Biomass program could net $150M for Maine suppliers

Posted Feb. 04, 2010, at 8:26 p.m.

AUGUSTA, Maine — Farmers and woodland owners in Maine can benefit from a new federal subsidy program that Gov. John Baldacci says will pump about $150 million into the state over the next two years through the Biomass Crop Assistance Program paid for with funds from the American Recovery and Reinvestment Act.

“[These are] payments for material that is sold to qualified biomass facilities for the production of heat, power, biobased products and advanced biofuels like the cellulosic ethanol project in Old Town,” Baldacci said in an interview. “This is really some good news for the state.”

The governor said there was some discussion of the program at a meeting he attended Wednesday at the White House with President Barack Obama and Vice President Joseph Biden. Baldacci said details of the program became available Thursday when the rules were published in the Federal Register.

“We have 19 million acres of forestland,” Baldacci said. “We have the second highest number of biomass facilities in the country after California. This can be a very significant program for Maine.”

He said the federal payments are aimed at assisting the producers with the cost of collection, harvest transportation and storage of the biomass materials that qualify under the program. The matching payment is at a rate of $1 for each $1 per dry ton paid by the conversion facility to suppliers, up to $45 per dry ton, for a period of two years.

“This can be a real shot in the arm for the state,” Baldacci said.

The program is flexible, covering suppliers of wood chips to the state’s seven wood-to-electricity plants and suppliers of materials such as fats, oils and greases for the making of biodiesel fuel. In all, 26 facilities, including paper plants in Lincoln, East Millinocket, Rumford, Skowhegan and Westbrook, are listed as conversion facilities in the state by federal officials.

Suppliers need to sell their materials to a qualified conversion facility in order to receive the federal subsidies.

“This is going to be a real help in developing more facilities in the state,” Baldacci said. “This will help in our effort to provide more green jobs in the future.”

The program is administered by the U.S. Department of Agriculture. Secretary Tom Vilsack said the Biomass Crop Assistance Program is one of the programs pushed by Obama to encourage more green jobs across the country.

“As the Obama administration continues laying the foundation for a stronger, revitalized economy, biomass has great potential to create new, green jobs for American workers,” Vilsack said in statement. “Biomass also has important environmental benefits to produce cleaner energy and reduce greenhouse gases.”

While the program is funded with one-time stimulus money, Baldacci is hopeful it can be extended in a different form as a tax credit program in the future. He met with U.S. Sen. Olympia Snowe, R-Maine, on Wednesday in Washington and discussed the tax credit proposal she is co-sponsoring.

“It would elevate the tax credit for biomass to the same level as other renewable energy sources,” the governor said. “It is only half that level now.”

Baldacci said the subsidies followed by the improved tax credit would be “a big boost” for the efforts to convert the Millinocket paper mill from oil fuel to biomass fuel.

Snowe said current tax policy is “illogical” and the legislation she is co-sponsoring would provide help to Maine companies after the one-time subsidy money runs out.

“Providing equity for biomass incentives for our pulp and paper industry will spur job growth, reduce the consumption of fossil energy, and reduce carbon emissions,” she said in a statement. “It is exactly the tax policy that will keep our industry competitive and begin to curtail carbon emissions and I am pleased to work with the governor to enact this critical policy.”

Baldacci said the rules implementing the program become final in 60 days, when Maine suppliers will be able to start applying for the subsidies.

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