Pulp & paper, farmers, power companies unsure of impact of BCAP on biomass prices

In Illinois, power producers and pulp & paper companies are among those struggling to predict the impact of a new program that will pay up to $45 per ton in government subsidies forf biomass sold to power generators beginning in January.  The Biomass Crop Assistance Program is expected to be a windfall for saw mills and forest landowners – and may drop prices from the current $80-per ton levels – but pulp & paper companies are facing huge new competition for forest biomass — and are expected to lose a windfall in black liquor tax credits.

In a program reminiscent of the biodiesel “splash and dash” tax credit, pulp & paper companies have been adding trace amounts of  diesel to black liquor, and claiming a 50-cent per gallon excise tax credit – a pure payout, rather than a credit against taxes owed. The loophole is expected to close.

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