Despite the government’s unintended largesse, the 21 companies had combined net income of about $3 billion, according to an exclusive Dead Tree Edition analysis of documents filed with the Securities and Exchange Commission.
Without the U.S. government subsidy, only nine of the companies would have been profitable in 2009, In fact, three recipients – Weyerhaeuser, NewPage, and Sappi – together lost $1.1 billion last year despite receiving nearly $800 million from the black-liquor program that expired on Dec. 31. AbitibiBowater, the one recipient that has not reported earnings for the 4th Quarter, almost certainly lost hundreds of millions as well.
At least one-fourth of the country’s capacity to make kraft pulp is in the hands of privately held companies that don’t have to file with the SEC. Assuming they took advantage of the “alternative fuel mixture” program in the same way that their publicly held peers did, the federal government probably shelled out between $8 and $9 billion to pay to do what they would have done anyway – use black liquor, a pulp byproduct, as a fuel source for their pulp operations.
Several of the public companies' reports state that they expect to receive no subsidies for black liquor this year. And they're right.
But don’t tell that to Congress or the news media. Obama Joins in on the Black Liquor Two-Step documented how sloppy reporting by leading news organizations had allowed Democratic Congress members to claim they were saving money by excluding black liquor from the new Cellulosic Biofuel Producer Credits (CBPC) -- a program that black liquor couldn't qualify for anyway.
In the 12 days since that was published, the black-liquor silliness in Washington has gotten even worse, with Republicans joining the shell game. Sen. Jim Bunning (R-KY) tried to play taxpayer hero this week by proposing to “pay” for a new jobs program by closing the non-existent CBPC loophole. But Democrats blocked that effort because they have already committed to using the bogus savings for healthcare reform.
Bunning's effort to exclude black liquor from CBPC "is absolutely meritorious and should be adopted whatever else Congress does," The Washington Post opined in a fact-challenged editorial. "This particular piece of corporate welfare showers paper companies with about $2.5 billion per year . . . that encourages them to generate power with 'black liquor,' an 'alternative fuel.'" Nope. Not a dime has been paid to pulp and paper companies under CBPC.
Here are the 21 publicly traded companies, listed according to the amount of credits they received. The first number is the amount of black-liquor credits reported, the second is 2009 net income:
|Company||million in black liquor credits||million net income|
|AbitibiBowater||284 (estimated)||-801(through third quarter)|
|Kapstone Paper and Packaging||178||80|
|Packaging Corporation of America||176||266|