Maine Legislature Passes Bill to Revitalize Rural Communities, Fight Climate Change with Production Tax Credit for Renewable Chemicals and Products

Environmental Health Strategy Center
News Releases

AUGUSTA, Maine, June 19, 2019—The Maine Senate today unanimously passed LD 1698, a production tax credit for renewable chemicals and products that will bring high-paying green jobs to rural Maine, sending the bill to Governor Janet Mills’ desk. The Senate vote follows a unanimous vote in the House.

The legislation will incentivize new, climate-friendly biobased technologies to invest in Maine, fighting global climate change and creating high-paying green jobs that will revitalize Maine’s mill town communities suffering from economic distress.

Specifically, the bill awards a tax credit of at least seven cents for every pound of renewable chemicals and five cents for every gallon of biofuels produced from forest residues or other biomass. Producing sustainable chemicals and biofuels from renewable materials will slash greenhouse gas emissions compared to the fossil resources they displace.

“The booming biobased industry offers Maine’s rural communities an unparalleled opportunity for new growth and revitalization,” said Jamie Chittum, board president of Biobased Maine. “But until now, Maine has failed to compete for investment with other natural resource-rich states that already offer production tax incentives. That will change with this new legislation, which will grow this industry in Maine and create hundreds of high-paying green jobs over the next ten years.”

“As a society, we must end our reliance on climate-damaging fossil fuels for the production of plastics, chemicals, and other products we use every day,” said Mike Belliveau, executive director of the Environmental Health Strategy Center. “The production tax incentive established by LD 1698 helps to level the playing field for emerging biobased technology companies seeking to compete with the heavily subsidized oil and gas industry, and establishes Maine as a national leader in the fight against climate change.”

Members of Maine’s business, academic, and nonprofit communities testified in support of LD 1698 at a public hearing in May. Those testifying in support included representatives from Maine’s forest products industry, the University of Maine, the Maine Department of Economic and Community Development (DECD), the national biobased technology industry association (BIO), executives from biobased technology companies in Maine and throughout New England, the Professional Logging Contractors of Maine (PLC), and residents of former mill towns, among others.

“I am particularly grateful to assistant majority leader Rep. Ryan Fecteau (D-Biddeford) and Senate President Troy Jackson (D-Allagash) for their leadership on this issue, and to the many supporters who came to Augusta and testified about the economic and social benefits Maine will see when this bill is law,” said Sarah Woodbury, state advocacy director at the Environmental Health Strategy Center. “Maine has a bright and more sustainable future with this production tax credit for renewable products and chemicals.”

Proponents argue that with Maine’s vast supply of sustainably harvested wood, experienced but underutilized workforce, and world-class research at the University of Maine’s Forest Bioproducts Research Institute, the state is well-positioned to grab a market share in the rapidly growing “bioeconomy.”

In the forest bioproducts sector alone, the production tax credit is forecast to attract investment of over $1 billion in new manufacturing facilities and create more than 1,000 new jobs in manufacturing, logging, transportation and other support industries, according to an analysis from biobased trade association Biobased Maine.

The same analysis shows tremendous environmental benefits, with products made from renewable materials replacing over 250,000 tons per year of petrochemicals and fossil fuels. It will also slash global greenhouse gas emissions by more than 750,000 tons per year due to biobased products’ much smaller carbon footprint during manufacture and use.

When signed into law by Governor Mills, LD 1698 will bring investment to Maine over other resource-rich states. Industry representatives note that biobased technologies that can use Maine's sustainably harvested forest residuals are just now being commercialized. To make their economics work, these technologies are looking to scale up and invest in states that already offer biobased production incentives, such as Iowa and Minnesota. Nebraska’s lawmakers introduced a similar biobased production incentive in their state earlier this year. LD 1698 is more competitive than these incentives in other states.

The law will also help existing Maine companies grow and reinvest in the state’s economy and workforce, say representatives of biotechnology companies based in the state. Companies manufacturing biobased products are already looking to grow in Maine, as demonstrated by the $1.5 million dollars awarded in April by the Maine Technology Institute to emerging biobased technology companies GO Lab, Inc., in Belfast, and Biofine Developments Northeast, in Bucksport. Biofine Developments Northeast testified in support of LD 1698.

LD 1698 also follows recommendations from Maine’s forest products industry. The action plan published in September 2018 by the industry-led coalition FOR/Maine (Forest Opportunity Roadmap Maine) recommended biobased manufacturing as a pathway to diversification and sustainability for Maine’s forest economy.

Technically, the production tax credit established by LD 1698 applies to the conversion of renewable biomass from the forest, farms, the sea, or solid waste. The tax credit is equal to:

  • 7¢ per pound of renewable chemical produced in the state,
  • 9¢ per pound of renewable chemical produced in the state if the taxpayer demonstrates to the satisfaction of DECD that the contractors hired or retained by a landowner to harvest renewable biomass used in production of the renewable chemicals are 3rd-party certified by the Northeast Master Logger program or successor program and at least 50% of the contractors' employees are residents of the United States, or
  • 12¢ per pound of renewable chemical produced in the state if the taxpayer demonstrates to the satisfaction of DECD that the contractors hired or retained by a landowner to harvest renewable biomass used in such production are 3rd-party certified by the Northeast Master Logger program and at least 75% of the contractors' employees are residents of the United States.

Renewable chemicals are defined to include chemicals, polymers, plastics and formulated products, and to exclude substances used for food, feed or fuel, with limited exceptions. The bill also reinstates the tax credit for commercial production and use of biofuels.

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The Environmental Health Strategy Center is a Maine-based nonprofit organization that works for a world where all people are healthy and thriving in a safe environment. Everyone deserves access to safe food and drinking water, and toxic-free, climate-friendly products.