Biomass power is a $1 billion industry with 80 facilities in 20 states and supports more than 14,000 jobs nationwide. Biomass power plants usually are located in rural communities, creating thousands of jobs and producing millions in revenue for small towns.

Tenny said that NAFO agrees with EPA Administrator Lisa Jackson's assessment that "renewable, homegrown power sources are essential to our energy future, and an important step to cutting the pollution responsible for climate change."

Jackson said the EPA will issue guidance soon that will provide a basis for state or local permitting authorities to use to conclude that the use of biomass as fuel is the Best Available Control Technology for greenhouse gas emissions until July when the agency expects to complete a rulemaking action on the three-year deferral.

Environmentalists object to the EPA's deferral decision.

Attorney David Carr with the Southern Environmental Law Center said, "This is a 180-degree change in EPA's policy and we vigorously disagree. While it's reasonable for the EPA to continue evaluating the issue, it should not grant a blanket exemption in the meantime to industries planning to set up shop and burn trees for electricity, something it declined to do last year."

"More and more studies show that cutting down forests to burn for energy production often increases greenhouse gas emissions," he said. "The decision eliminates the incentive for companies to pursue biomass projects that are proven to truly help address climate change."

But biomass fuel producers like the EPA's move.

National Farmers Union President Roger Johnson said, "NFU emphasizes that carbon policy should be based on the best available science and methodologies. We also strongly support consultation and collaboration with farmers and ranchers as the United States moves forward in reducing greenhouse gas emissions."

Calling the EPA's decision "the right step," Renewable Fuels Association President Bob Dineen explained how the biogenic sources provision of the deferral will benefit his industry.

"Biogenic CO2 emissions that result from the fermentation of corn or other biomass are, by nature, carbon neutral because those emissions are naturally offset when the biomass removes an equivalent amount of CO2 from the atmosphere via photosynthesis," said Dineen. "Because biomass is carbon neutral, RFA and other stakeholders expressed concern when EPA failed to exempt biogenic emissions" from the Tailoring Rule.

Until recently, both industry and government have assumed that biomass burning is "carbon-neutral,? that is, it adds no net greenhouse gases to the atmosphere.

EPA stated on May 26, 2009, "The CO2 emitted from biomass-based fuels combustion does not increase atmospheric CO2 concentrations, assuming the biogenic carbon emitted is offset by the uptake of CO2 resulting from the growth of new biomass."

But Carr said, "burning trees to produce electricity is often not carbon neutral." Instead, he said, "Forests in the United States currently sequester more than 10 percent of our annual carbon emissions."

Biomass Accountability Project President Meg Sheehan said the EPA ruling means the agency will give this "presumed carbon neutrality" a second look, emphasizing that "hard science will be the arbiter of the outcome." This could mean the biomass energy industry will be subject to more, not less, regulation.

"Recent respected scientific studies indicate that carbon neutrality is not supported by the facts, so the industry is likely to face increased regulation and scrutiny," Sheehan said, citing a 2010 study commissioned by Massachusetts that showed burning biomass over decades puts more carbon dioxide in the atmosphere than burning coal.

"While most people think of windmills and solar panels as the primary renewable energy source, biomass burning currently generates roughly half of the power considered 'renewable' in the United States," she said. "In many cases that includes the burning of whole trees and chemically contaminated waste."

Still, the biomass industry is encouraged by the EPA deferral decision. Bob Cleaves, president and chief executive of the Biomass Power Association, said, "The agency's statement that certain biomass 'such as waste materials whose inevitable decomposition will result in greenhouse gas emissions anyway' confirms what we at BPA have known all along - the use of wood waste materials and agricultural residues for biomass energy have a beneficial carbon impact and should be embraced as a renewable energy source."