Tuesday, December 15, 2009

Property-Assessed Wood Stove and Boiler Loans on Rise

Berkeley, CA and Boulder, CO may be known in most of America for their ultra-liberal tendencies, but they have pioneered a renewable energy funding mechanism that is on its way to being implemented in Illinois, Louisiana, Nevada, Ohio, Oklahoma, Texas, Virginia and many other states. It ties a loan for renewable energy systems to your property tax over a period of 20 – 40 years so whoever owns the property keeps paying down the loan. The Alliance for Green Heat researched how easy it will be for these loans to cover wood and pellet stoves and boilers.

To offer this sort of creative financing states need to pass enabling legislation and then the counties or municipalities that implement it, need to pass implementing regulations. To date around 15 states have already passed enabling legislation and 3 have pending, drafted legislation (AZ, NH & NY). Of all 18, CO, NV and NH identified biomass as being an eligible energy source. Seven other states (LA, MD, NC, OR, TX, VT and WI) stipulate "renewable energy" so presumably all renewables, including biomass, are included. In CO, funding can only be used to change-out an old wood or pellet stove unless your only source of heat is electric, which case it will cover a new installation.

Four states authorize "distributed generation renewable energy sources" which limits it to solar and wind, and precludes biomass and geothermal, as far as we can tell: CA, IL, OK and VA. NY authorizes only solar and wind. Two states specifically just authorize solar: NM & OH. AZ appears to be unique in that it may not be available to individual property owners but only to groupings of properties and focuses on water improvements.

Several states include financing for both renewable energy and energy efficiency projects, so biomass may be able to be included as energy efficiency device, as it is in the federal tax code.

These programs are known as Property-Assessed Clean Energy (PACE) being promoted by the DOE, and a similar program, the Voluntary Environmental Improvement Bond (VEIB) is promoted by the EPA. Both programs are similar and states can merge the concepts and details. The VEIB concept can fund an even broader array of projects, and also has a focus on changing out wood stoves and outdoor wood boilers. EPA documents specifically explain that a payment for a new “$3,500 wood stove becomes less than $19 a month” under a VEIB program.

The Alliance for Green Heat is concerned that PACE type loans could be used to finance unregulated outdoor wood boilers in states that have not adopted legislation to ban installation of the most polluting models. The Alliance believes that PACE or VEIB funds should only be used to finance a EPA Phase II outdoor wood boiler.

To find out if your state is considering passing enabling legislation, contact the office in charge of renewable energy. Clean biomass systems could be excluded inadvertently in some cases and some states like Maryland is already amending their enabling legislation.

For more information, see http://pacenow.org/ and http://www.renewfund.com/.

Biomass in Copenhagen

Thermal biomass is a small piece of a big puzzle in Copenhagen this week, but one of the hottest topics is forestry – and deforestation - including for energy crops. At the center of this debate is how to incentivize maintaining existing forests and preventing land conversion, the same issues we grapple with in North America? One intersection of thermal biomass and climate talks in Copenhagen is the growing demand for “renewable” biomass energy crops by the developed world.

Reducing carbon emissions from deforestation and forest degradation (REDD) is one of the big expected substantive outcomes from Copenhagen. Tropical deforestation accounts for 20% of global greenhouse gases. No one disputes that slowing the pace of tropical deforestation is key to slowing climate change, but what causes tropical deforestation?
The leading cause today is commercial agriculture and demand for timber, pulp and paper. And demand from developed countries is a huge part of that. In fact, EU and US policy mandates crop-based biofuels is creating unintended consequences for tropical forests where rapid rise of oil palm plantations appear to be driven by international demand for biofuels. Could thermal energy biomass crops also begin to be a player in unsustainable forestry practices in developing countries?

Often, poor, indigenous peoples are blamed for deforestation and their role is key to solutions. Traditional livelihood practices such as cyclical cultivation and fuelwood production are not always unsustainable. Pro-poor development strategies for biomass harvesting and utilization are key in both developing and developed countries. In the US, low-income communities are often blamed for wood smoke emissions, even though government funding overwhelming goes to development of solar and wind and has largely ignored modernizing biomass renewable energy systems relied upon by the poor. Similarly, in developing countries, it is often larger institutional and political conditions that drive land use, energy use and land conversion.
The thrust of REDD is being torn between environmental groups that want conservation of old growth and others pushing fro “sustainable forest management.” As of December 15, key safeguards to protect indigenous people and biodiversity and limit forest conversion to plantations have been moved from the operative section of the REDD agreement to a non-binding preamble.

The REDD framework may have ramifications for trade in thermal biomass energy crops but it is key for the EU and others to police their own biomass imports. The 2003 EU Forest Law Enforcement Governance and Trade regulation was a major step forward for demand-side policy. But it was the US Lacey Act, passed in 2008, that may be the best model for simply prohibiting the import or export of illegally sourced timber and wood products. This landmark bill is sending shockwaves through the global timber industry by rewriting companies equation of risk and benefit in importing wood fiber. The thermal biomass industry needs to watch this closely and ensure that incentives to limit greenhouse gases in developed countries are not at the expense of deforestation and more greenhouse gases in developing countries.

Further Resources:
The REDD road to Copenhagen: Readiness for what? By Oversees Development Institute, December 2008, p. 2.

“Copenhagen: The Curse of REDD,” by Terra Lawson-Remer, http://www.huffingtonpost.com/terra-lawsonremer/copenhagen-the-curse-of-r_b_391812.html.

Putting the Breaks on Drivers of Forest Destruction: A Shared Responsibility by the Environmental Investigation Agency, Dec. 2009, p. 4.

Wood Heat Helps Poor Households Feed their Families in Winter

More Americans are struggling with not having enough food to eat. The USDA’s November 2009 report shows the highest rate of food insecurity since reporting began nearly 15 years ago. During 2008, 17 million U.S. households – that’s about 49 million people – were food insecure and families had difficulty putting enough food on the table at times during that year.

In many parts of the United States, winters can impose a financial burden. Low- income families have to choose between heating their homes, feeding themselves, and feeding their children.

Low income families who get some or all of their wood for free are cushioned from these tough choices and are not as likely to suffer food insecurity during the winter as families that have to pay for fossil fuels – especially expensive ones like oil, electricity and propane.

One study found that when poor families increased fuel expenditures in response to un- usually cold weather, they reduced food expenditures by roughly the same amount as their increase in fuel expenditures (whereas richer families increased food expenditures). The study concluded that poor parents and their children eat less food during cold-weather budgetary shocks and existing social programs fail to buffer against these shocks. (Am J Public Health. 2003;93:1149–1154)

Arkansas and New Mexico, two of the states that have among the highest per capita use of wood as the primary heat source are also have among the highest rates of food insecurity. In those states, 16% and 14% of families experience food insecurity. The worst state is Mississippi with 17.4% and the lowest is North Dakota with 6.9%.