Targets, Policy for State-Level Thermal Energy Markets

June 2015, by Adam Sherman, Biomass Magazine -- The use of energy for space and water heating accounts for roughly one-third of the total energy consumed in the U.S. and is supplied almost entirely by fossil fuels such as natural gas, propane and heating oil. In the Northeast, an epicenter of the growing wood heating market, more than 4.4 billion gallons of heating oil are used annually, primarily for space heating. This accounts for approximately 86 percent of the national demand for heating oil.

In recent years, many northeastern states have established aggressive targets for renewable energy as a way to expedite the transition away from fossil fuels. To date, however, most of the targets have focused on the use of renewable energy for electricity generation, rather than for thermal energy or transportation. In 2010, the Northeast Biomass Thermal Working Group, a coalition of biomass thermal energy advocates, released a vision statement calling for state and federal policies to grow the use of biomass energy from 4 percent of thermal energy demand to 18.5 percent of demand in the region by 2025. Referred to as “The Bold Vision,” this report was a valiant effort to spur more aggressive targets at the state level, and also recognize the positive economic impacts a bigger biomass market would generate for local economies, including job creation and other societal benefits. A bold vision indeed, this report was a first step in the right direction, and if you are not familiar with it, look it up on the NEBTWG website—it is worth a read.

Five years after release of the report, great progress has been made in the region. Maine, New Hampshire, Vermont, New York, and Massachusetts are now front-runner states where advancement of modern wood heating is most noticeable. Each of these states has a wide range of regulations, incentives, financing and education programs aimed at helping the market accelerate the use of modern wood heating. Each offers some level of incentives for bulk wood pellet-fueled boilers and has modest grant programs to encourage larger commercial and institutional wood heating projects. And a few states have also adopted, or are currently pursuing, other helpful policies,  such as flexible boiler regulations; sales tax exemptions on biomass heating equipment; fuel, state income tax credits; PACE and other financing programs; thermal inclusion in their state renewable portfolio standards; government lead-by-example policies, and wood heat education and technicalassistance programs.

Any of these policies taken individually may be a helpful step in the right direction, but they remain a patchwork of activity with incremental gains. When several can be woven together into a portfolio of biomass thermal energy policies, however, a lot more progress can be made. This is essentially the “carrots, sticks and tambourine” approach touted by our colleague (and 2015 Excellence in BioEnergy Award winner) Christiane Egger from Upper Austria.

In the U.S., we need a combination of financial, regulatory, and program support policies to move the market. But as states move toward developing portfolios of biomass thermal policy, we need also need state-specific targets for biomass thermal energy. The NEBTWG Bold Vision goals of 18.5 percent of thermal energy met with biomass by 2025 for the Northeast region was a great start, but the real need is for each state’s energy office to set its own specific targets for biomass heating in conjunction with their counterparts in economic development and forestry offices.

For example, in Vermont we have an ambitious state goal of reaching 90 percent all energy—including electric, thermal, and transportation—with renewables by the year 2050. Vermont is somewhat unique in that this state goal is not limited to just the electric sector. To meet such a large, ambitious goal, however, there must be smaller, achievable subgoals to serve as milestones to demonstrate measureable progress over time. Toward that end, we are working with the state to adopt a subgoal of reaching 35 percent of Vermont’s space heating needs with modern wood heating equipment and locally sourced wood fuels by the year 2030.

Establishing high-level goals for the expanded use of biomass heating is an essential strategy to unify all the various policies and programs and will help ensure we are all rowing in the right direction.
As more states broaden their energy thinking beyond just electricity, and realize that thermal and transportation make up a large majority of energy consumption (and carbon emissions), we have an ideal opportunity to engage state-level policy makers and regulators to help set clear goals and implement packaged policies and programs that will make measurable progress toward those goals.


Author: Adam Sherman
Manager, Biomass Energy Resource Center
asherman@biomasscenter.org
(802) 658-6060

(reposted from biomassmagazine.com ; also see Endless Mountains RC&D Council's Energy Committee webpage here for more information on our Biomass project.)