Black Liquor Credits Still Flowing

Black liquor has been a hot topic and meant big bucks to the paper industry since 2007. And when we talk about “big bucks,” we mean big—as in billions of dollars. That’s with a “b!”

Let’s take a step back and look at how this whole thing works.

In 2003, a paper from The Center for Paper Business and Industry Studies discussed the value of black liquor as a fuel source. Black liquor is left when pulpwood is digested to free the cellulose fibers so those fibers can be used in papermaking.

The organic content in the fluid—almost half the energy content of the wood—is enough that it can be used as a low-grade fuel. According to Kevin Mason of Equity Research Associates, in bleached Kraft pulp production, an average North American mill produces between 1.6 to 1.8 tons of black liquor solids for every ton of pulp. He goes on to say that the solids typically make up 73 percent of black liquor. The result is two to three tons of black liquor for every ton of pulp.

International Paper’s approximate annual Kraft pulp capacity is 11 million tons and it earned about $2.1 billion from the original black liquor tax credit. At 50¢ per gallon, that equals 4.2 billion gallons—or nearly 400 gallons per ton.

This fuel source is nothing new; pulp mills have used black liquor as an energy source since the 1930s. Paper mills produce, on average, 66 percent of their own electricity needs on-site.

A tax credit in 2005 that rewarded the use of liquid alternative fuel derived from bio-mass in the transportation sector was expanded in 2007 to include “non-mobile” uses and the pulp and paper companies saw their opportunity. By switching from the natural gas they were mixing with the black liquor to adding gasoline, kerosene or diesel, as required by law, the “waste fuel” that had been used for close to 70 years suddenly became qualified for billions of dollars of bio-fuel tax credits.

A business adviser and problem solver, Gail is managing director of Business Strategies Etc., which provides strategic marketing and business planning services and manages the execution of marketing communications tactics that help companies:
• Define their sustainability strategies,
• Deliver a positive, sustainable image,
• Gain credibility, trust and respect, and
• Measure the results of their green initiatives and actions.

Gail is a nationally recognized speaker on a wide range of subjects and brings enthusiasm and a unique blend of experience to the podium. As an industry analyst and journalist contributing to publications in the United States, Canada, India and Brazil, she has covered a number of beats, particularly sustainability in printing and mailing, print on demand, variable data printing and direct mail.
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