IP gains $71.6 million from IRS for using alternative fuels at 15 of its kraft pulp mills

SAN FRANCISCO, March 24, 2009 (RISI) - International Paper (IP) was paid $71.6 million by the Internal Revenue Service (IRS) for using alternative fuels at 15 of its kraft pulp mills for one month, the company said Friday. 

IP said the payment was made on Mar. 20 for using alternative fuels from Nov. 14-Dec. 14.

Several US paper and board companies are seeking the government funding because of their use of spent black liquor for generating energy at kraft pulp mills. The IRS allows "an excise tax credit for alternative fuel mixtures produced by a taxpayer for sale, or for use as a fuel in a taxpayer's trade or business," according to IP.  

Verso gained $29.7 million under the federal program because of alternative fuels used at its Jay, ME, mill in the fourth quarter. The company expects a similar payment this month for black liquor use at its Quinnesec, MI, mill, the company said.

"(IP) will continue to submit refund claims based on actual mill production and use of an alternative fuel mixture, and will provide investors with information relating to future credits during its regular quarterly earnings calls," IP said.

If IP, the largest paper and board producer in the world, gained $71.6 million each month, it would generate $859 million in a calendar year in US IRS payments, based on estimates.