Government Assistance: Double-Edged Sword?

By Bill Bell | April 05, 2012

“Wood Pellet Producers Ask Federal Government for Help.” So read the unfortunate headline of the Bangor Daily News article describing a February meeting of Maine’s pellet industry leaders with USDA Rural Development Undersecretary Dallas Tonsager.

A predictable reader reaction in the comments blog accompanying the online version of the newspaper was “Great, another industry looking for a handout.” Of greater concern was the fact that of the 129 posted comments, this particular response was “liked” by 78 viewers, far more than the response to any other set of remarks. 

Even allowing for the infantile nature of many commenters and their respondents, this reaction needs to be recognized for what it is. Our industry needs to adjust for the fact that federal energy assistance programs are now going to be “Solyndra-shy.” Add to this the fact that one of our biomass champions, U.S. Sen. Olympia Snowe, R-Maine, has announced that she will not be seeking re-election. Add to all that the fossil fuel industry’s success in getting the “government shouldn’t pick winners and losers” mantra adopted in many circles.  

We need to ask of government only that which clearly makes sense to virtually every consumer and voter.

In many states, common-sense concerns about the cost of constructing new electrical generating facilities has led to a very modest systems benefit charge added to every electric bill. Those funds are then used to bring about significant efficiencies, and reductions in electricity consumption, to electricity consumers of all classes.

Concerned citizens, legislators, and public utility regulators in half of our states have used somewhat the same electricity-oriented approach to establish renewable portfolio standards mandating that a percentage of the electricity delivered in those states come from renewable sources. In Maine, however, a yellow light has just flicked on. The attempt by environmental groups to place on the November ballot an increase in the required renewables has fallen short of the required petition signatures, and is postponed for a year.

Public measures to promote pellet heat will succeed only if they are seen by the consumers as truly cost-saving. The best thing happening now, in terms of public support for fuel-switching, is the media advertising presently taking place in Maine by both stove retailers and a major pellet boiler firm, all stressing that pellets are half the price of oil. Once this simple claim becomes widely accepted as fact, arguments about climate change, economic benefits of keeping fuel dollars in-state, and increased employment in the forest products industry suddenly carry much more weight.

But let’s be careful what we wish for. Short-term subsidies such as the very successful Maine Forest Service grants to schools installing pellet heat are enduring only if they can inspire other school officials, architects, heating consultants, and local taxpayers to make similar investments without grant assistance. Public financing for wood heating systems will be successful if it is in the form not of outright taxpayer expenditures, but instead of loan guarantees such as those USDA already provides for a myriad of rural development purposes.

Maine’s energy agencies are currently considering a pilot project that will enable 500 clients of the Low Income Home Energy Assistance Program to install pellet stoves, getting them off the ever-escalating oil treadmill. This has potentially great value both for our industry and for the community action agencies administering the LIHEAP program. It will show taxpayer funds being channeled to purchase a local fuel and provide jobs to Maine workers, while helping needy persons get through the winter.

There is, of course, one request of public officials that generally engenders strong public support: sensible regulation. In response to a strong request from Dutch Dresser, president of the Maine Pellet Fuels Association, Sen. Susan Collins, R-Maine, and the U.S. Secretary Housing and Urban Development announced March 2 that pellet heating systems are now to be accepted as a primary heating source for FHA financing. “There are moments when the federal government can be a little behind the cutting edge in terms of new technology,” HUD Secretary Shaun Donovan conceded. This recognition of pellet heat removes what has been a major roadblock for heating installers.

Government support: not a good request. Fair treatment for pellet heating customers: a popular goal. Go figure.

Author: Bill Bell
Executive Director
Maine Pellet Fuels Association
(207) 752-1392