black liquor tax credit

Definition

A federal tax credit which was intended to promote the use of bio fuel but had the opposite effect. Black liquor, a byproduct of making wood pulp, has long been used in the forest products industry as a bio fuel. In 2005, the federal government began offering tax credits to companies that used mixtures of bio fuel and fossil fuels. Some companies in the forest products industry began adding diesel fuel to black liquor to take advantage of the tax credits. The companies were abiding by the letter of the law, but they were using less bio fuel, not more.

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