EPA Continues to Tailor Tailoring Rule

From the December 2010 Forest2Fuel newsletter.

The EPA continues to release rules and guidance that will help state and federal permitting agencies implement the Tailoring Rule, which goes into effect January 2, 2011. The rule will require large sources of greenhouse gas emissions to adopt the best available emissions control technology (BACT) to reduce emissions. One of the biggest unknowns about the new rules continues to be the treatment of biomass. Citing insufficient information, the EPA did not outline a final action for the treatment of biomass combustion emissions for air permitting purposes in PSD and Title V Permitting Guidance for Greenhouse Gases.

The EPA appears to continue along the path of treating biomass plants in the same manner as it does fossil fuel plants, without regard for either life cycle analysis science or the negative consequences of failing to distinguish between renewable and non-renewable sources of energy.

A recent study by Corrim (The Consortium of Research on Renewable Industrial Materials), “ The Unintended Consequences of the EPA Tailoring Rule: Treatment of Biomass Emissions the Same as Fossil Fuel Emissions,” concludes that the Tailoring Rule is based on faulty science that will lead to greater use of fossil fuels:

While the use of wood produces two way flows of carbon from the atmosphere and back, the dominant flow is from the atmosphere to either carbon stores or displacement of fossil intensive products and fuels. Using biomass as a fuel displaces the one-way flow of fossil fuel emissions from deep pools to the atmosphere. Life-cycle science does not support the EPA Tailoring Rule that treats biomass emissions the same as fossil emissions; doing so will be counterproductive to carbon mitigation opportunities.

Other studies have attempted to quantify the impact of the Tailoring Rule, both on jobs and investments that new biomass electricity projects represent and on the advancement of renewable sources of energy. A recent study commissioned by the National Alliance of Forest Owners estimates that as many as 134 projects are at risk if the Tailoring Rule goes into effect. These 134 projects—some in pre-construction phases, some idled and some closed—represent 5,300 MW of electricity, $18 billion in capital investment, somewhere between 12,000-26,000 jobs and a loss of 54 million tons of wood fuel sales.

For now, it appears that the EPA will release supplemental rules, no later than May 2011, that consider the special conditions associated with power produced from biogenic sources. Here, specifically, is what they said:

[N]umerous stakeholders requested that EPA exclude, either partially or wholly, emissions of GHG from bioenergy and other biogenic sources for the purposes of the BACT analysis and the PSD program based on the view that the biomass used to produce bioenergy feedstocks can also be a carbon sink and therefore management of that biomass can play a role in reducing GHGs. EPA plans to provide further guidance on the how to consider the unique GHG attributes of biomass as fuel.

EPA plans to determine by May 2011, well before the start of the second phase of PSD implementation pursuant to the Tailoring Rule, whether the issuance of a supplemental rule is appropriate to address whether the Clean Air Act would allow the Agency and permitting authorities or permitted sources, when determining the applicability of PSD permitting requirements to sources of biogenic emissions, to quantify carbon emissions from bioenergy or biogenic sources by applying separate accounting rules for different types of feedstocks that reflect the net impact of their carbon emissions.

On a positive note, the guidance does allow permitting authorities to take into account the environmental, energy and economic benefits of biomass during the BACT selection process:

A variety of federal and state policies have recognized that some types of biomass can be part of a national strategy to reduce dependence on fossil fuels and to reduce emissions of GHGs. Federal and state policies, along with a number of state and regional efforts, are currently under way to foster the expansion of renewable resources and promote biomass as a way of addressing climate change and enhancing forest-management. EPA believes that it is appropriate for permitting authorities to account for both existing federal and state policies and their underlying objectives in evaluating the environmental, energy and economic benefits of biomass fuel. Based on these considerations, permitting authorities might determine that, with respect to the biomass component of a facility’s fuel stream, certain types of biomass by themselves are BACT for GHGs.

To assist permitting authorities further in considering these factors, as well as to provide a measure of national consistency and certainty, EPA intends to issue guidance in January 2011 that will provide a suggested framework for undertaking an analysis of the environmental, energy and economic benefits of biomass in Step 4 of the top-down BACT process, that, as a result, may enable permitting authorities to simplify and streamline BACT determinations with respect to certain types of biomass.

The guidance will include qualitative information on useful issues to consider with respect to biomass combustion, such as specific feedstock types and trends in carbon stocks at different spatial scales (national, regional, state). The aim of the information will be to assist permitting authorities in evaluating “carbon neutrality” in the assessment of environmental, energy and economic impacts of control strategies under Step 4 of the BACT process, which, again, may enable the streamlining of BACT determinations with respect to certain types of biomass.

The agency is currently reviewing the comments received in response to the July 15, 2010 Call for Information (CFI) that solicited feedback from stakeholders on approaches to accounting for GHG emissions from bioenergy and other biogenic sources. These comments, among other things, suggest that certain biomass feedstocks (e.g., biogas) may be considered carbon neutral with minor additional analysis. Such a carbon benefit may further inform the BACT process, especially where a permitting authority considers the net carbon impact or carbon-neutrality of certain feedstocks in accounting for the broader environmental implications of using particular biomass feedstocks.

In other news, efforts to stop the tailoring rule from going into effect have so far met a roadblock in the court system. In the beginning of December, the US Court of Appeals refused to stay the Tailoring Rule, a request that had been made in 84 separate lawsuits from states and industry groups. The Court found that petitioners had not satisfied the stringent standards required to delay implementation of the rule pending court review.

Instead, the best chance for opponents may lie with the new Congress. Jerry Lewis, the ranking Republican on the House Appropriations Committee, recently sent a letter to EPA Administrator Jackson warning that the House plans to strip funding for agency regulations and conduct “unprecedented levels of oversight” of the administration, especially its climate change policies, in 2011. “In addition to scrutinizing the agency’s entire FY 2012 budget, with particular attention on the agency’s rulemaking process, the House Appropriations Committee will be exercising its prerogative to withhold funding for prospective EPA regulations and de-fund through the rescissions process many of those already on the books,” wrote Lewis, the chair of the Committee in 2005 and 2006.

Additional Stories from the December 2010 Forest2Fuel Newsletter:
Biomass Crop Assistance Program Set for Implementation
Boiler MACT Rule on Back Burner
The Tipping Point: A More Complex Look at Wood Supply Sheds
State of the Industry—U.S. Northwest
Is Cellulosic Ethanol Running on Empty?

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