1111 Nineteenth Street, NW, Suite 800 ▪ Washington, DC 20036 ▪ 202 463-2700 Fax: 202 463-2785 ▪ www.afandpa.org America’s Forest & Paper People ®

- Improving Tomorrow’s Environment Today ® Prevention of Significant Deterioration/ Title V Greenhouse Gas Tailoring Rule

American Forest & Paper Association Response to EPA questions Regard ing Impacts on Small Business

The American Forest & Paper Association is the national trade association of the forest products industry, representing pu lp, paper, packaging and wood products manufacturers, and forest landowners. Our companies make products from renewable and recyclable resources. The forest produc ts industry accounts for approximately 6 percent of the total U.S. manufacturing GD P, putting it on par wit h the automotive and plastics industries. Industry companies produce $200 billion in products annually and employ approximately 1 million people earni ng $54 billion in annual payroll. The industry is among the top 10 manufacturi ng sector employers in 48 states.

Of AF&PA’s 135 member companies, approxim ately 23 companies are considered small businesses per the fo rmal government definition 1 . AF&PA does not collect Title V permit information or potential to emit in formation from our me mbers and therefore cannot directly answer many of the questions posed by EPA. However, we would like to highlight what we see as a severe impac t on small facilities, largely wood products mills, due to the Tailoring Rule’s failure to re cognize that emissions from the combustion
of biomass are carbon neutral and should not be included in major source and
modification thresholds.

Carbon neutrality is universally recognized as a basic tenet of renewable energy and climate change policy. It is incorporated into the Intergovernmental Panel on Climate Change Guidance and the UNFCCC reporti ng protocols, whic h U.S. EPA uses
to calculate its annual GHG invent ory of emissions and sinks.

Like most GHG Reporting protocols, EPA’ s Mandatory GHG Reporting Rule excludes biogenic emissions from the threshold deter mination. The European Union Emissions Trading System and proposed climat e legislation in the U.S. do not regulate emissions

1 Employ less than 500 people1111 Nineteenth Street, NW, Suite 800 ▪ Washington, DC 20036 ▪ 202 463-2700 Fax: 202 463-2785 ▪ www.afandpa.org America’s Forest & Paper People ®

- Improving Tomorrow’s Environment Today ® from biogenic sources. By including biogeni c emissions in its threshold determination for PSD major sources, AF&PA estimates t hat an additional 136 wood products mills will be considered major sources for GHGs under PSD. If bi ogenic emissions are
excluded from PSD threshold determinations , only 5 mills would exceed the 25,000
threshold. This is an increase from 2% of member wood product mills considered major

sources to 51%.

EPA has ample authority to exclude CO 2 emissions generated by combustion of biomass from the determination of whether a facility is a ma jor stationary source or is undergoing a major modification for PSD purposes. In fact, EPA has repeatedly asserted that it has similar types of flexibility to interpret t he PSD provisions of the Clean Air Act, including in the proposed Tailoring Rule.

There are significant consequences should the PSD GHG Tailoring Rule not recognize the carbon neutrality of CO 2 emissions from biomass.

First, treating biomass-based fuels essentiall y the same as fossil fuels under climate policy would increase the adv erse environmental impacts associated with fossil fuel use. Entities would prefer to use fossil fuels, which have higher heating values and are therefore more efficient in terms of energy production. Beyond GHGs, fossil fuels also produce more sulfur dioxide when burned than do biomass-based fuels.

Second, failing to recognize the carbon neut rality of biomass would create substantial uncertainty, deterring markets for renewable energy and upsetting strategies to address climate change and energy security. Invest ors and industries pl anning to undertake investments in these areas w ould be paralyzed precisely at a moment when the national and global economies need those ty pes of investments.

Third, economic and job dislocation would like ly result in jurisdictions that do not recognize biomass as carbon neutral in c limate policy. EPA would be eliminating a potential cost mitigating compliance strategy - the use of carbon neutral biomass fuel - for forest products industry and other manufactu ring facilities. Due to increased cost of compliance (and being competitively disadvan taged globally), these facilities may have to close and relocate to other areas outsi de the U.S. that do not have mandated GHG reduction programs or that do recognize the carbon neutrality of biomass in their GHG reduction programs.

Finally, because national accounting proced ures account for biogenic emissions separately as net emissions (and sequestrat ion) from land use activities, counting emissions from the combustion of biogenic sources would result in double counting.1111 Nineteenth Street, NW, Suite 800 ▪ Washington, DC 20036 ▪ 202 463-2700 Fax: 202 463-2785 ▪ www.afandpa.org America’s Forest & Paper People ®

- Improving Tomorrow’s Environment Today ® AF&PA appreciates the opportunity to submit these comments. Pl ease do not hesitate to contact us with any questions.

Contact:

Rhea Hale rhea_hale@afandpa.org
202-463-2709

Tim Hunt tim_hunt@afandpa.org
202-463-2588