Senate jobs plan seeks $24 billion from closing ‘black liquor’ loophole

The draft bipartisan jobs package that Senate Finance Committee leaders unveiled Thursday would raise an estimated $24 billon over a decade by preventing paper companies from claiming a lucrative renewable fuels credit.

Lawmakers don’t want the credits applied to “black liquor,” a byproduct of wood pulping that is used as an energy source at paper mills.

From the Finance Committee summary:

Cellulosic Biofuels Loophole. The provision would modify the $1.01 per gallon cellulosic biofuel producer credit to exclude fuels with significant water, sediment, or ash content, such as black liquor.  The provision would exclude from the definition of cellulosic biofuel any fuels that (1) are more than four percent (according to weight) water and sediment in any combination, or (2) have an ash content of more than one percent (according to weight).  The provision would be effective for fuel sold or used after date of enactment. This proposal is estimated to raise $24 billion over ten years.

The bill, a version of which leaked earlier this week, also includes several other energy-related tax provisions, such as an extension of tax credits that aid biodiesel producers and incentives for building energy-efficient homes.

A Senate vote is not expected until after next week’s President’s Day recess.