For the second time this year, Congress plans to “pay” for a new program partly by closing a non-existent loophole involving a pulp byproduct.
The House-passed version of the “Small Business and Infrastructure Jobs Tax Act of 2010” counts on nearly $1.9 billion in revenue from making crude tall oil ineligible for Cellulosic Biofuel Producer Credits (CBPC). As with the $23.6 billion Congress recently “saved” by closing the mythical Son of Black Liquor loophole, the crude tall oil savings are a mirage because the chemcial probably could not qualify for the credits anyway.
Crude tall oil starts as a substance skimmed off of black liquor at kraft pulp mills that use pine as their wood source. In theory, it can be burned as a fuel, but it is almost always refined into more valuable chemicals that are used in such products as soaps, inks, adhesives, lubricants, and rosin. (Yes, baseball and fiddle fans, that kind of rosin.)
The legislation, which has been referred to the Senate Finance Committee, states that “The term ‘cellulosic biofuel’ shall not include any processed fuel with an acid number greater than 25.” (Acid number, rather than pH, is the measure of acidity commonly used for oils.)
“The normal acid number for crude tall oil is between 100 and 175,” says an explanatory document from Congress’ Joint Committee on Taxation. “Since the acid number for crude tall oil exceeds 25, crude tall oil would no longer qualify for the credit under the provision.”
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