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Papermakers Seek Renewable Energy Credit

By Mike Obel, Associated Press

March 26, 2009 - U.S. paper makers [March 24] asked Congress for the same credits for making renewable energy that it is considering giving utilities as part of a new mandate that utilities make more electricity from renewable sources.

Numerous bills calling for a so-called renewable electricity standard, or RES, are pending before House and Senate committees.

Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee, has introduced legislation now pending in his committee that would create a 20 percent RES by 2021. Hearings on his bill could begin as early as next week.

RES proposals would require power generators to produce a certain percent of their electricity from renewable sources like sunlight, wind and biomass, which includes wood chips, sawdust and bark, rather than coal or petroleum. That would increase demand for biomass and thus its cost.

In recognition that not all utilities will be able to meet the new regulations, Congress is expected to allow utilities to buy renewable energy from wind, solar or biomass producers in the form of credits.

However, the paper industry uses biomass to make its products as well as to generate electricity for its facilities, and excess power generated by them is sold on to the local or regional power grid.

The prospect of sharply higher biomass prices comes at a difficult time for the paper industry, said Donna Harman, president of the American Forest & Paper Association. The industry, which currently buys biomass to generate power for 2.7 million homes, has had to cut 190,000 jobs since 2006, she said.

Getting a renewable energy credit provision, which can be traded, in a federal RES "will level the playing field between forest products manufacturers that use wood fiber as a raw material and energy source and generators of new renewable energy," she told meeting participants.

Not getting a renewable energy credit provision could be devastating, she said.

"You can't take for granted the forest products industry if a public policy is put in place that disadvantages existing renewable energy producers on behalf of creating new renewable energy capacity," Harman said.

The head of P.H. Glatfelter Co., a major, York, Pa.-based producer of specialized papers, attended a meeting of the association in New York and said getting a renewable energy credit in a federal RES "is critical to the paper industry."

"Don't penalize companies that have built their infrastructures
around biomass." — George H. Glatfelter II.

George H. Glatfelter II said his company has a "major revenue stream at one of our U.S. facilities that runs off biomass and generates excess power that we sell back into the electricity grid. If regulations that are promulgated don't recognize what the industry is already doing from a biomass perspective and only encourages new biomass or renewable power generation capacity, then that will drive up the cost of biomass, which would hit us hard."

"Don't penalize companies that have built their infrastructures around biomass."

Harman said a renewable energy credit provision, which can be traded, in a federal RES "will level the playing field between forest products manufacturers that use wood fiber as a raw material and energy source and generators of new renewable energy."

SOURCE: Associated Press




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