Pellet Politics in the Pine Tree State

By Bill Bell | May 21, 2013

My last column in Biomass Magazine described the carefully orchestrated presentations during which members of Maine’s Congressional delegation were informed of the merits that tax legislation would provide thermal biomass, the same favorable treatment that’s been accorded to other forms of renewable energy for years. As predicted, U.S. Sen. Angus King, I-Maine, is now introducing the Renewable Biomass Heating Initiative Act of 2013. If passed, this bill will amend Sections 25 and 48 of the Internal Revenue Service Code to put our industry on the same level playing field as other renewables.  

There’s one problem however: the bill won’t exactly be moving forward at warp speed.  Once scored by Congressional staff for impact upon federal revenues, the bill –despite its boost to economic growth—will appear on the books as an expenditure, and Congress is hardly in a spending mood. Even more daunting: thermal biomass is not a national energy system. There is scant representation of northern tier states on the 38-member  U.S. House Ways and Means Committee, with which tax law must originate. The Biomass Caucus, diligently assembled by the Biomass Thermal Energy Council, is relatively small. It will take very adept maneuvering and leveraging before we can achieve federal tax parity with other green energy.

In the meantime, our Maine industry has therefore undertaken a major state legislative initiative, aimed at vastly increasing sales of pellet heating systems and Maine wood pellets. Details of our legislative “ask” are particular to Maine and subject to change, and therefore less important than the lessons being learned, which are:

• Don’t spend any more time arguing with “the insulationists.”  When our state’s energy policy and program administration were completely revamped about five years ago, equal emphasis was placed upon reducing oil consumption (Maine ranks #1 in the nation in dependency upon home heating oil) by curtailing energy consumption and by fuel-switching.  However, once federal stimulus funds ran out, all the emphasis has been on insulation and weatherization.  A de facto policy alliance has emerged between the state’s most influential environmental organization, which sees reduced consumption as its highest priority, and the oil dealers, who would rather be seeing homeowners cut their oil consumption than switch altogether.

Fortunately, legislators understand that people have to pay the oil bill, and that the bill for the average Maine home has gone from $2,000 in 2007 to $3,000 at present. The “insulationists” will continue to claim, with justification, that “the cheapest fuel is that which you don’t have to buy.” There is no winning this argument. Legislators, however, realize that reducing energy usage is only part of the answer; switching to Maine’s home-grown fuel is the other part, and one that creates local jobs.

• Identifying special funding streams is critical to success. Any fuel-switching program is going to require an initial outlay of funds, and tapping into a state’s general fund means competing with hundreds of other worthy (and a few unworthy) claimants, from health care to highways. There are, however, energy-related funds coming to states participating in the Regional Greenhouse Gas Initiative, there are pockets of discretionary funds available to state energy and housing agencies, and many homeowners have equity that can be brought into play with attractive loan programs such as the PACE (Property Assessed Clean Energy) program.

• Don’t concede to sharing programs with other renewable energy sectors. As noted above, the other sectors all have their federal tax incentives. To quote Les Otten of Maine Energy Systems, “If they are going to be included in this program along with us, they’ll be double-dipping.” Because thermal biomass is excluded from federal tax incentives, as well as from many state renewable energy credit programs, we deserve to seize the high ground. And hold it.

• The oil dealers can be our best friends. The folks who install oil burners and deliver heating oil are good guys. They extend credit in times of individual hardship. They deliver in harsh winter weather and after hours, when necessary. They are welcome in most homes, in which they have installed reliable and convenient heating systems. They have many friends among state legislators.  They are family businesses, often third-generation, which once delivered ice and coal. They will be bulk delivering wood pellets some day; some of them already are. Our most listened-to speaker at a recent hearing was an oil dealer who has added pellets to his line of business.

By the time you read this article, our legislative initiative will have met with success, failure, or something in between. Stay tuned.

Author: Bill Bell
Executive Director, Maine Pellet Fuels Association