Paper and wood products mills could soon receive a 1-2 cent per kWH tax credit for the electricity that they produce from biomass. Since 1986, the Internal Revenue Code has provided tax credits for companies that produce electricity and sell it to the grid. Companies that produce electricity for on-site use have not been eligible for the credit.
What’s changed? Congressman Mike Michaud of Maine introduced H.R. 7390, which would broaden the tax credit to include companies that use cogeneration to power their own facilities. The American Forest & Paper Association (AF&PA) supports the measure. AF&PA President and CEO Donna Harman released the following statement: “The forest products industry is the nation’s leading industrial producer of renewable energy with paper mills generating 64 percent of their own energy, and wood products mills generating 74 percent. Unfortunately, the forest products industry does not receive the same favorable tax consideration as other industrial renewable energy producers because we use a large portion of our energy in-house instead of selling it all to the grid. Congressman Michaud’s bill fixes this imbalance by ensuring that Congress’ previously-passed renewable energy tax incentives benefit facilities that generate their own energy from biomass. This important change will help encourage greater use of renewable energy as Congress originally intended.”
Once introduced, the bill was referred to the House Ways and Means Committee. Former Senator Elizabeth Dole introduced an identical bill in the Senate in October 2008; it was referred to the Finance Committee for discussion. Due to the need for finance-related committees to focus on issues in the broader economy for at least the short term, neither body has scheduled discussions on the bills at this time.
Suz-Anne Kinney
Forest2Market: July 14, 2023
