EPA Exempts Biomass Electricity; Smooths Path for Wood Bioenergy Projects

13 01 2011

From the desk of Amanda Lang, Managing Editor, Wood Bioenergy US:

On January 12, 2011 the EPA announced that it will defer greenhouse-gas permitting requirements for facilities using biomass to make electricity (see “EPA Grants Greenhouse-Gas Rule Exemption”, wsj.com, 1/13/11). During the three-year deferral, the agency will consider third party scientific research to determine a future rulemaking specific to biomass electricity. The agency plans to officially issue the deferral in July 2011. In the meantime, EPA will issue guidance to local air permitting authorities to consider biomass fuel as the best available control technology for greenhouse gas emissions.

Forisk worked with the National Alliance for Forest Owners (NAFO) in December 2010 to research the potential economic impacts of the EPA’s greenhouse gas Tailoring Rule on biomass energy producers. Nationwide the Tailoring Rule captures in the PSD permitting program 87% of the currently operating and announced wood-to-electricity projects and 92% of cogeneration facilities at forest products mills in the continental US.  Prior to EPA’s announcement, the Tailoring Rule put 134 of these projects “at-risk” for cancellation or delays with the following impacts by the year 2021:

  • 5,384 fewer MW of renewable electricity generation in the US;
  • 11,844 to 26,380 fewer renewable energy jobs;
  • $18.0 billion fewer dollars of capital investment in renewable electricity generation; and
  • 53.8 million tons of wood biomass per year removed from the renewable energy marketplace.

The EPA’s decision to defer greenhouse gas permitting requirements for biomass electricity facilities will encourage projects currently in development to move forward. The decision will also shorten expected permitting delays for woody biomass projects that are in or exploring the permitting process. A copy of the Forisk report is available at: http://nafoalliance.org/wp-content/uploads/NAFO-Study-Tailoring-Rule-Economic-Impact-20101214.pdf


Economic Analysis of Tailoring Rule Quantifies Potential Impacts on Renewable Energy Jobs, Investment

22 12 2010

Last week, Forisk completed a study titled “Economic and Regional Impact Analysis of the Treatment of Biomass Energy Under the EPA Greenhouse Gas Tailoring Rule.”  Commissioned by the National Alliance of Forest Owners (NAFO), the research identified 130 publicly-known and announced wood bioenergy projects in the continental U.S. put “at-risk” by the Tailoring Rule.  These projects represent:

  • 5,384 MW of renewable electricity generation;
  • 11,844 to 26,380 green energy jobs;
  • $18.0 billion in capital investment; and
  • 53.4 million green tons of wood biomass per year.

The research relies on an inherently conservative approach and transparent assumptions.  As such, our team found the attention and critiques amusing and off-base.  For example:

  • The Environmental Defense Fund (EDF) asserts, using data from Forisk :), that the production of wood bioenergy continues to increase despite the Tailoring Rule (see EDF post).  However, EDF’s release disregards the timing and heart of Forisk’s bioenergy market analysis, which assesses the viability of new wood bioenergy capacity on a project-by-project basis.  Most projects cited by EDF were announced prior to the new Tailoring Rule.  And “announced” projects differ from “operating” projects; only 53% of the projects included in EDF’s analysis pass Forisk’s screening for viability (see NAFO post).
  • National Resources Defense Council (NRDC) critiques include concerns about the 53.4 million tons of wood cited in the Forisk study, asserting that this volume of wood must come at the expense of other uses or harvesting new forests (see NRDC post).  It ain’t so NRDC.  We completed research this year commissioned by the American Forest & Paper Association that identified, conservatively, ~50 million tons of “readily available” wood biomass in the U.S. for energy purposes. The sources of this biomass?  Unused forest residuals from current forest operations, unused wood from other land uses, and cleaned wood from municipal solid waste (see details and the complete study).

At the end of the day, initiating, building and operating wood bioenergy projects takes time and resources.  Many announced projects will fail.  The assumption that all announced projects will come online and concerns about available forest resources are the issues which motivated the development of Forisk’s bioenergy project screening methodology.  In practice, projections of bioenergy expansion divorced from the reality of what it takes to actually develop renewable energy capacity provide a disservice to those tasked with making policy and investment decisions.