Washington Update: Carbon And Tax Policy
Last month, the Biomass Power Association contributed to evolving policy and regulatory discussions at the U.S. EPA and U.S. Senate Finance Committee. Both proceedings could have a major impact on the future of the biomass power industry.
In late March, we testified at the EPA’s Scientific Advisory Board meeting to review the Framework for Assessing Biogenic CO2 Emissions from Stationary Sources that the agency released last November. This panel’s scientists, experts representing several areas of forestry and agriculture, have been meeting regularly for the past four years. Their simple-sounding mission is to determine a method for accounting for carbon from all biogenic sources. Not surprisingly, this has proven to be a daunting task with implications far beyond the realities of the biomass power sector. How to account for corn ethanol and its production? Dedicated energy crops? Pelletized fuel? While interesting topics to consider, none of them have much bearing on biomass power.
The goal of the panel is to come up with an all-purpose and all-encompassing way to measure carbon from biogenic fuels. However, in keeping the process completely separate from policy considerations, the panel may be keeping biomass power in a policy limbo at a time we can’t afford uncertainty. The EPA’s final Clean Power Plan is due out this summer, and will shape how states are able to design carbon reduction plans. We need a clear understanding of how biomass will count under the Clean Power Plan.
If the final language defers to the SAB panel’s future decision on biomass—one that may not be available for years—states may be uncomfortable including biomass in their carbon reduction plans. States with abundant biomass, or the potential for a strong biomass industry, need a baseload power source to include in their energy mix alongside intermittent sources like wind and solar. Failure to create certainty around biomass would be a major oversight.
Fortunately, there is an easy fix here: The EPA simply needs to declare biomass from residuals and low-value, organic sources as a permissible, zero-carbon power source under the Clean Power Plan. Virtually every scientist who has studied biogenic carbon accounting agrees with this approach, even the staunchest biomass skeptics. We are doing all that we can to make this point to the EPA.
Meanwhile, the Senate Finance Committee, led by Sens. Orrin Hatch, R-Utah, and Ron Wyden, D-Ore., is undertaking another challenging task: how to reform our tax code. The two senators have broken down the tax code into five sections, and are soliciting comments on each of these pieces of tax law. In late March, Biomass Power Association presented our views on how to improve taxes to preserve our industry.
Alongside representatives of the other baseload power sources, we highlighted to a panel of staffers the important role that biomass plays in our power grid. In addition to being a reliable and consistent energy source, biomass also provides rural jobs and is an important market for discarded forestry and agricultural materials. To a panel of Senate Finance Committee staffers, we recommended a more balanced approach to supporting renewable energy sources through the tax system. By ensuring parity among the renewable sources, and taking into account the factors that distinguish them—like longer lead times for building projects—the tax code can play a role in making sure that the appropriate renewable resources are available and taken advantage of in every state and region.
Biomass Power Association is holding its annual fly-in to Washington, D.C., in May. Our members will be meeting with their elected officials, emphasizing the need to get tax policy and carbon regulations right.
Author: Bob Cleaves
President and CEO, Biomass Power Association