1. B ACKGROUNDER FOR SEC LETTER ON BIOENERGY Mary S. Booth, PhD Partnership for Policy Integrity October 25, 2013

2. “B IOMASS ENERGY ” –Combustion of wood and other biological materials to produce steam and generate heat and power; or gasification of fuel to drive a turbine. –Combustion at “direct-fired” plants or as co-firing with coal –“Biomass” = wood. Few facilities using agricultural residues or energy crops –Considered “renewable energy”: eligible for same incentives and subsidies as wind and solar power. –Has been considered “carbon neutral” –now changing 2

3. McNeil Power Plant, Burlington, Vermont Photo: Chris Matera, Massachusetts Forest Watch 3

4. Wood chip pile, 49 MW biomass plant, Anderson, CA 4

5. 5

6. Company claims Biomass power is “clean” Biomass power is “carbon neutral” Bioenergy “reduces” greenhouse gas emissions Bioenergy mitigates climate change 6

7. Bioenergy is not “clean” CO 2 emissions greater than from fossil fuels Conventional air pollutant emissions similar to or greater than from fossil fuels 7

8. California: “Blue Lake Power Plant Smokes Out City” 8

9. Bioenergy pollutant emissions per MWh are greater than from coal or gas 9

10. Permitted emissions for Russell Biomass, 50 MW plant in MA (forest wood only) Particulate matter: 84.3 tons/yr Nitrogen oxides: 194.5 tons/yr Carbon monoxide: 243.1 tons/yr Sulfur oxides: 81 tons/yr Volatile org. cmpds: 32.4 tons/yr Ammonia: 32.4 tons/yr Mercury: 8 lb/yr Lead: 400 lb/yr Hydrochloric acid: 11.4 tons/yr Hazardous air pollutants: 49.1 tons/yr CO2: 635,000 tons/yr - Cooling water requirement: 880,000 gallons/day from Westfield River - Discharge of warm concentrated boiler blowdown to river - Eligible for about $96 million in subsidies over 10 years 10

11. Biomass energy is opposed by health organizations Massachusetts Medical Society resolution: (December, 2009) “biomass power plants pose an unacceptable risk to the public’s health by increasing air pollution” American Lung Association Energy Policy: (June 11, 2011) The American Lung Association does not support biomass combustion for electricity production, a category that includes wood, wood products, agricultural residues or forest wastes, and potentially highly toxic feedstocks, such as construction and demolition waste. The American Lung Association strongly opposes the combustion of wood and other biomass sources at schools and institutions with vulnerable populations. 11

12. Bioenergy is not “carbon neutral” – at least not in timeframes we care about Bioenergy transforms forest carbon into atmospheric carbon Bioenergy CO 2 emissions higher than from fossil fuels Emissions persist – atmosphere can’t tell the difference between bioenergy emissions and fossil fuel emissions Takes decades to achieve parity with fossil fuels Carbon neutrality does not equal climate neutrality 12

13. Biomass power facilities emit more CO 2 per MWh than coal or gas facilities A biomass plant emits ~150% the CO2 of a coal plant ~250% the CO2 of a gas plant ~ 340% the CO2 of a combined cycle plant Fuel CO2 per heat content data are from EIA. Efficiency for fossil fuel facilities calculated using EIA heat rate data (http://www.eia.gov/cneaf/electricity/epa/epat5p4.html); biomass efficiency value is common value for utility-scale facilities. 13

14. U.S. Biomass industry CO 2 emissions, 2009 Equivalent to combined reported power sector emissions from RI, SD, DE, AK, ME, NH, CT, HI, OR, WA, and NJ Wood demand for bioenergy and pellets will triple by 2020 Fuel typefuel (tons) heat input (mmbtu) CO2 emissions (tons) Agricultural fuels 4,252,601 32,312,178 5,613,433 Wood solids 48,165,174 489,243,148 48,566,550 Pulping liquors 57,011,003 645,150,689 32,923,854 "other" biomass solids 1,981,226 20,853,306 1,997,736 Total 111,410,004 1,187,559,321 89,101,573 14

15. –The “waste” argument: Materials burned are waste and would decompose and emit CO2 anyway – e.g. forestry residues – tops and branches left over after commercial timber harvesting. Thus, no net release of carbon. –The “resequestration” argument: Ongoing or future forest growth re-sequesters carbon that’s released by burning, thus no net release of carbon. Bioenergry “offsetting” Neither argument acknowledges time-lag between burning biomass and offsetting those emissions. 15 Why has biomass energy been treated as carbon neutral?

16. Burning emits more CO 2 than decomposition 16 25 tons 15 tons

17. 17 May 12, 1998 October 31, 2007 25- ACRE CLEARCUT, M AINE ~ 950 dry tons biomass Enough fuel to power a 50-MW biomass plant for about 21 hours T REES TAKE A LONG TIME TO GROW BACK

18. Sustainable Forestry Initiative certified biomass harvesting, Nova Scotia Photo credit: Jamie Simpson 18

19. Manomet Study Commissioned by the State of Massachusetts to examine carbon and forest cutting impacts of biomass power When using whole trees as fuel, net CO2 emissions are greater than coal emissions for more than 45 years. 19

20. Manomet Study: Northeastern Forests When using whole trees as fuel, net CO2 emissions exceed coal emissions for more than 45 years, and exceed gas emissions for more than 90 years, even taking forest regrowth into account. Southeastern Study (Colnes et al, 2012) Executive summary: “The expanded biomass scenario creates a carbon debt that takes 35-50 years to recover. This outcome depends on the fossil fuel pathway used for comparison and assumes forests re-occupy the site through planting or natural regeneration, with no forest land conversion.” 20

21. Massachusetts regulations constrain biomass power eligibility for the RPS Efficiency  50% efficiency to qualify for ½ REC/MWh (60% for full REC)  Promotes combined heat and power GHG emissions accounting  Framework accounts for carbon debt of whole tree harvesting  Requires 50% reduction in GHGs over 20 yrs compared to combined cycle natural gas facility Harvesting Sustainability  Allowable biomass removals (as a percent of the forest products harvested) depend on soil conditions  Protection old growth, steep slopes; retention of naturally down woody material  Harvest plans/fuel sourcing plans required 21

22. The consequences of getting it wrong 22

23. Green Swamp, Brunswick County, NC (Photo: Dogwood Alliance) 23 The consequences of getting it wrong

24. 24 14% reduction from 2006 3% reduction from 2006 B OOTH AND W ILES, “C LEARCUT D ISASTER,” E NVIRONMENTAL W ORKING G ROUP The consequences of getting it wrong: ACESA, 2009

25. Concentrations of the greenhouse gases CO2, CH4, and N 2 O now substantially exceed the highest concentrations recorded in ice cores during the past 800,000 years. The mean rates of increase in atmospheric concentrations over the past century are, with very high confidence, unprecedented in the last 22,000 years. The pH of ocean surface water has decreased by 0.1 since the beginning of the industrial era (high confidence), corresponding to a 26% increase in hydrogen ion concentration. Continued emissions of greenhouse gases will cause further warming and changes in all components of the climate system. Limiting climate change will require substantial and sustained reductions of greenhouse gas emissions. (Intergovernmental Panel on Climate Change, Fifth Assessment Report. Summary for policymakers, September 27, 2013. www.ipcc.ch) Intergovernmental Panel on Climate Change (IPCC) We need to reduce emissions NOW 25

26. Millions of tons of new demand for “energy wood” 0 – 100k 100k – 250k 250k – 500k 500k – 1,000k 1,000k – 2,000k Yearly wood demand, thousands of tons Biopower (mostly proposed) Pellets (existing and proposed) Liquid biofuels using wood (mostly proposed) 26

27. IPCC “Mitigation” Scenario – incompatible with wood-fired power plants 27 Three out of for scenarios project continued temperature rise past 2100 Only mitigation scenario stabilizes – requires immediate effort to reverse emissions We should be planting trees, not burning them.

28. Investor risk and bioenergy Risks: Of regulation Of damage to the company’s reputation Of investments that won’t pay off We are asking the SEC: Have companies adequately disclosed material risks? Are they making materially misleading statements to investors, including claims that appear to be unsupportable? Can the SEC offer some accounting or disclosure guidance for claims of carbon neutrality? 28

29. Relevant policy developments Federal level: EPA regulates CO 2 under the Clean Air Act – bioenergy emissions initially included July 2011: 3-yr deferral for bioenergy emissions, exempting most facilities from PSD permitting. Enviros sue EPA. Center for Biological Diversity, et al. v. U.S. EPA, July 2013: Environmental groups win case. 29 State-level: MA biomass regulations; proposed regulations in MD, DC (heavy opposition from Dominion) Meanwhile: EPA’s Science Advisory Panel, Sept. 2012: “Bioenergy can not a priori be considered carbon neutral”

30. September, 2013: EPA’s New Source Performance Standard for CO 2 acknowledges biogenic emissions: “In general, the overall net atmospheric loading of CO 2 resulting from the use of a biogenic feedstock by a stationary source, such as an EGU, will ultimately depend on the stationary source process and the type of feedstock used, as well as the conditions under which that feedstock is grown and harvested.” 30

31. Mary S. Booth mbooth@pfpi.net 413-253-3256 Sanford Lewis sanfordlewis@gmail.com 413-549-7333