UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D.C. 20460



## JAN 1 22011 THE ADMINISTRATOR

The Honorable Max Baucus United States Senate Washington, D.C. 20510

Dear Senator Baucus:

Thank you for your recent letter about the way that carbon dioxide ("C02") emissions from biomass burning will be treated in Clean Air Actpermitting ofconstructionprojects at large stationary sources. As you know, biomass canbe part ofa national strategy to reduce dependence onfossil fuels, and efforts are underway to foster the expansion ofrenewable
resources and promote biomass as ways ofaddressing climate change and enhancing forest management.

Last July, EPA solicited views from the public on approaches to accounting for C02 emissions from biomass and otherbiogenic sources, including whether some orall ofa source's biomass C02 emissions could be discounted based on a determination that they are canceled out by the C02 absorption associated with growing the fuel. EPA received information supporting the conclusion that certain biomass

- such as waste materials whose inevitable decomposition will result in greenhouse gas emissions anyway
- have only very limited climate impacts when combusted as fuel. EPA also, however, received information indicating that the use ofcertain other biomass as fuel could have more significant climate impacts.

In November, EPA announced that it was reviewing the public's comments with the goal ofdeciding whether the Clean AirAct would allowthe use ofsome kind ofdiscounting system
orother methodreflecting the net impacts ofbiomass combustion in determining the applicability ofthe pre-constructionpermitting requirement to C02 emissions from biomassfired units. Your recent letter urges EPA to make a positive determination and to start a rulemaking promptly.

As ofJanuary 2, 2011, only those large stationary sources that triggerthe preconstruction permitting requirement for otherpollutants need to address greenhouse gases such
as C02. No source will be subjectto the pre-construction permittingrequirement solely because ofits greenhouse gas emissions until afterJuly 1, 2011. That is one result ofthe Tailoring Rule that EPA issued last year. With the approach ofJuly 1in mind, I am announcingtoday that, by that date, EPA will complete a rulemaking to defer for three years the application ofthe preconstruction permitting requirement to biomass and other biogenic C02 emissions.

Internet Address (URl). http://www epa.gov Recycled/Recyclable. Printed WIth Vegetable Oil Based Inks on 100% Postconsumer. Process ChlOrine Free Recycled PaperThe purpose ofthe deferral is to give EPA time to effectuate a detailed examination of the science associated with biogenic C02 emissions and to considerthe technical issues that the agency must resolve in orderto account for biogenic C02 emissions in ways that are scientifically sound and also manageable in practice.

EPA will ensure that partners within the federal government and scientists outside ofit withrelevant expertise play meaningful roles in the examination. Followingthe examination's completion, EPA will use its work product in establishing, by notice-and-commentrulemaking, the system for determining the applicability ofthe Clean Air Act'spre-constructionpermitting requirement to projects that result in biomass and other biogenic C02 emissions. EPA's intent is to ensure that both the scientific examination and the resulting rulemaking are completed within the three-year deferral period mentioned above.

Concurrent with the proposal to defer application ofthe pre-constructionpermitting requirement (known as "Prevention ofSignificant Deterioration," or "PSD") to biomass and otherbiogenic C02 emissions, EPA intends to Issue interim guidance to help permitting authorities establish a basis for concluding that the bestavailable control technology (or "BACT," which is one ofthe statutory conditions for receiving a permit) for greenhouse gas emissions at such sources is simply combustion ofbiomass fuels. As noted above, underthe Tailoring Rule, as ofJanuary 2, 2011, large stationary sources that become subject to PSD for otherpollutants will need to address greenhouse gases such as C02. Ifsuch permits are issued before July I, 2011, then existing regulations might require that the permits meet the BACT requirement for greenhouse gas emissions during an interim period oftime. In guidance issued last November, EPA explicitly recognized that apermitting authority might determine that certain types ofbiomass by themselves are BACT for greenhouse gas emissions after considering the environmental, energy, and economic benefits ofusing the fuel. EPA's supplemental guidance will provide abasis thatpermitting authorities may use to supportthe conclusion, during the interim period, that BACT for C02 at such sources is simplythe combustionofbiomass fueL

I hope you will see the steps described inthis letter as following through on my prior commitmentto exercise whatever discretion the Clean Air Act affords to avoid discouraging the
use ofrenewable, domestically-produced fuel 

### inpowerplants and factories. Ifyou have additional questions, please do not hesitate to contact me orto have your staffcontact David McIntosh in EPA's Office ofCongressional and Intergovernmental Relations.