -- this process of using black liquor as fuel to create energy for the plant, even though it's been around a long time, is a good re-use of an industrial by-product. It's great that a business is being rewarded for right-practices. However, using extra diesel to do it sucks, and the amount of money they're being awarded is surely way over the top as well.

It's almost guaranteed that the loophole/interpretation will be sewn up in some way, some time soon, but in the meanwhile stocks for these companies are looking good.

Enjoy seeing how damned inventive humans can be when money is at stake,


[via Micah, random image of German pulp mill via Wiki commons]

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