Taxpayer-funded biomass pollution – a summary of subsidies

Biomass power receives substantial subsidies from taxpayers and electricity ratepayers. PFPI crafted a memo that describes health and environmental impacts of biomass power, and why we, as well as a growing number of groups around the country, think biomass power does not deserve the same subsidies as truly clean and renewable sources of energy. Taxpayers and ratepayers should not have to pay extra for “renewable” energy that accelerates forest cutting, increases greenhouse gas emissions, and pollutes the air.
Our analysis of federal subsidies for the biomass energy sector found that:
1.      Renewable energy production tax credit obligations (PTC) are about $46 million for a typical 50 MW biomass plant over the duration of the credit; total obligations projected by the Ways and Means Committee for the PTC are around $1.3 billion for 2009 – 2013. Due to the explosive growth in the biomass industry currently underway, PTC obligations may increase significantly. The federal credit is worth about $45.8 million to a 50 MW plant for the duration of the credit.  Some states also have similar tax credit programs for renewable energy generation.
2.      Stimulus grant expenditures of $102 million for reimbursement of 30% of construction costs have been allocated to 9 biomass energy facilities under the Incentive Tax Credit (ITC) program. Depending on ongoing availability of these funds, it is highly likely that a significant additional number of facilities will receive these grants, which are taken in lieu of the production tax credit.
3.      Subsidies and tax credits for fuel collection are significant. In addition to the “collection/harvest/storage/transport” (CHST) component of the BCAP program, which cost about $243 million for FY 2009/2010, stimulus grants supporting fuel collection and facility development are also available (these are a separate category of support from the ITC). A subset of these projects supporting fuel collection represented $12.5 million; total program costs are greater. Some states also offer tax credits and grants for fuel collection.
4.      Ratepayer renewable energy credits (RECs) also support biomass power. Renewable energy credits are worth around $8 million – $12 million per year for a 50 MW biomass plant, depending on the value of RECs.

Partnership for Policy Integrity