Piling on Support to Equalize Biomass and Wind Subsidies

The biomass industry has become a rising star in Congress in its push to bring renewable energy tax credits for biomass in line with those provided for wind, Bob Cleaves, president of the Biomass Power Association, told attendees at the International Biomass Conference yesterday in Portland. The industry lobby in the past didn't have enough clout to win subsidies for biomass producers, he said.

"All of a sudden, we have traction to get parity with wind energy," said Cleaves.

The Association has adopted Ron Wyden's catchy term for biomass - the "half-credit technology" - to illustrate that biomass receives only half of the 2.1 cents per kilowatt-hour credit that wind and other renewable projects receive for green electricity production. They're pushing for reform in the energy tax code to provide a subsidy per ton of CO2 reduced for each technology. Cleaves claims that biomass provides "the biggest bang for taxpayers' buck in carbon replacement" with four times the environmental benefits of wind.

In testimony to the Senate finance committee last week, Tufts economist Gilbert Metcalf demonstrated how even renewable technologies that receive equal subsidies, geothermal and wind, are actually subsidized very differently when compared on a subsidy-per-ton of CO2 basis. Given that an average wind turbine produces energy about 27% of the year (its capacity factor) compared to geothermal's 73%, the subsidy ends up being $7.74/ton of avoided emissions for geothermal and $12.28/ ton of wind, according to Metcalf's calculations. In other words, taxpayers are paying wind producers 60 percent more to reduce CO2 emissions than they're paying geothermal producers.

The Senate finance committee meeting last week on "technology neutral" energy tax policy provides an interesting glimpse into the debate.