6. Biomass: Wood

C. The Biomass Power Industry

The biomass power industry is a decentralized, loosely knit coalition of firms, such as independent power producers, electric utilities, engineering and construction firms that use or develop biomass products, and fuel suppliers. Unlike many large utilities, biomass power producers typically are not vertically integrated (where one firm owns supply, generation, and distribution facilities) but, rather, are horizontally integrated in some areas, such as construction and engineering firms that specialize in biomass projects or provide turbines and other specialized components. Most biomass power companies today are independent power producers or are in the forest industry.

The Energy Policy Act of 1992 offers a production tax credit of 1.5 cents per kilowatthour to biomass power producers that purchase biomass fuels from "closed-loop systems." A closed-loop system has been interpreted to mean an energy crop farm. Today, there are no such facilities in existence to allow capture of the tax credit, although several have been proposed recently.

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