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SB 127 extends the Wood Energy Tax Credit (WETC) through June 30, 2027. The WETC, which expired in June, is meant to help companies more affordably get rid of their “processed material” — mainly sawdust, the small chippings of wood waste produced when wood is sawed, sanded, milled, planed, and routed.
The tax credit is equal to $5 for every ton of material produced, which helps these companies to offset the cost of transporting the multiple tons of sawdust that collects as they go about their work, Brown said.
“It helps keep our sawmill and wood product operators in business,” Brown, a Republican, told The Missouri Times. “It gives them the ability to remove that waste, where if they didn’t have it, it could hamper their business.”
According to the Missouri Department of Conservation, forest products, wood, lumber, paper, and related industries contribute almost $10 billion each year to the Missouri economy and support more than 44,000 jobs. Missouri is one of the leading producers of timber products in the U.S.
Once sold, this sawdust is used by companies such as Kingsford to create charcoal and wood pellets for smokers and grills. Kingsford has a plant in Belle that employs more than 100 individuals.
“It’s not only helped create jobs and new industries in Missouri, it’s also been a huge benefit by turning waste into a useful product,” Brown said.
Without the credit, it can become too costly to get rid of the sawdust, causing businesses to have large piles of the material stored on their lots, Brown said. These piles take up significant space and are potentially harmful to the environment, according to Brown. With the tax credit incentive in place, businesses can afford to clear those large piles, opening up more space for production and potentially lowering the environmental impact, he said.
The WETC has a $6 million annual cap subject to appropriations, according to the fiscal note attached to HB 2274, an identical bill filed in the House in 2020. The legislature appropriated $1 million in WETC in FY 2018 and FY 2019.
The bill did not pass during the last legislative session due to disruptions caused by the COVID-19 pandemic, according to Brown.
Past extensions of the WETC legislation have been supported by the Missouri Forest Products Association, which represents the primary and secondary wood industry along with loggers and landowners, and the Associated Industries of Missouri, which represents the business manufacturing industry.