A Maryland paper mill burns a polluting sludge called black liquor. The state calls it green energy.

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LUKE, Md — The paper mill hulks over a bend in the Potomac River Valley, a castle of pale blue metal between steep green slopes. Clouds of steam billow from its towers.

The Luke Mill, the largest employer in this tiny town, has powered the economy in this corner of Appalachia for generations, producing paper for countless Campbell’s soup labels and glossy covers for National Geographic and Playboy.


Even as other factories in this stretch of Western Maryland have closed down, this mill has managed to survive.

That’s in part because the 10-story-high boiler deep inside the mill burns a sludge known as black liquor.

An exterior view of the Luke paper mill now operated by Verso.

The substance, a mix of caustic chemicals and wood waste left over from the papermaking process, was once pollution, a byproduct that fouled the rocky banks of the Potomac.

Now, Maryland calls it green energy.

It’s not a particularly clean form of energy. Burning black liquor releases carbon dioxide, the greenhouse gas that causes climate change.

But because it’s a waste product that’s being used to generate power, state legislators declared it a renewable energy source. So the paper mill gets millions of ratepayer dollars from a state program created to promote the greening of Maryland.

The subsidies were established in 2004 to help wind turbines, solar panels and other clean technologies compete with fossil fuels, which emit pollution that blankets the planet, melting polar ice, raising sea levels and making extreme weather more likely. The idea was to give a financial boost to alternative energy sources that are both clean and renewable, but expensive to develop.

But many of the facilities that receive the subsidies — trash incinerators, wood-burning “biomass” plants, and the paper mill in Luke — spew millions of pounds of carbon dioxide into the atmosphere each year, plus toxins that are harmful to people and the environment.

The subsidies earmarked for clean energy come from a fast-growing portion of Maryland electricity ratepayers’ bills. The payouts to carbon-emitting energy producers such as the Luke mill have totaled more than $100 million through 2015.

That’s money that could and should have gone to wind power.

—  Mike Ewall, director of the Energy Justice Network

Black liquor — its formal name in the paper-making industry — is Maryland’s largest source of renewable power. Paper factories across the Eastern United States supply a quarter of Maryland’s renewable energy supply. Such wood-derived fuels make up the nation’s third-largest source of renewable energy.


To Mike Ewall, who has spent years trying to convince lawmakers in Maryland and elsewhere to stop subsidizing carbon emissions, it’s a shocking contradiction.

“That’s money that could and should have gone to wind power,” says Ewall, director of the Energy Justice Network, a nonprofit advocacy group.

But Todd Downey, manager of the Luke mill, says black liquor “is clearly aligned” with Maryland’s goals to both recognize and develop a diverse portfolio of renewable energy. He says the mill “is helping to shape a cleaner energy future for all Marylanders.”

And Greg Harvey, who ran the black liquor machine in Luke for a decade, takes it personally when mill workers are maligned as polluters — as if he’s being accused of valuing a paycheck above his community.

“You’re questioning my integrity,” says Harvey, the president of the union that represents most of the mill’s 700 workers.

Greg Harvey, president United steel workers Local 676, is the third generation of his family to work at the town's paper mill.

The battle over black liquor demonstrates the complicated struggle beneath efforts to shift to cleaner forms of energy.


The waste-to-energy industry has also fought to win and maintain environmental incentives that were created to promote green power sources. The Wheelabrator trash incinerator on the Middle Branch in Baltimore is the city’s largest source of air pollution. Yet it has received close to $10 million in renewable energy subsidies since 2011.

Such investments have meant there is much less money available to support cleaner forms of energy, such as wind and solar farms. At the same time, clean projects are running into resistance in their communities, where people who might support a green future in theory don’t necessarily want wind turbines or a solar array next door.

State lawmakers have long wrestled with the question of what sort of energy should be considered renewable.

Some argue: Certainly not black liquor.

A company town

Luke is a survivor of an era when blue-collar jobs were plentiful in rural America. The mill told workers where to live and provided the steam that heated their homes. For years, employees were paid in marks they could use at the company store.


Audrey Nolan, 104, immigrated with her parents from Spain and settled in Luke in 1921.

“We belonged to the mill,” she says.

Audrey Nolan, 104, right, picks up a picture of her sister as Edward E. Clemons, Jr., left, mayor of Luke, Md. looks on. Nolan lives across the street from the town's paper mill.

In its heyday, which lasted into the 1950s, the mill employed more than 2,000 people. Most of them lived in what are known as the Tri-Towns — Luke and Westernport in Maryland and Piedmont just over the river in West Virginia. Some were descendants of Hessians, the mercenaries who fought for the British in the Revolutionary War. Others were recent immigrants from Italy or Spain.

Families assumed that sons would join their fathers in the paper-making business. Fazenbaker was one of the early family names in the mill, local historian Patrick McCarty is proud to say — it’s his mother’s maiden name. He would have joined the three generations before him had his father not insisted he go to college and work in a profession other than making paper.

The mill community was like a family, McCarty said, making the Tri-Towns a cross between a company town and Mayberry. It was a place where McCarty could wander from the top of Westernport Hill across a bridge over the rocky Potomac to the top of Piedmont Hill by himself at age 6.

“It was the most wonderful place in the world to grow up,” the retired school principal says.

Patrick McCarty, president of The Westernport Heritage Society, recalls the history of the Luke paper mill now owned by Verso.

But longtime residents of the Tri-Towns also remember when their surroundings weren’t so beautiful. They remember how the steep slope across the Potomac from the mill was barren, stripped for lumber and too choked by pollution to recover. The river itself was opaque.

“You could not see the water,” McCarty remembers of the 1940s and ’50s. The floes of black liquor and other waste from the mill “looked like icebergs,” he says — icebergs that reeked of the rotten-egg, cooked-cabbage scent for which the mill is still known.

It was an uncomfortable part of life in a mill town, Nolan recalls. When black liquor would spill into the Potomac, she says, you didn’t talk about it at the pulp mill.

A boost for clean energy

Generations later, mill waste would become the renewable resource that helps keep the machines running.

In 2004, to give clean power generation a head start, Maryland offered financial incentives to the renewable energy industry. The policy, known as a Renewable Portfolio Standard, was spreading across the country as a way for states to create high-paying jobs in high-tech industries and to advance a green energy agenda.


The idea was to create a bonus revenue source for companies that generate power from renewable energy, such as wind and solar, to reward them for their environmental benefits. For each megawatt of electricity they produce and sell, they can sell a certificate.

The state law requires utilities and retail electric companies such as Baltimore Gas and Electric, Direct Energy and Pepco to buy those certificates from power producers within the PJM energy grid, which serves the Mid-Atlantic and part of the Midwest. Some of those producers are in Maryland, but most of the certificates bought by Maryland utilities come from producers in other states.

The utilities pass the cost on to residents and businesses in the rates they charge for electricity. Proponents say it’s a reasonable way of attaching a value to the support many residents have for green energy.

The amount residential ratepayers pay for the renewable energy certificates is at most a few dollars a month, but it adds up. Proceeds for all types of renewable energy in Maryland’s portfolio have grown to $127 million in 2015, the most recent year for which totals are available.

For the largest energy producers, the incentives can reach millions of dollars.

By 2020, Maryland utilities will need to buy enough of the credits to equal one-fourth of the state’s energy supply. By then, state legislative analysts predict, the cost to the average household will peak at somewhere between 77 cents and $3 per month.


Maryland’s biggest suppliers of renewable energy — the generators that get the most money from the ratepayer subsidies — include paper mills in Covington, Va., and Kingsport, Tenn.; a biomass facility that burns logging waste in South Boston, Va.; and two trash incinerators in Maryland: the Wheelabrator Baltimore facility along Russell Street and Covanta Montgomery in Dickerson.

More than three-quarters of the renewable energy subsidized by Maryland ratepayers is generated outside the state.

To Ewall of Energy Justice Network, that statistic undermines arguments that the renewable energy incentives can grow jobs in the state. What, he asks, do Marylanders owe to a paper mill in Tennessee?

“Why should all this Maryland ratepayer money flow to them?” he asks.

Black liquor

Of equal concern to some is that the renewable energy credits are going to dirty sources such as black liquor.


It was part of the program from the beginning, thanks to nearly a dozen amendments that MeadWestvaco Corp., then the Luke mill’s owner, persuaded lawmakers to adopt during the legislative process in 2004, General Assembly documents show.

The paper industry argues that black liquor earns the “renewable” designation because it’s burned as part of an efficient process: As power is generated, the harsh chemicals used to create paper pulp are also being recovered from the sludge. They are reused in the next paper-making cycle.

And as trees are consumed to make the paper, more can be planted. Richard Watro, the Luke mill’s manager from 2011 to 2015, likens it to harvesting and replanting corn to create ethanol.

The Luke paper mill, operated by Verso, is framed by the columns of a former school that is now home to offices of Luke’s town government.

Verso Corp., which assumed ownership of the mill in 2015, says the carbon stored inside trees always makes its way into the atmosphere, whether through natural decomposition or forest fires. Burning black liquor is no different from the natural carbon cycle, company officials say, and the energy it generates means the mill can rely less on its other energy sources, coal or natural gas.

Mill workers say the fuel’s main problem is its name.

“If you called it ‘dandelion liquor,’ no one would care," Harvey says.


If you called it ‘dandelion liquor,’ no one would care.

—  Greg Harvey, president of United Steelworkers Local 676

Paper mills generate less energy than power plants, and emit less pollution. But they still give off millions of pounds of carbon dioxide every year. They also release other harmful pollutants, including smog-creating nitrogen oxides and sulfur dioxide.

Last year, as the Luke Mill burned a combination of coal, gas and black liquor, it gave off 20 pounds of lead and 100 tons of methane. That was about the same as the Brandon Shores and H.A. Wagner coal- and gas-fired power plant complex in Pasadena in 2015, according to the annual emissions inventories that power generators must file with the state.

It’s better than burning coal, but it’s not renewable energy in my mind.

—  State Del. Shane Robinson

The paper mill emitted more than half as much sulfur dioxide, a pollutant that can trigger lung disease, as the power plants.

“It’s better than burning coal, but it’s not a renewable energy source in my mind,” Del. Shane Robinson says. The Montgomery County Democrat has pushed legislation to stop rewarding black liquor as renewable energy.

Paper mills in Maryland and other states received about $60 million of Maryland’s renewable energy subsidies through 2015 — nearly a fifth of the total. That included about $4 million for the Luke Mill, where black liquor produces about 40 percent of the mill’s energy, Public Service Commission data indicates. (The PSC does not release precise figures, only the number of certificates each facility sells and the average price of all certificates.)

It was money that helped the mill amid the fluctuating demand for paper and pressure to reduce prices. Mill officials say demand for paper is declining at a rate of 5 percent each year.


Beginning in 2013, the subsidy came under threat.

Environmentalists began to focus on the subsidies going to Luke and the other paper mills. They felt a program intended to spur the development of clean energy was paying to perpetuate dirty energy.

They decided it was time to try to cut the paper mills off.

Mike Tidwell, director of the Chesapeake Climate Action Network, equated black liquor with pink slime, the maligned beef additive made from meat processing leftovers. He said black liquor seemed innocuous when lawmakers added it to the state’s menu of green power, and that no one knew how much of the subsidy money it would command.

“Today we do know,” he says. “And it’s a lot."

In Luke, this was a new danger to the community’s survival.


Luke under siege

For years, the community had weathered the combined pressures of environmental regulation, foreign competition and declining demand. The same forces had closed other blue-collar job centers around Cumberland — the Celanese textile plant in 1983 and the Kelly-Springfield tire factory in 1987.

As the population thinned and tax revenue waned, the number of public high schools in Allegany County shrank from seven to three.

Mill workers say pressure to cut pollution began in the 1950s, when a wastewater treatment plant opened just downriver from the mill. By the 1970s, a 600-foot smokestack rose from the mill to lift emissions high above the valley.

Early morning light hits homes on a hillside in Westernport, Md. and the cloud of emissions from the Verso paper mill in Luke. The plant generates much of its own power by burning "black liquor," a sludge byproduct of the paper making process.

Those and other investments likely improved the fortunes of the once-bare mountain opposite the river from the mill. The peak once called “Baldy” is now covered in thick forest.

Verso, the mill’s current owner, says former and current management has invested more than $200 million since the 1950s in protecting the environment.


That includes the installation of a succession of recovery boilers, which burn black liquor and capture chemicals that can be reused to make more paper.

In a 1975 ad in the Cumberland Sunday Times, the mill touted a state-of-the-art boiler installed three years earlier, said to be the tallest building between Baltimore and Pittsburgh. It said the $10 million machine was part of a “progressive and costly effort” to invest some $37 million in pollution controls over the previous two decades — an amount worth at least $168 million today.

The efforts helped restore the local environment. Today, groups of anglers catch trout downriver of the mill, and a bald eagle roosts near its lumber yard — wildlife that Harvey would never have expected to see when he started working at the mill in the 1980s.

“I believe they have grown into being very good stewards of the environment,” Harvey says.

A truck load of logs is delivered to the Luke paper mill.

But the outlay also made it more difficult for the mill to compete, especially as paper mills began appearing around the Pacific Rim in the 1980s. It was also the time when readership of printed magazines and newspapers began to decline.

The combination of pressures wracked the Luke mill as it forced the closure of other paper mills across the country. Dozens of mills have closed since 2000, and more than 200,000 jobs have disappeared. The industry now employs about 370,000 people.


Luke’s paper-making machines were closed down one by one. From as many as seven that ran through World War II, only two remain. (With new technology, they make the mill more efficient and productive than it has ever been.) The oldest paper machines, which press and heat wood pulp until it rolls out in massive rolls, were rendered obsolete and sold to Pakistan.

With each contraction, mill workers grew more anxious.

Gary Custer worked as an engineer and manager at the mill for some 25 years before leaving in 2014.

Gary Custer worked about 25 years as an engineer for the paper mill at Luke, Md. Now, he works as a solar engineer.

“Every move that happens, the whole work force feels that and starts to wonder what’s going on,” he says.

The turmoil is felt in Luke, where a town of more than a thousand people in 1930 has dwindled to 63, according to the census. For generations, steam from the mill heated Luke’s homes for no more than $20 a month. But that heating supply was cut off in 2010.

New worries spring up every time the mill is sold to a new owner. In the past dozen years, it has passed from the Luke family business through two separate corporations to Verso.


Neighbors say they used to be so close with mill managers, they would know when and why the mill might temporarily suspend production. Now, they say, with Verso’s corporate offices in Ohio, they find out only when the valley goes dark, and traffic disappears.

Annapolis showdown

Harvey, president of United Steelworkers Local 676, had never been to Annapolis when he and a dozen of his fellow mill workers loaded up in two vans on a chilly morning in March 2013 for the three-and-a-half-hour trek from Luke to the capital.

They were nervous. The territory was unfamiliar, and the outcome uncertain.

Environmentalists were urging the state to stop sending ratepayer money to paper mills. The steelworkers union and mill management had been working with lawmakers and the administration of Gov. Martin O’Malley on a compromise. The deal would maintain the subsidies — and the jobs they support — for the Luke mill only, not paper mills outside Maryland.

But the deal fell apart. The Luke mill and its workers rejected it, saying that because the money was vital to the whole paper industry, they decided it wasn’t fair to accept special treatment.

The 228-acre Verso paper mill dwarfs the town of Luke on the banks of the Potomac River in Western Maryland. The plant generates much of its own power by burning "black liquor," a sludge byproduct of the paper-making process.

Now, Harvey and his comrades were in Annapolis to fight for the subsidy. The union and mill management thought workers’ voices could be most powerful against their opposition.

At a Senate hearing on a bill to take away the subsidies, Harvey sat and waited for his turn to speak. He watched as Tidwell, of the climate action network, held up a vial of thick black liquor. Tidwell argued that the bill to cut off the subsidy to the paper mill was a rare “no-brainer” that should pass the General Assembly easily.

A coalition of environmental groups urged lawmakers on with a slogan: “End the gimmicks. End the loopholes.” Administration officials suggested that the paper industry didn’t need the subsidies because it would burn black liquor even without the extra money.

“They have been doing this for decades,” said Kevin Lucas, then director of energy market strategies for the Maryland Energy Administration. “They will continue to do it as standard operating procedure, independent of whether we are paying them.”

State Sen. Rob Garagiola, the bill’s sponsor, stressed that the state Renewable Portfolio Standard should channel ratepayer money only to new and clean energy technologies.

“The RPS was not intended to be the crutch to keep a business open,” the Montgomery County Democrat said.


The mill workers sat in the back of the hearing room. They wore matching T-shirts urging legislators to reject Senate Bill 684.

Richard Watro, then the Luke mill’s manager, responded by expressing frustration at hearing the mill called “old” and “dirty” when he had seen hundreds of millions of dollars invested into new technology over three decades.

Jim Strong, the steelworkers’ Maryland director, said the legislation threatened thousands of jobs in the paper business.

“Once you lose an industry to another country, that industry doesn’t come back,” he said.

Harvey was the last person to testify. His nerves were frayed. He practically shouted into the microphone.

“I’m the guy who burns the black liquor,” he announced. He pleaded for lawmakers to spare his members another setback. The union had already fought through the foreign competition, the corporate mergers, the contract negotiations.


“The last thing I want to do,” he said, “is go to my 617 union members and tell them, ‘By the way, you’re the next victim.’”

The group left for the long drive home not knowing whether to be satisfied or relieved. They just wondered what would happen next.

Within weeks, lawmakers came up with an offer similar to a proposal they’d floated before the hearing: The paper mills would lose the subsidies, but the governor would grant the Luke mill cash from state coffers each year to offset the loss. It was a win for environmentalists and for the workers of Western Maryland, or so it seemed.

The mill balked again. They couldn’t be sure future governors would honor the deal. And they rejected the special treatment.

The attempts at compromise by the Democratic governor and environmental allies in the General Assembly had failed. And the legislation was defeated.

Momentum shifts


For the workers in Luke, it was a victory. But there was still a sense that Annapolis did not understand the town or the mill.

“This is Appalachia,” says McCarty, the local historian. “The words for stranger and enemy are the same thing.”

For three years, bills returned, and environmentalists repeated their arguments: Black liquor is dirty, and ratepayer subsidies should be reserved for new technologies.

Harvey returned to Annapolis, begrudgingly.

“We battle foreign competition and industry competitors,” he told legislators in 2014.Now we have to fight changes in government regulation.”

But then the winds changed.


The Obama administration’s Environmental Protection Agency issued a draft report in which it affirmed that burning black liquor adds carbon dioxide to the atmosphere — but said that with sustainable replanting, the cycle could be made carbon-neutral.

The paper mill seized on it like a shield.

Last year, the mill’s workers made their case in the form of a four-and-a-half minute video they delivered to Annapolis. To the soundtrack of a strumming banjo, lawmakers saw views of the lush forests and bubbling Potomac, all alongside the steaming smokestacks.

Harry Stafford, a safety advocate at the mill, explains that the mill raised him and put his three daughters through college.

“If this mill wasn’t here, there would be a giant void,” he says in the video. “Everything about it touches an awful lot of people.”

The momentum shifted. Lawmakers said they had revived the issue at the behest of environmentalists, but they no longer believed that a bill ending the black liquor subsidy could pass.


If this mill wasn’t here, there would be a giant void. Everything about it touches an awful lot of people.

—  Henry Stafford, safety advocate at Luke Mill

Del. Jeff Waldstreicher offered several bills over the years that would have ended the paper mills’ subsidies. It became obvious to the Montgomery County Democrat that the issue was stoking a conflict between key Democratic constituencies: environmentalists and labor. Dividing them would never allow enough votes to pass a black liquor measure.

“Bills are about counting to a certain number in committee,” Waldstreicher says. “A frontal assault on this issue will not be successful.”

And so environmentalists have largely given up the fight in Maryland. They have chosen to focus instead on expanding the state’s renewable energy supply to cover half or even all of Maryland’s energy needs, up from the current 25 percent goal for 2020.

Groups including the Maryland Clean Energy Jobs Initiative and the Maryland League of Conservation Voters are campaigning to take the “renewable” label away from household trash, but not black liquor.

Years after comparing black liquor to pink slime, Tidwell says, there is reluctance to antagonize the Luke mill any further.

“The General Assembly came very close to closing the black liquor loophole in 2013,” he says. But he doesn’t think that could happen today — there is no longer the political will.


About the series:

This project was supported with a grant from the Society of Environmental Journalists, a professional organization dedicated to increasing and improving coverage of environmental issues.

Read the second in the series: The Greenwashing of Trash: A trash incinerator in Southwest Baltimore has received millions of dollars in subsidies since state lawmakers declared it “green” in 2011, but residents who have endured a legacy of pollution hope to shut it down.

Read the third in the series: Going Green: One wind farm project in Western Maryland is 16 years in the making but still battling community opposition, an example of the challenges that can arise as the green economy of the future becomes a reality.