Washington State Decision Excludes Bioenergy-based GHG Emissions from Clean Air Act Permit Requirements

An administrative hearings board in Washington State has rejected calls for further assessment of climate impacts from a cogeneration project that will burn woody biomass to generate electricity and steam.[1] The hearing board’s decision provides a preview of arguments that will likely be made as EPA considers whether to permanently exclude bioenergy-based CO2 emissions from Clean Air Act (“CAA”) permitting.

EPA is preparing to adopt a three-year deferral of federal CAA construction and operating permit requirements for bioenergy projects so that it can “seek further independent scientific analysis” and consider “how these emissions should be treated in determining whether a Clean Air Act permit is required.”[2] See Under Attack, EPA Defers Greenhouse Gas Permitting for Biomass Projects, Marten Law Environmental News (April 15, 2011).

The appellants, local environmental groups, were backed by a coalition of national groups opposed to bioenergy. They argued – unsuccessfully – that CO2 emissions generated by the project’s planned increased use of biomass fuel should have been further analyzed in the CAA permit and environmental review processes.

Regulating CO2 Emissions From Burning Biomass

In June 2010, EPA adopted its Tailoring Rule, which establishes a timeline for phasing in permitting for greenhouse gas emissions under the federal Clean Air Act’s Title V operating permit and Prevention of Significant Deterioration (“PSD”) construction permit programs.[3] When EPA proposed the Tailoring Rule, commenters urged EPA to exclude emissions from biomass combustion because such emissions are “carbon neutral, in that they would cause no net increase in greenhouse gas emissions on a lifecycle basis. In adopting the Tailoring Rule, EPA acknowledged that biogenic fuels and feedstocks can play a role in reducing anthropogenic greenhouse gas emissions, and recognized that many State, Federal, and international rules and policies differentiate between biogenic and fossil sources of CO2.[4] The agency declined to exclude biogenic CO2 emissions from the Tailoring Rule’s emission thresholds but reserved judgment on the issue, and promised to give it further consideration.

Following up on that promise, in July 2010, EPA issued a call for information on the approaches it could take to accounting for greenhouse gas emissions from bioenergy and other biologic fuel sources in the PSD and operating permit programs.[5] EPA defined “bioenergy” emissions for these purpose as being generated by the combustion or decomposition of biologically-based material, other than hydrocarbons, including sources such as forestry and agricultural products and byproducts, landfills, wastewater treatment and livestock management facilities, and ethanol production.[6]

EPA also received formal petitions to reconsider several aspects of the greenhouse gas tailoring rule, including its application to emissions from biomass combustion.[7] In January 2011 EPA’s administrator announced that the agency planned to defer Clean Air Act permitting for CO2 emissions from biomass-fired and other biogenic sources, and that it would grant the petition for reconsideration of this aspect of the Tailoring Rule.[8] In March, 2011 EPA proposed a three-year deferral of the application of PSD and operating permit requirements for CO2 emissions generated from bioenergy.[9] The comment period on the proposed deferral closed on May 5, 2011. The proposed deferral would apply to CO2 emissions from biomass combustion, combusting the biogenic component of municipal solid waste and some other waste streams, biogas sources (such as anaerobic digesters) and biogas users, as well as ethanol manufacturing and processes that burn agricultural biomass.[10]For further discussion of the scope and effect of EPA’s proposed deferral, see Under Attack, EPA Defers Greenhouse Gas Permitting for Biomass Projects, Marten Law Environmental News (April 15, 2011).

Washington’s Approach to Greenhouse Gases and Biomass Emissions

The State of Washington has adopted state-wide goals for reducing greenhouse gas emissions,[11] as well as greenhouse gas reporting requirements for larger sources.[12] Washington also requires utilities to obtain a portion of their electricity from renewable resources,[13] which Washington has defined to include energy generated from burning biomass fuels.[14]

Greenhouse gases and climate impacts have also become a part of environmental reviews under the State Environmental Policy Act (“SEPA”), Washington’s counterpart to the National Environmental Policy Act (“NEPA”). SEPA requires a review of the potential environmental impacts of any proposed action that may significantly affect the quality of the environment.[15] Unlike NEPA, SEPA requires that “significant” impacts be mitigated.[16]

Washington’s Department of Ecology issued a guidance document in June 2011 to assist Ecology staff in determining how to include greenhouse gas emissions in SEPA reviews.[17] Ecology’s guidance calls for SEPA documents to disclose new greenhouse gas emissions (i.e., those that are additional to existing emissions) that are expected to average 10,000 metric tons or more of CO2-equivalent. It also suggests that greenhouse gas emissions should be considered insignificant and not require mitigation if less than 25,000 metric tons a year, or if over that threshold but already subject to legal constraints, or if the project already incorporates mitigation that would reduce emissions at least 11 percent below the emissions that would occur in the absence of mitigation measures. The 11 percent target is derived from Ecology’s assessment of the reductions needed to meet the State’s emission target for 2020.[18]

Advancing its dual objectives of reducing greenhouse gas emissions and promoting renewable energy, Washington has defined greenhouse gases by statute to exclude CO2 emitted from the industrial combustion of biomass, except for reporting purposes.[19] This exclusion has one caveat: it applies so long as the capacity of the region’s forests to sequester carbon is maintained or increased.

Differing Regulatory Approaches, Which May Converge

In December 2010, Washington’s Department of Natural Resources (“DNR”) provided a report to the state legislature on the status of forest biomass development in Washington, including its assessment of the carbon neutrality of using forest biomass for fuel.[20] The DNR report includes an account of the State of Washington’s disagreement with the approach EPA took to biomass fuels in the Tailoring Rule, and a defense of Washington’s exclusion of biomass-generated CO2 from its definition of greenhouse gases.[21]

DNR began by discussing the reporting protocols for greenhouse gas emissions developed by the Intergovernmental Panel on Climate Change (“IPCC”), noting that under IPCC protocols, CO2 emissions from burning biomass are not attributed to energy production.[22] Instead, the IPCC recommended that if the use of biomass for fuel resulted in a long-term net reduction in the amount of carbon stored in forests and other standing biomass, it should recognized as an emission resulting from land use changes.[23]

As noted above, in the Tailoring Rule EPA chose not to differentiate between biogenic and hydrocarbon sources of CO2, instead regulating based solely on the volume of CO2-equivalent emissions. DNR’s report took issue with EPA’s decision, noting two ways that greenhouse gases from forest biomass differ from those generated from fossil fuels: (1) biogenic emissions are part of the earth’s natural carbon cycle, and are balanced by re-absorption of carbon into forests and other vegetation; and (2) the baseline level of biogenic emissions over time is dependent on the overall size of the biological system and the system’s capacity to sequester carbon, with no comparable system for reabsorbing CO2 from fossil sources.[24] DNR also noted that Washington’s Governor and DNR Commissioner wrote to EPA recommending reconsideration of this aspect of the Tailoring Rule. They advocated for determining whether to regulate CO2 emissions from biomass combustion based on state-level assessments of the carbon neutrality. In other words, they suggested EPA take the same approach Washington has in excluding CO2 from use of biomass as a fuel from its definition of greenhouse gases, so long as the region’s forests maintain or increase their sequestration of carbon.

In its March 2011 proposal to defer Clean Air Act permitting for bioenergy sources for three years, discussed above, EPA recognized that under the IPCC’s guidance, emissions from burning biomass would not be attributed to energy production and would instead be evaluated based on their net effect on carbon storage in forests and other biomass.[25] EPA also noted that it follows the IPCC’s guidelines in conducting is national inventory of greenhouse gas emissions, and that its inventory has shown that over the period 1990-2008, the forestry and land use sector has been a net sink of about 815 terragrams of CO2-equivalent a year, or about 12 percent of the average gross emissions from all other U.S. sources of greenhouse gases combined.[26] However, EPA also noted that neither the IPCC guidelines nor its own national inventory were designed to quantify the net atmospheric impact of a particular type of stationary source over any specified time period.[27]

While EPA’s comments suggest some skepticism about applying the IPCC approach at a source level, as Washington has, EPA also expressed support for the fundamental distinction Washington has drawn between biogenic and geologic fuels. EPA recognized a qualitative difference in the time required to replenish the reservoirs in which biologic carbon is stored when compared to geologic storage. While coal beds took millennia to form, carbon storage in forests and cropland occurs over decades, and is similarly rapidly replenished.[28] EPA also recognized another distinction, also noted by Washington’s DNR: natural processes release CO2 from biogenic sources, through natural decomposition as well as more rapid processes such as fires and floods.[29]

The PCHB Decision

The implications of Washington’s approach to biomass fuels can be seen in the Washington Pollution Control Hearings Board’s (“PCHB”) recent decision upholding the air permit for a biomass-fueled cogeneration project at a pulp mill in Port Townsend, Washington. The air permit for the project was approved by Washington’s Department of Ecology on October 22, 2010,[30] before EPA’s Tailoring Rule took effect.[31] As a result, greenhouse gas emissions were not an issue for the project’s air permit, but the appellants did challenge the way in which those emissions were handled in the environmental review of the project done under SEPA.

The cogeneration project involves modifications to two existing steam boilers and installation of new air pollution controls and a new steam turbine. The project will result in a 25 percent reduction (1.8 million gallons) in the mill’s annual combustion of fuel oil, which will be replaced by increasing its combustion of woody biomass fuels.[32] The SEPA checklist for the project explained that the project would result in a substantial reduction in the mill’s CO2 emissions from burning hydrocarbons. It also explained that CO2 emissions from burning wood would increase by more than double, but that under Washington’s statutory definition those were not considered greenhouse gas emissions. Based on this analysis, Ecology concluded that the project would result in a net decrease in regulated greenhouse gas emissions.

The project’s opponents objected to Ecology’s determination that the project would result in a net decrease in greenhouse gas emissions. They argued that Ecology should have prepared an EIS to fully evaluate the impacts of greenhouse gas emissions from the project, and required mitigation for the climate and other impacts of its CO2 emissions. The PCHB disagreed, holding that Ecology’s position complied with the Legislature’s direction that CO2 emissions from burning biomass are not greenhouse gas emissions.[33] The PCHB also found that the evidence before it showed that the region’s silvicultural sequestration capacity is increasing, and so the statutory exclusion for emissions from burning biomass is in effect.[34]

The Appellants further argued that the Legislature’s decision to exclude biomass-related CO2 emissions from greenhouse gas requirements was based on flawed scientific principles and should be reexamined by the PCHB. They presented the PCHB with a letter that had been sent to the Washington Legislature criticizing the biomass exclusion, arguing that it would increase timber harvesting, and that the IPCC approach should not be applied at the level of individual emission sources. While making note of the arguments, the PCHB concluded that the meaning of the statute and the legislative intent were unambiguous, and so it was bound by the statute’s plain meaning.[35]

Finally, the project’s opponents argued that Ecology had failed to adequately consider the effect of burning biomass on endangered species and forest health. The PCHB noted that the argument was premised on not just this one project, but on several new biomass burning projects being built in the region, resulting in increased competition for biomass, with resulting increased timber harvest or removal of forest debris needed for forest health. The PCHB concluded that the potential for a shortage of biomass was too remote and speculative to require additional analysis.[36]

Conclusion

The project opponents have appealed the PCHB’s decision to superior court, and so the final word on the challenge to this cogeneration project has not yet been written. Still, it provides a concrete example of the policy differences over the treatment of CO2 emissions from biomass combustion, as well as a useful illustration of the policy arguments likely to be advanced as EPA decides how biomass emissions should be treated under the federal Clean Air Act.

For more information regarding this case or the regulation of biomass emissions, please contact Svend Brandt-Erichsen or any member of Marten Law’s Climate Change or Air Quality practices.