As 2011 comes to a close, the biomass industry can look back on a fairly active year, not necessarily all positive, and look ahead to a more advantageous one that brings recognition to its benefits and merit.
 With portions of the Maximum Achievable Control Technology (MACT) rules stayed and further changes expected, a delay on implementation of the EPA Tailoring Rule for biogenic emissions, and pending revisions of certain waste definitions, the biomass industry is suspended in a realm of political uncertainty.
 But what does 2012 hold in store? Could research to better understand biogenic emissions prove that biomass is indeed a clean replacement for fossil fuels and warrant more reasonable emission guidelines? Will development opportunities, support and funding sources grow for power and thermal applications?
 Charlie Niebling, chairman of the Biomass Thermal Energy Council board of directors, tells Biomass Power &amp; Thermal what he expects in the biomass thermal industry in the year ahead, while Bob Cleaves, president and CEO of the Biomass Power Association, makes his predictions for the biomass power industry.
 Here&rsquo;s what they had to say:
 Opportunities
 Where do the best opportunities for biomass power/thermal currently lie and why?
 Niebling: The best opportunities lie in providing residential, commercial and industrial heat consumers, who currently use heating oil or propane, with a cost-effective alternative heating fuel. Biomass fuels are less than half the heating cost of oil and propane. Cost savings is the single-most important factor driving market penetration for biomass thermal.
 Cleaves: Our members are engaged in development projects across the country. Conventional wisdom continues to be that the Southeast has the greatest opportunities, and the recent 100-megawatt Gainesville, Fla., project is probably the most dramatic illustration of such potential. That said, in the past 24 months, we have seen projects undertaken in Texas, New Hampshire, Wisconsin and the Pacific Northwest. While different, all of these projects are being undertaken in renewable portfolio standard (RPS)-friendly states and where biomass is welcomed.
 Do you see this changing in 2012 and why?
 Niebling: I don&rsquo;t see this changing in 2012 as long as oil and propane prices stay high.
 Cleaves: In the near term, given the effect of natural gas on pricing and the lack of electricity generally, we see new projects as being &ldquo;opportunistic&rdquo; in nature, meaning in regions where fuel is competitively priced and where local markets value energy diversity, rural economic development and sustainable forestry.
 Policy
 Which current or developing policies (state and federal) can/do help spur project development and how?
 Niebling: Unfortunately there is little policy developing at the federal level in support of biomass thermal. Biomass thermal is not recognized with investment tax credits (ITC) similar to solar thermal or geothermal. Expansion of tax credits seems unlikely in the current fiscal climate but BTEC continues to advocate for tax parity with other renewables, for both residential and commercial/industrial entities. The greatest need is to help build the market with demand-side incentives such as ITC&rsquo;s or demonstration project grants through USDA, U.S. DOE or other agencies. At the state level, we are seeing some progress, particularly in the Northeast U.S. where heating oil is prevalent. Massachusetts is expected to unveil supportive policies during 2012 for small-scale biomass thermal. New York is funding a statewide biomass thermal &ldquo;roadmap&rdquo; strategic planning effort. New Hampshire is considering amending its RPS to include thermal renewables; if this moves forward New Hampshire would be the first state with a fuel/technology neutral renewable energy standard.
 Cleaves: We would like to see the Section 1603 Treasury Program extended. We also need the production tax credit (PTC) extended beyond 2013, and we need parity with other technologies on the applicable rate. We also need Congress to enact legislation governing boiler MACT and the solid waste rules so that U.S. EPA has the necessary time to craft regulations that are achievable, affordable and based in science and common sense. At EPA, we are cautiously optimistic that the agency will &ldquo;get it right&rdquo; on the carbon equation.
 What can the industry do in 2012 to help craft and/or change policy that would be more beneficial to biomass power and thermal?
 Niebling: Continue to advocate the cost saving/job creating advantages of displacing fossil heating fuels with renewable fuels such as biomass. Continue to work together through organizations such as BTEC and its regional affiliates in the Northeastern and Midwestern states. Also, focus organized advocacy at the state level where state legislatures are showing increased support for biomass thermal.
 Cleaves: Ultimately, we need a national energy policy that promotes carbon-friendly, renewable technologies such as biomass. To achieve that goal, we need federal and state policymakers to fully appreciate the carbon benefits of biomass.
 Supporters
 Which congressional leaders have supported and helped the biomass power and thermal industries the most? How?
 Niebling: In the U.S. Senate, Sens. Jeanne Shaheen, D-N.H., Olympia Snowe, R-Maine, Jeff Bingaman, D-N.M., Debbie Stabenow, D-Mich., Ron Wyden, D-Ore., Lisa Murkowski, R-Alaska, Bernie Sanders, I-Vt., Mike Crapo, R-Idaho, and Mark Begich, D-Alaska, have shown the greatest interest in biomass thermal. These members have introduced and reintroduced legislation to advance biomass thermal, or raised the profile of this technology through their committee assignments. The current membership of the House Biomass Caucus is a good proxy for those members who support biomass thermal along with other forms of biomass energy.
 Cleaves: A majority of House members, from leadership to the rank and file on both sides of the aisle, have shown tremendous support for our industry. A recent example was the vote on HR 2250 (the EPA Regulatory Relief Act allowing more time for better Boiler MACT rules), which received bipartisan support on its passage.
 Who do you see taking the lead in your industries in 2012?
 Niebling: Pretty much the same group, although BTEC continues to recruit and educate new champions in both the House and Senate.
 Cleaves: We see members primarily from forestry and agricultural states continuing to take a lead in 2012. They understand the need for Congress to enable, not stifle, private investment in our rural economies.
 Financing
 What are the best financing options and mechanisms for developers in the biomass power and thermal industries today?
 Niebling: There are limited options underwritten by the federal government that are accessible for biomass thermal projects. For example, U.S. DOE loan guarantees are not available to small-scale thermal projects. These projects do qualify for grants from the USDA Rural Energy for America Program, and they qualify for loans or grants through USDA Rural Development&rsquo;s Business and Industry Program.
 Cleaves: The 1603 and Investment Tax Credit programs are undoubtedly the single-most successful financing program in the history of our industry. It has unleashed more than $1 billion in private capital&mdash;an amount not seen in our sector since the early 1980s.
 Are there any financing options on the horizon for 2012 or beyond that you believe could play a major role in the growth of our industry?
 Niebling: At the state level, one program that holds great promise is PACE, Property-Assessed Clean Energy, which allows communities to float bonds to finance residential or commercial renewable energy investments, with the loan being paid through property tax assessments. States must first enact the program, and communities must agree to adopt it. Another innovative approach mostly applicable to larger projects is financing through energy service contracts, where future energy savings are used to pay off the upfront capital cost through a third-party intermediary. The large upfront capital cost of these systems remains an impediment to more rapid market growth, and creative financing will be more important in the future.
 Cleaves: We would like to see extension of the PTC, and the extension of in-service dates that are sufficiently extended to facilitate the development cycles of biomass, which are sometimes five years or more.
 Action
 What benefits of your industry sector will you be emphasizing in order to gain support from Congress in 2012, and why?
 Niebling: Jobs, jobs, jobs; rural economic development; energy independence and security&mdash;these are the key talking points for biomass thermal going forward.
 Cleaves: It&rsquo;s all about jobs. Biomass is base-load power, and job intensive. The payback for the public&rsquo;s support of this industry is immediate and meaningful.
 Outlook
 What is your outlook on the biomass power and thermal industries in 2012 and what, if any, major developments or happenings do you expect?
 Niebling: With continued high oil and propane costs, I expect robust growth in this sector in 2012&mdash;with or without support from government. I expect commercial- and industrial-scale heating and combined-heat-and-power projects to get real traction in 2012. With these larger projects will come critical mass in the marketplace that will enable greater access by residential consumers, too. High capital cost of fuel switching will continue to be our greatest challenge.
 Cleaves: We continue to be optimistic about the industry. Natural gas markets and shifting political winds in Washington, D.C., have forced all renewable technologies to rethink how we present our benefits to policymakers and the market generally. Fundamentally, and this is particularly true with base-load forms of renewable energy like biomass, it&rsquo;s all about energy diversity at an affordable price for the ratepayer while providing economic benefits and other ancillary benefits like healthy forests. We are confident that this message is a compelling one.
 What factors are affecting your industries now, and do you see them continuing or changing in 2012? Niebling: I do see political support for biomass thermal growing as our elected leaders come to more fully appreciate the economic and environmental benefits of reducing our reliance on imported fossil heating fuels. I see a challenging transition from getting projects done without the benefit of public grants (stimulus funding) that is drying up at the federal and state level. However, I think the understanding of favorable payback economics is growing. Hopefully with a strengthening economy and stronger consumer confidence, we will see homeowners and businesses investing capital again in projects that will save them lots of money in the future&mdash;and strengthen their community at the same time.
 Cleaves: We would like to see greater regulatory certainty at EPA, and anticipate that 2012 will see clarity on Boiler MACT, the solid waste rule and the Tailoring Rule. Author: Lisa Gibson Associate Editor, Biomass Power &amp; Thermal <a href="mailto:lgibson@bbiinternational.com">lgibson@bbiinternational.com</a> (701) 738-4952

ENERGIZED: Niebling and Cleaves shared their legislative insights with attendees of the 2011 International Biomass Conference & Expo in May during a panel moderated by BBI International's Tom Bryan (left to right), participating were Mary Rosenthal, 

2011/11/13220013756027.jpg

Key leaders in the biomass power and thermal industries discuss their sectors' outlooks for 2012, drawing from experiences in 2011. 

Industry Insight

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