EPA Uncertain of Biogenic Fuels’ Role

By Todd Palmer and Anna Wildeman | August 22, 2012

Recent air permitting actions highlight the U.S. EPA’s struggle—and continued uncertainty—in determining the most appropriate Best Available Control Technology emission limits for bioenergy facilities. The agency actions described further below suggest that EPA will not consider the use of biogenic fuel, in and of itself, as sufficient to meet a source’s BACT obligations for the control of greenhouse gas (GHG) emissions. Rather, bioenergy facilities are expected to consider the use of additional GHG control equipment or more energy-efficient technologies, such as combined-cycle turbines or combined heat and power (CHP) to limit GHG emissions. This development could unintentionally hinder the development of bioenergy facilities by adding more costs and regulatory uncertainty.  

By way of background, EPA requires larger sources of GHG emissions to obtain preconstruction prevention of significant deterioration (PSD) permits.These PSD permits must contain emission limits that are developed on a case-by-case basis to reflect the emission rates that can be achieved by employing the best available control technology. In November 2010, EPA released its PSD and Title V Permitting Guidance for Greenhouse Gases, in an effort to assist states in developing BACT limits for GHG emissions. This guidance acknowledged that various federal and state policies are specifically designed to facilitate and expand the use of biogenic fuels—biomass and biogas—as a way to reduce ambient GHG emission concentrations and thereby address climate change. To that end, the EPA guidance suggested that state permitting authorities consider the use of “certain types of biomass by themselves” as satisfying BACT obligations for controlling GHG emissions. 

In March 2012, EPA released a second policy document entitled Guidance for Determining Best Available Control Technology for Reducing Carbon Dioxide Emissions from Bio-Energy Production. This second guidance provided illustrations of how a state might support a conclusion that the combustion of biogenic fuels, without any other emission control techniques, was sufficient to satisfy BACT emission control requirements for GHG emissions. With these two guidance documents in place, EPA appeared to be signaling that the use of biomass as a fuel would in and of itself meet BACT obligations.

However, on March 15, 2012, EPA Region V provided comments on a draft PSD permit that had been issued by the Wisconsin Department of Natural Resources for five new combustion turbines that were proposed to burn biogas. In the draft permit determination, WDNR concluded that the proposed facility’s GHG BACT requirements were satisfied by the turbines burning biogas and using good combustion practices. Yet, in its March 2012 letter, EPA asked WDNR to explain why it did not require the permittee to evaluate the feasibility of reconfiguring the project to utilize combined-cycle turbines or CHP to meet GHG BACT requirements, both of which utilize thermal energy in a more efficient manner and thereby lower overall GHG emissions.  Implicit in EPA’s comment is that the permittee’s proposed use of biogas, in and of itself, was not sufficient to satisfy the source’s GHG BACT obligations.

In a letter dated May 25, 2012, WDNR rejected EPA’s comment, reasoning that combined-cycle and CHP technology cannot be implemented at the proposed facility due to the lack of available space. WDNR’s response avoids the broader policy issue of whether regulators have the authority to force a permit applicant to utilize ancillary GHG emission reduction techniques on bioenergy facilities, or whether they can force a project developer to switch its chosen power generation technology from simple-cycle to combined-cycle or CHP. It remains to be seen whether EPA or others challenge the WDNR’s decision.

The renewable energy industry—particularly biomass and biogas project developers—should closely scrutinize PSD permits currently being issued to bioenergy facilities, as they can provide insight into costs associated with biogenic fuel uses. Permits requiring the utilization of combined-cycle or CHP technology will add additional regulatory burden and expense which could make bioenergy facilities less competitive.

Authors: Anna Wildeman
Attorney, Michael Best & Friedrich LLP
(608) 283-0109
Todd Palmer
Attorney, Michael Best & Friedrich LLP
(608) 283-4432