BioCycle October 2010, Vol. 51, No. 10, p. 53
Mark Jenner

An amazingly polite battle is raging between the US Department of Energy (DOE) and the US Environmental Protection Agency (EPA) over whether the harm to humans from carbon dioxide (CO2) is relative or whether it is absolute. The relative DOE methodology is based on a net increase in ancient, fossil greenhouse gases (GHG). The DOE treats CO2 emissions from recent biomass as carbon neutral. The EPA does not consider a relative change in carbon neutrality – only whether there is an absolute GHG emission or not. The outcome of this carbon-accounting conflict will define the future for us all.
If the DOE strategy prevails, biomass energy continues to be recognized as a potentially carbon-neutral energy source and there is hope for green economic growth. If the EPA wins, the outcome will be different. Early environmental regulations were technology-based (specifying technologies that can meet pollutant limits) rather than outcome-based (performance, or technology neutral, as long as the limit is met). Both methods count all potential pollutants or liabilities. The performance standard approach allows for adaptation and innovation, but the focus is still only on harm, with little attention to potential benefits such as compost or energy. EPA registers all liabilities, and then allows, or “permits,” reuse once the standards are met. Tabulating only the liabilities is no longer economically sufficient. The new EPA CO2-regulated world will cost more and allow fewer benefits. The current weak U.S. economy makes this especially difficult.

THE 600-POUND GORILLA
In fairness we got in this position quite innocently and with the best intentions. In December 2009, EPA declared carbon dioxide a human health hazard. This announcement came as a climate summit was beginning in Copenhagen. The EPA has chosen to regulate CO2 as it does other CAA emissions. In June 2010, the EPA issued its Title V, Greenhouse Gas (GHG) Tailoring Rule. With this rule, EPA adds greenhouse gas (GHG, in terms of CO2-equivalents) emissions to the CAA permitting process. EPA views the CO2 rules as economically inconsequential, because nearly all of the entities that will be regulated on CO2 are already regulated on other CAA pollutants. As a carbon-loving economist, I do not agree.
In May 2010, the DOE’s Energy Information Administration (EIA) released its Annual Energy Outlook on the state of energy out into the future. Biomass CO2 emissions are considered carbon neutral and are not included in energy GHG emissions. The EIA has been following the United Nations Intergovernmental Panel on Climate Change (IPCC) protocols for more than 10 years. The amount of energy-related emissions attributable to biomass combustion according to the EIA would increase energy-related CO2 emissions by 6.1 percent, or 353 million metric tons.
The crux of the conflict is due to two completely different carbon objectives: use vs. restriction. The EPA believes it is more important to count every ton of GHG – which is not costless – before permitting a beneficial use. The DOE, like the USDA, acknowledges beneficial attributes of biomass carbon without forcing added costs on both the private and public sectors. The EPA claims that in the big picture these additional costs are negligible.
Regardless of whether the EPA develops a pathway to permit biomass energy emissions, the added cost of compliance under the CAA Tailoring Rule will add sufficient costs as to undermine all the financial incentives that have been offered through the DOE and USDA grants and loans for bioenergy projects. The benefits of the absolute accounting imposed by the Tailoring Rule negate the benefits of building a carbon neutral biomass energy sector.
The carbon-neutrality of the DOE system does not directly allow for either beneficial uses or restriction of CO2/GHG in economic growth. However the DOE follows up with other economic incentives that promote economic, energy and environmental benefits. The private sector costs of managing the relative GHG accounting of the IPCC protocols allow the “system” to find the benefits, before emission costs accrue.

BETWEEN A “CARBON” ROCK AND A HARD PLACE
The bottom line is that regulating emissions as absolute liabilities is no longer sufficient to simultaneously promote the environment, economic growth and energy independence. Regulated biobased industries of the future require more flexibility in meeting these goals. There are arguably better ways than the IPCC protocols to promote and regulate carbon use and restrictions.
The larger issue is the growing implicit cost of navigating multiple regulatory layers of cross-media carbon use. The Obama Administration will have to decide to relax the EPA hard-line of accounting for all environmental liabilities in an absolute manner – with no recognition of cross-media benefits. Or, it will have to discard a vision of a green economy for the sake of maintaining its absolute, no-exceptions-to-emission history of Clean Air Act regulation.
This is the biomass policy “Waterloo” conflict with which U.S. policy makers are saddled. Is biomass carbon a benefit or a liability? EPA actions are imposing greater costs than the economy can assimilate. The costs of maintaining an absolute accounting system are far greater than the costs of maintaining a relative accounting system. I am rooting for the DOE.

Mark Jenner, PhD, and Biomass Rules, LLC, has joined the California Biomass Collaborative. Burning Bio News and other biomass information is available at www.biomassrules.com.