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The program pays for up to 75% of establishment costs of new energy crops. In addition, farmers participating in a selected BCAP project area surrounding a qualifying BCF can collect five years of payments (15 years for woody biomass) for the establishment of new energy crops. An additional matching payment of up to $45/ton (on a $1 to $1 basis) to assist with collection, harvest, storage and transportation (CHST) of an eligible material to a BCF will also be available for a period of two years. The launch of this new program has resulted in a substantial new subsidy for the existing wood market with significant market impact. Large numbers of existing biomass conversion facili- ties (led by lumber, pellet and paper mills currently burning wood for their own energy use without a federal subsidy) submitted applications to USDA to be approved as qualifying facilities. Consequently, funds obligated (though not yet spent) for BCAP through the end of March 2010 soared to over $500 million, more than seven times BCAP’s estimated budget of $70 million in the 2008 Farm Bill. The USDA now estimates BCAP costs at $2.1 billion on CHST from 2010 through 2013. USDA has allocated $2.1 million to Massachusetts for BCAP payments and $500,000 has been dispersed to date. Despite broad outreach (11 public meetings and other efforts), BCAP enrollment has been limited in the state, probably due to the limited array of biomass facilities. In Massachusetts, there are two qualifying biomass conversion facilities (BCF): Pinetree Power (17 MW electric generation facility) and LaSalle Florists, a very small greenhouse operation (USDA, 2010). Pinetree Power has about 20–25 suppliers that are approved eligible material owners (EMO). Based on interviews with procurement personnel at the Pinetree facility, the long-term impact of BCAP is unknown at this point. Overall, it is perceived to have created instability in the supply sector, potentially cutting costs for the electric power industry, but increasing costs for other competing industries that are not enrolled in the program. In Pinetree’s view, it also might encourage overcutting in response to the short-term subsidy to suppliers. The lack of forest management requirements for the program was also noted. 4 Based on interviews with Cousineau Forest Products, a leader in the wood brokerage industry for pulp, chips and biomass supplies across New England and the east, approximately 50% of the BCAP subsidy is being passed onto qualifying facilities from suppliers in the form of lower prices paid for fuel. Consequently, as currently structured, the BCAP program is significantly lowering fuel costs for the biomass power sector. Where landholdings are small, such as in Massachusetts, these savings generally accrue to loggers and the biomass consumers. In areas with larger landholdings, more of these savings go to landowners. 4 Pinetree Power information based on interviews with Tim Haley who prepared their BCAP application and Jamie Damman (M.S.) forester and wood buyer for North Country Procurement, consultant to Pinetree Power. The Commodity Credit Corporation (CCC) has issued a draft rule to implement BCAP specifying the requirements for eligible participants, biomass conversion facilities, and biomass crops and materials. Public comment on the draft rule closed on April 9, 2010. Comments on the rule address a diversity of issues ranging from overall support for the continuation of the program to concern that the initial focus on CHST payments has resulted in a substantial new subsidy for the existing woody-biomass market, creating market distortions and instability in the supply sector, cutting costs for some users (e.g., biomass power plants) and increasing costs for other competing industries (OSB manufacturers and other users of bark and chips). In addition, some comments have raised the issue of the absence of forest management requirements in BCAP could encourage overcutting in response to the short term subsidy to suppliers. Others have spoken to the need to focus BCAP on directing more resources towards the establishment and produc- tion of new energy crops, so the program can fulfill its purpose of expanding the amount of biomass available for alternative energy. 1.3.2 EnvironmentalProtectionAgency Position on Biomass Energy and Carbon Accounting 5 As determined by the Environmental Protection Agency in their final rule on Mandatory Reporting of Greenhouse Gases, electric generation and thermal facilities are not required to count emis- sions associated with biomass combustion when determining whether they meet or exceed the threshold for reporting (emis- sion of 25,000 metric tons per year for all aggregated sources at a facility). But if the threshold is exceeded, facilities are required to separately report emissions associated with the biomass combus- tion. Thus, facilities that rely primarily on biomass fuels are not be required to report under the rule (EPA, 2009). This approach is consistent with IPCC Guidelines for National Greenhouse Gas Inventories, which require the separate reporting of CO2 emissions from biomass combustion, and the approach taken in the U.S. Inventory of Greenhouse Gas Emissions and Sinks. Separate reporting of emissions from biomass combustion is also consistent with some State and regional GHG programs, such as California’s mandatory GHG reporting program, the Western Climate Initiative, and The Climate Registry, all of which require reporting of biogenic emissions from stationary fuel combustion sources. While this reporting requirement does not imply whether emissions from combustion of biomass will or will not be regulated in the future, the data collected will improve EPA’s understanding of the extent of biomass combustion and the sectors of the economy where biomass fuels are used. It will also allow EPA to improve methods for quantifying emissions through testing of biomass fuels. 5 Much of this section is drawn directly and/or quoted verbatim from the EPA’s Response to Public Comments Volume No.: 1 Selection of Source Categories to Report and Level of Reporting, September 2009 BIOMASS SUSTAINABILITY AND CARBON POLICY STUDY MANOMET CENTER FOR CONSERVATION SCIENCES 14 NATURAL CAPITAL INITIATIVEPDF Image | NATURAL CAPITAL INITIATIVE AT MANOMET
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