May 11--Amid a faltering market, two Northland papermakers have discovered a way to bolster their bottom line. Federal energy tax credits could help keep the Sappi Fine Paper mill in Cloquet and the Boise Inc. mill in International Falls solvent by injecting millions of dollars into their operations.

Both papermakers operate pulp mills that process wood fibers using a decades-old technique called the Kraft process. It leaves a waste byproduct called "black liquor," a dark viscous liquid that papermakers burn to produce steam and power.

Boise's International Falls mill is about 65 percent energy self-sufficient as a result of its use of black liquor, said Virginia Aulin, vice president of corporate affairs.

"We're very proud of that," she said. "We're reusing what would otherwise be a waste product and we're also reducing our use of fossil fuels."

Amy Olson, Sappi's manager of corporate communications, was of a similar mind.

"Sappi Fine Paper North America is proud of the paper industry's history of using black liquor as a renewable energy resource," she said.

The two companies operate the only mills in the state producing black liquor, and they're poised to benefit from a federal tax credit. Intended to spur the development of alternative fuels, the 50-cent-per-gallon credit is offered to those who blend conventional petroleum-based fuels with renewable fuels.

The idea is to reduce fossil fuel use, but to qualify for the credit, Boise has been adding a traditional fuel -- diesel -- to its black liquor before burning it.

Only a minute amount of diesel -- about one-thousandth of the mix -- is added, which Aulin said enables the black liquor to burn hotter and more steadily, reducing the plant's consumption of other fossil fuels.

Boise began regularly blending diesel into its black liquor earlier this year, and by the end of April had claimed about $37 million in credits, Aulin said.

Olson would not disclose whether Sappi had collected any credit payments from its Cloquet black liquor operations yet, but implied in a statement that it had not.

"Sappi Fine Paper North America awaits clarification from Congress regarding the application of the alternative fuel tax credit," she said.

Some analysts project the tax credits could put upwards of $6 billion into papermakers' pockets.

That doesn't sit well with some lawmakers, including Senate Finance Committee Chairman Max Baucus, D-Mont., who has pledged to close what he considers a loophole for the papermakers.