Expiring Tax Credits Imperil America’s Booming Biomass Industry


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Power plants that burn wood and plant materials for electricity account for more than 50 percent of America’s renewable energy. But that could change.

Federal tax credits that are keeping 100-plus "biomass" facilities afloat are set to expire at the end of 2009.

If the tax credits are not renewed, it will have "catastrophic consequences to our industry," said Bob Cleaves, president and CEO of the Biomass Power Association (BPS), during a news conference.

Who knew? Apparently not Congress. Which is why BPA has launched a $250,000 public relations campaign to raise the profile of biomass in Washington as an alternative to fossil fuels and help "level the playing field" with wind and solar this year.

BPA’s gripe is not just with the expiration of the tax incentives, but with the amount of them.

Biomass power receives a production tax credit at only half the rate of wind, solar and other renewable energy technologies. And yet, it is already a mainstay of energy production in the U.S.

Burning waste provides some 2 percent of the nation’s energy, according to Department of Energy estimates. That’s not a huge percentage, but it’s all relative, of course. Wind provides just over 1.5 percent of U.S. electricity generation, while solar accounts for less than 1 percent.

The DOE projects that the potential for biomass could grow to 15 percent by 2020.

Is it worth it? Yes, argues BPA, for two reasons: climate protection and jobs.

Biomass is a carbon neutral power source (sometimes it’s carbon negative). The process begins with organic matter, usually timber and agricultural leftovers that have to be dumped anyway, and at considerable cost. Producers prepare the waste as fuel, and then use it to generate clean power.

Burning biomass isn’t exactly emissions free, but organic material is part of the carbon cycle. Meaning, if the waste were to decay naturally, the same amount of global warming pollution would be spewed back into the atmosphere, mainly as methane, a greenhouse gas that is 25 times more potent than CO2.

Burning coal, on the contrary, releases new emissions that never would be cast loose if the coal were left in the ground.

BPA contends that biomass is a potential green-jobs engine in job-starved rural America. This is particularly true in the Southeast, where trees are plentiful but wind and sun are not, making power generation from these clean sources impractical.

In fact, for Cleaves, the BPA campaign "is all about jobs."

"We can talk all day long about the science of climate, but in the end and in particularly in 2009, at a time when it’s relevant to the American people, the issue is: Is this an investment in our economic future?"

Another biomass bonus is that it’s one of the few renewable energy technologies that is not intermittent. It’s 24-7 power, like coal. Which is precisely why blending it into an existing plant’s coal feed is now seen as an effective way to cut emissions from the nation’s coal generators.

Adding biomass could even get utilities to wean themselves off the dirty energy source.

Such "biomass cofiring," is indeed attractive. Installation costs are low relative to competing technologies. No new transmission lines, freight trains or sources of water supply are needed.

There is a potential downside, though. Opponents claim that cofiring could extend the economic viability of aging coal plants while diluting support for alternatives like solar and geothermal. Many say that if transforming a plant to burn biomass, best to do it 100 percent.

But whether that’s possible – if biomass is truly scalable and sustainable in the long term – is also debatable. Biomass is, indeed, a biofuel, and talk of planting mass crops to get burned up to produce electricity in utility-scale plants raises concerns over destructive land- and water-use practices. Expanding the use of biomass from forest products, as opposed to crops, also raises concerns that it could open the door to more logging at the same time. BPA’s members include some large timber and lumber companies.

For its part, Cleaves says BPA isn’t too focused on massive growth but on the survival of its existing plants. Here’s what it wants:

  • Tax equity, or parity, in the production tax credit.
  • Extension of these tax credits to existing biomass power facilities for an additional five years.

Like most renewable energy trade groups, it’s also urging a stronger Renewable Energy Standard (RES) in America’s potential future climate law, the American Clean Energy and Security Act (ACES), which passed the U.S. House in June and is now under debate in the U.S. Senate.

"We believe that Congress should pass a robust Renewable Energy Standard. But what they did in Markey-Waxman falls far short of what they should do in order to really move the needle in terms of renewable energy," said Cleaves.

It’s a David and Goliath battle for biomass. These days, a quarter of a million dollars is peanuts in the D.C. energy lobbying game. Just consider the dirty energy interests. In just the first three months of 2009 alone, they spent some $80 million lobbying Congress.

"We’re completely outspent by very entrenched fossil-fuel based energy interests who, for a very long time, have had their voice on Capitol Hill," said Cleaves.

The organization represents about 80 biomass plants in 20 states, which have a combined capacity of 2,500 MW. For contrast, big coal boasts over 300,000 MW.

Still, Cleaves has hope. This is the story of "the little engine that could," he said.


See also:

Biochar and George Monbiot’s Misguided Rant

Forests Caught in Tug-of-War Over Biofuel Rules