September 20, 2024
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Energy bill delay hurts Maine biomass plants

WASHINGTON – The energy bill currently mired in Congress carries a relatively small, innocuous provision that would give a tax credit to certain biomass energy plants, including 11 in Maine.

The tax credit could help several of the plants in Maine stay open and reopen some of the nearly half that are currently idle.

Biomass proponents have lobbied Capitol Hill for the tax-law change for four years and have worked closely with Republican Sens. Olympia J. Snowe and Susan M. Collins, as well as Democratic Rep. Michael H. Michaud. The proponents finally got the provision added to the energy bill this year, but then the bill got bogged down in debate over an unrelated issue – the gas additive MTBE that is contaminating drinking water.

Democrats have engineered a successful filibuster, effectively setting up a situation where the energy bill can’t move forward through a final step in the Senate. Ironically, the bid to halt the bill was supported by Collins and Snowe, who have no gripe with biomass, but have taken a position against shielding the makers of MTBE from liability and against other elements of the bill they say would take the U.S. down the wrong energy path.

“We want them to change their minds, and vote to cut off the filibuster,” said Bob Cleaves, a consultant to Wheelabrator Sherman, a biomass facility in Aroostook County. “We want Sens. Collins and Snowe to allow the bill to be voted upon, up or down.”

Collins said she supports the tax credit for the biomass facilities and will work to come up with a way to handle the so-called production tax credit in separate legislation, though it might have to wait until next year. Snowe, who also backs the tax credit, was unavailable for comment.

Cleaves is working with Bill Carlson, chairman of the USA Biomass Power Producers Alliance, a Sacramento, Calif.-based organization that represents many of the biomass producers in the United States. After California, Maine ranks second in biomass production facilities, followed by Michigan and Florida. Few other states operate biomass facilities.

Carlson said the problem is that a decade-old tax credit that is currently available only benefits closed-loop biomass operations – those that both produce and consume the fuels used to generate power.

Since that law went into effect, no facility has operated a closed-loop system and taken the federal tax credit.

But several open-loop biomass plants have been launched, struggled, and in some cases, closed, because they were not eligible for the same credit.

In an open-loop system, the facility has to buy the fuel that it burns to generate power. Wheelabrator Sherman, for instance, must acquire wood chips and the other wood wastes that it burns to make power at its plant.

If approved, the current version of the tax credit would give a biomass producer 1.2 cents per kilowatt hour of energy generated. The company operating the plant could deduct that amount directly from federal taxes that were due.

For many plants in Maine, Carlson said, “that could amount to a third of their revenue.” Already, he said, since its peak in the 1990s, 40 percent of the industry has evaporated nationwide.

Wheelabrator consultant Cleaves added: “And if it is not approved, another 300 jobs in Maine are likely to be lost.”


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