Greenhouse Gas Tailoring Rule now in play

By Anna Austin | January 04, 2011

The dreaded U.S. EPA Greenhouse Gas Tailoring rule is now in effect, despite hopes of modifications or a delayed implementation date.

While the rule largely affects fossil fuel consumers, the largest greenhouse gas emitters, it does not exempt biomass power producers from greenhouse gas (GHG) permitting requirements or consider biogenic carbon cycles. Therefore, the rule requires the same GHG reporting obligations from biomass consumers as fossil fuel consumers.

It is widely speculated the rule will negatively affect the biomass power industry, which has been exposed to an array of regulatory and political uncertainty in the past year, including the looming Tailoring Rule, the future implementation of the industrial boiler Maximum Achievable Control Technology (MACT) rules, and the near-suspension of Biomass Crop Assistance Program funding for 2011.

According to a study released in December commissioned by the National Alliance of Forest Owners and conducted by Forisk Consulting, regulatory uncertainty created by the EPA has contributed to stalled investment in at least 23 near-term projects representing 1,519 megawatts of potential electrical capacity.

The study projects that up to 19 states would be unable to satisfy a minimum renewable electricity standard of 15 percent by 2021, and taking into account impacts on investment in wood bioenergy projects particularly in wood-rich states and regions, implementation of the Tailoring Rule could leave up to 30 states unable to meet renewable energy goals.

Additionally, by 2021 the U.S. is likely to see 11,844 to 26,380 fewer renewable energy jobs and $18 billion fewer dollars of capital investment in renewable electricity generation, according to the study.

The NAFO study is not alone its findings. A report released in September by scientists at the University of Washington titled “Unintended Consequences of the EPA Tailoring Rule” found that the rule will reduce U.S. forest sector competitiveness, decreasing U.S. production and increasing forest product imports or fossil intensive substitutes.

Additionally, earlier in the year 114 of the nation's leading environmental scientists expressed concern over the Tailoring Rule in a letter to U.S. House and Senate leaders, stating that “[the rule is] incorrect and will impede the development of renewable biomass energy sources.”

Still, there has been no indication from the EPA that the Tailoring Rule will be modified to exempt biomass. However, in December EPA filed a request with the federal District Court for the District of Columbia seeking an 18-month extension of the current schedule for issuing the MACT rules.