Political changes may hinder biomass

With Republicans poised to become the majority party in the U.S. House of Representatives after the November election, climate change legislation probably is dead for at least two years.

And that’s bad news for Montana wood producers who are interested in biomass, a group at Wednesday’s meeting of the Montana Wood Products Association was told.

Seattle attorney Craig Gannett spoke about regulations affecting green energy, the great carbon neutrality debate and challenges facing biomass to about 100 people at the association meeting in Whitefish. Gannett specializes in renewable energy and climate change law.

A biomass cogeneration plant — to serve as an alternative and productive destination for the area’s wood-waste products — has been proposed by F.H. Stoltze Land & Lumber Co. near Columbia Falls.

Renewable energy sources benefit from the perception there will be limits placed on the amount of carbon used to generate electricity, Gannett said. That’s why businesses that want to use biomass as an energy source should want climate change legislation enacted.

If that legislation doesn’t get approved, the “next best thing” for biomass as an energy source would be implementation of a national renewable energy standard, which would require utilities to include certain percentages of renewable energy in their portfolios.

About half of the states have such standards already, Gannett said. But a federal requirement would allow biomass to be included as a renewable energy and marketed nationwide.

A bill to implement that federal rule was introduced in the U.S. House of Representatives on Tuesday, Gannett said, but because “there is no compelling reason to do it this year,” he added he’d “be surprised if it becomes law.”

Another debate related to biomass production that Gannett discussed is whether carbon emissions from a biomass plant should be treated the same as carbon emissions from a fossil fuel plant.

His position on that?

No.

“Almost everyone gets that except the entity that matters,” Gannett said — the Environmental Protection Agency.

“EPA says ‘yes.’ And EPA holds the regulatory stick” regarding the Clean Air Act.

EPA officials could change their minds about that at any time, though, he said. They have asked for additional information to review biomass emissions.

Generally, there is disagreement among both scientists and the general public about how to treat carbon emissions from biomass. A key factor in those differing opinions is the time frame for the evaluation.

“If you look at biomass in the short term, there are times it’s a net emitter,” Gannett said, “but not in the long term because the cycle is complete.”

It’s important that producers don’t do things wrong in the short term and hurt the long-term scenario, he said.

In the great renewables race, biomass is losing ground to wind and solar energy, even though the potential for electricity generation from biomass “exceeds wind and dwarfs solar” at some point, Gannett said. “My concern is it isn’t materializing.”

Today, in the northwestern United States, 3,000 megawatts of electricity come from wind power, compared to 325 megawatts coming from biomass, Gannett said.

Part of the reason for the lack of interest in biomass production is low electricity prices because of the sluggish economy, which has resulted in the closure of some power plants and decisions not to build planned power plants.

Policy-makers seem to be buying in to wind and solar, he said, which means biomass producers need to tell their story “until you’re blue in the face.”

Right now, there’s pressure on coal operations in the northwest United States to close, which presents an opportunity for biomass to step in, he said. “The power to replace coal needs to come from somewhere and biomass should be looking to fill that.”

Biomass suffers from a different set of standards related to production tax credits, too, Gannett said, which has been a negative factor in its development.

Producers who generate electricity that’s returned to the grid have been able to take advantage of a 4-cent-per-kilowatt-hour tax credit since 1992. Biomass was added to the qualifying list in 2004, but the credit was only 2 cents per kilowatt hour, Gannett said.

The production tax credits expired at the end of 2009 although Sen. Max Baucus, D-Mont., has introduced legislation to retroactively extend the tax through the end of 2010, Gannett said.

Opponents of the extension argue that tax credits shouldn’t be awarded to operations that are “up and running.” He countered that argument by pointing out such credits are offered “all of the time” by governments.

Gannett doesn’t expect a vote on the tax credit issue this fall because Congress likely will be consumed with the issue of extending tax cuts. However, he said, it’s possible the energy production tax credit issue could be rolled into the bigger tax bill.

“The 2 cents versus 4 cents fight will come another day for biomass,” Gannett said.

Reporter Shelley Ridenour may be reached at 758-4439 or by e-mail at sridenour@dailyinterlake.com.