Black liquor tax credit,
Definition of Black liquor tax credit:
Black liquor tax credit is an informal name for the repercussion of black liquor, the biomass byproduct of wood pulp production, becoming eligible for the Alternative Fuel Mixture Credit (AFMC) for corporations. The AFMC was designed to encourage development and use of alternative fuels created out of biomass by giving tax credits for companies who used a mixture of traditional fuels and biomass. Paper companies immediately began exploiting a loophole in the law by taking the black liquor biomass they already had and mixing it with diesel fuel. This mixture qualified under the rules of the credit, although in practice it was the exact opposite process the credit was intended to promote.
Black liquor tax credit is a term coined by the forest-products industry to describe an abusive subsidy scheme within the industry. Black liquor is a byproduct of creating wood pulp and is used as fuel. As part of the Energy Policy Act of 2005, the U.S. government created a tax credit called the Alternative Fuel Mixture Credit (AFMC), which was designed to encourage companies to use biofuels by mixing them with fossil fuels. An extension of the bill in 2007 created a loophole in which paper companies, who were already using the biofuel black liquor, did the reverse of what the bill intended, adding diesel to their black liquor to qualify for tax credits. It is estimated that the forestry industry has received billions of dollars in tax credits through the black liquor tax credit scheme.
A federal tax credit which was intended to promote the use of bio fuel but had the opposite effect. Black liquor, a byproduct of making wood pulp, has long been used in the forest products industry as a bio fuel. In 2005, the federal government began offering tax credits to companies that used mixtures of bio fuel and fossil fuels. Some companies in the forest products industry began adding diesel fuel to black liquor to take advantage of the tax credits. The companies were abiding by the letter of the law, but they were using less bio fuel, not more.
Meaning of Black liquor tax credit & Black liquor tax credit Definition