Despite claims of "devastating" impact, wood stove industry positioned to meet new emission standards

With the Step 2 deadline for wood and pellet stoves just a year away, most stove manufacturers say they are ready or will be soon. Many retailers also say they are ready, while others prepare to deeply discount stoves that can't be sold after May 2020. Gone are the days when industry was trying to convince Congress and the Administration that EPA's new stove regulations would have a "devastating" impact. Such claims are common in Washington, as groups try to rally their base, but it can also lead to a diminished credibility for an industry association if the hyperbole goes too far.

From the start, it was clear that the boiler and furnace manufacturers needed relief far more than stove companies and retailers.  Heads of outdoor boiler companies and indoor wood boilers that cost less than the average wood stove were leaders of a campaign to get Congress to give all classes of heaters a three-year delay in meeting the new standards.  At the same time, the industry association Hearth, Patio & Barbecue Association (HPBA) was challenging many of these standards in court, meaning a three-year delay could be permanent for some classes of heaters, if courts agreed with HPBA.  But it was never clear that stoves needed any delay and industry effort would have stalled innovation and efficiency improvements and put tens of thousands of families at higher risk of more wood smoke exposure.  The fallback position was that industry needed a two-year sell year, allowing manufacturers to sell Step 1 product during the fall and spring of 2019/2020, and retailers to sell Step 1 product until May 2022.  

At first, it appeared that the EPA under the current Administration was open to providing a two year  sell-through for stoves, but they have only issued a Notice of Proposed Rulemaking (NPRM) for boilers and furnaces, not for stoves.  Theoretically, the EPA could still issue a Notice of Proposed Rulemaking for a sell through for stoves but at this point it may be too late to provide any meaningful relief.

Many states pushed back strongly against watering down the NSPS and no state filed comments backing the Trump Administration's proposals.  States also began preparing their own plans in the event the EPA does change NSPS timelines, which could create a patchwork of regulations and more antagonistic relationships with a renewable energy industry.

If some manufacturers were not taking the 2020 deadline sufficiently seriously from 2016 - 2018, they are all likely to be doing so now.  Instead of focusing on government relief, HPBA's outreach to industry stakeholders is taking an a more urgent tone that everyone needs to focus on heeding the May 2020 deadline. However, almost all manufacturers were already focused on May 2020 for their own financial health and to assure their retailers that they are a reliable future partner.  And, many manufacturers and virtually all retailers already are well-diversified with gas fireplaces and stoves which often outsell their wood and pellet appliances.

The list of stove manufacturers who are ready for 2020, almost are or “well-positioned” to be 2020 ready grows by the week. As of May 1, they include:  APR Industries, Blaze King, Even Temp, ExtraFlame, Foyers, Heat Tech, Hearthstone, Innovative Hearth Products, Jotul, Kuma, Laminoux, MF Fire, Napoleon, Pacific Energy, Rais, Regency, Roby, RSF Fireplaces, SBI, Stuv, Supreme, Thelin, Travis and Woodstock Soapstone.  Hearth & Home Technologies, by far the largest manufacturer, says a majority of its stoves will be 2020 certified this year.

The 2020 deadline will undoubtedly be tough for much of the industry, but it remains to be seen if it’s tougher than lean shipment years such as 2007 and 2012.  Overall, the threat to industry does not appear to be as serious as industry claimed even a year ago.  The 2020 deadline is also bringing about benefits. some foreseen and others not. Some retailers still have stocks of Step 1 stoves and there is likely to be some heavily discounted stoves in the final year leading up to the deadline.  Retailers are still ordering some Step 1 stoves, but in much smaller quantities.  Many retailers are only buying Step 2 stoves but may face still competition from fire sales of Step 1 stoves by competitors.  Sending Step 1 stoves to Canada could have been a good outlet, but the more populous Canadian provinces have either adopted the 2020 deadline or are in the process of doing so. Other foreign countries are still a good option.  Most big box stores have the buying power to protect themselves by requiring manufacturers to buy back unsold inventory, influence that specialty hearth retailers don't have. 

Over the last six months, HPBA has developed more clear and insistent messaging for retailers and is using social media more to get the message across.  A facebook post outlined 5 things retailers need to know to survive the NSPS. Included is also a fear that in the race to meet the 2 gram an hour standard, some manufacturers may be putting out stoves that haven't been sufficiently beta-tested and simply won't work well in the real world.  This could jeopardize retailers who unknowingly carry those stoves.  HBPA urged retailers to test the stoves themselves, before selling them to customers, a tall order for retailers over the summer season.  The message for consumers is that the next twelve months will be a buyers’ market with unprecedented sales and discounts of Step 1 products

For the most part, the hyperbole from industry that consumers would be priced out of new stoves and there would be very little variety of product on floors, is not materializing.  Some manufacturers that were well known for disparaging catalytic stoves are now embracing them, swelling the ranks of "hybrid" stoves that only mention the catalyst in the fine-print. Presumably, this new crop of hybrids learned the tough lessons of the 80s and 90s, and their catalyst are well protected from flame impingement.

The 2020 deadline is also providing industry a gradual transition to cordwood testing, as some manufacturers opt to test with it.  Some groups idealistically hoped for a far quicker transition to cordwood.  Stoves tested with cordwood can emit up to 2.5 grams an hour, although many of them are coming in under 2 grams.  Despite messaging in advertisements from HPBA that it "shares the same goals as regulators," the 2.5 gram an hour standard for cordwood is one of the many emission standards that HPBA is challenging in federal court.  The many delays to the lawsuit may make it tougher for HPBA if enough stove models come in under 2.5 grams an hour using the broadly applicable alternative ASTM cordwood test method.

Many stakeholders are already looking past the 2020 deadlines toward the next NSPS, which by law should be scheduled in 2023.  Whenever the 2015 NSPS is superseded, there is likely to be intense controversies over certification protocols for cordwood testing and a timeline for all stoves to be tested with cordwood.  Key northeastern states believe the consensus driven ASTM Method is deeply flawed and are working behind the scenes on new test methods.

Unlike the 1988 wood heater NSPS that decimated the ranks of small stove manufacturers, the 2015 NSPS does not appear to be forcing manufacturers out of business. The 1988 regulations drastically improved the functioning, safety, cleanliness and efficiency of stoves while also driving up prices of those that were not claimed to be exempt.  The question remains whether the 2015 NSPS will significantly improve the functionality of stoves as they become cleaner and more efficient in the lab. Pellet stoves may the winners as their lab numbers should hold up in homes of consumers, a significant benefit that is rarely acknowledged by most in industry.  We can all agree that there will be both intended and unintended consequences which will take years to unfold.  Stay tuned.

March 11, 2020 update: The EPA finalized amendments to the 2015 NSPS and did not provide a retailer sell-through.  They did remove pellet fuel minimum requirements but retained the list of prohibited fuels in the 2015 NSPS.

  

Wood and pellet stove prices rise 3% in wake of new EPA regulations

Since the EPA announced stricter emissions regulations for wood and pellet stoves, prices increased by an average of 3% over a two-year period when adjusted for inflation, based on a review of 77 popular stove models. Without inflation, prices increased by an average of 4%.

The Alliance for Green Heat, an independent non-profit focused on the wood and pellet heating sector, tracked retail prices for 77 wood and pellet stoves over a two-year period, from February 2015 to February 2017. The EPA announced new regulations on February 3rd and they took effect on May 15, 2015. Even stricter emission limits are set for 2020 and the Alliance will continue to track prices through 2020 and beyond.

We identified 77 stoves made by 7 popular brands with varying price points: Jotul, Blaze King, Harman, Quadrafire, Woodstock Soapstone, Hearthstone, US Stove, and Englander.

It is impossible to tell how much regulations contributed to the 3% price rise, although each of the 7 brands are going through periods of increased R&D as they work towards complying with the 2020 emission limits. The EPA set a maximum of 7.5 grams an hour in 1990, 4.5 in 2015 and 2.0 or 2.5 grams in 2020. Most stoves already met the 4.5 gram limit in 2015, but most do not meet the 2020 limits. It is possible that some companies are starting to pass those costs along to consumers.

There may be steeper price rises as 2020 approaches and companies have to begin more intensive R&D and certification testing.  However, industry is pushing a bill in Congress to delay the 2020 emission standards to 2023.  The Hearth, Patio & Barbecue Association is also suing the EPA to block the 2020 emission standards for boilers and furnaces, but not necessarily for stoves.  The bill in Congress is partially designed to give the litigation enough time to get through the courts.  

We tracked the retail prices of 59 wood stoves and 18 pellet stoves using the sale or final price of the stove listed on the retailer’s website. Overall, the 59 wood stove retail prices rose an average of 4% ($80) or 3% ($45) when accounting for inflation. The pellet stove category saw a greater average price increase of 5% ($106) or 3% ($66) per stove when accounting for inflation.

• Four-fifths of the 77 wood and pellet stoves increased in price over the two years. Of these, the average price increase was 6% ($125) or 5% ($90) when adjusting for inflation.
• About one-fifth of the 77 stoves did not go up in price between February 2015 and 2017. The majority of the Englander and Blaze King models we tracked stayed the same price.
• Four wood stoves out of 77 wood and pellet stoves -- one Jotul, two Hearthstone, and one US Stove -- declined in price. The average decline was 6% ($250).

The EPA is required by law to do an economic regulatory impact analysis (PDF) and determine if the costs of the regulation outweigh the benefits. The EPA predicted slightly higher retail costs, and as a result, a slight decline in demand for new stoves. However, on balance they estimated that the overall health and other benefits vastly outweigh the costs.

Some commentators, members of Congress and editors claimed the EPA regulations would make wood stove prices rise sharply and be unaffordable for the average American.

The EPA also is required to assess the impact of the regulation on small businesses, since more than 90% of stove manufacturers and retailers are small firms. The U.S. Census Bureau reports that the industry employed 15,911 workers in 2011.

Price changes by brand and stove type

The wood stoves with the highest price decreases, Hearthstone’s Bari 8170 and Lima 8150, which declined in price by $620 and $300 respectively, were the priced the highest of any stove on our list in 2015 at $4,999 and $5,299. No pellet stove we tracked declined in price in 2017 and the only two pellet stoves did not increase in price in 2017 (both Englanders priced between $1,000 and $2,000).

Wood stove price increases ranged from 1% (Hearthstone Castleton 8030 and Craftsbury 8391) to 35% (US Stove’s Large Woodstove). Among the wood stoves that increased in price between 2015 and 2017, the average increase was around $125 or 6% more than the 2015 price. Seven of the nine pellet stoves that rose in price increased by an even $100, regardless of their 2015 price, which represented a 3-4% increase. All five of the Harman pellet stoves, which retailed between $2,999 and $3,999 retail in 2015, were listed $100 higher by the same retailer in 2017.

For the sake of consistency, we only used stove prices at one or at most two retailers per brand. We used final or sale prices rather than “suggested retail price” or “regular price” when given. The number of stoves we selected per brand varied based on the number of models available in 2015 and the number of models that continued to be sold by that retailer in 2017.

Englander and US Stove had some of the lowest prices stoves we began tracking in 2015, with a median price of about $1,000. At about the middle were the brands Woodstock Soapstone (median price of $2,400), Quadrafire ($2,550), and Jotul ($2,700). The more expensive stove brands included our study, based on median prices, were Hearthstone ($2,900), Blaze King ($2,950), and Harman ($3,000).

Four out of five Blaze King stoves, three out of four Englander wood stoves and all (two) Englander pellet stoves did not increase in price over these two years. The sixteen Hearthstone wood and pellet stoves we tracked declined in price by an average of 1% ($3.75) per stove, thanks in great part to large drop in price for two of the brand’s priciest ($5,000+) wood stoves.

As for the brands that increased their prices, Jotul’s 19 wood stoves increased by an average of 3% ($79) each. Quadrafire’s and Harman’s wood and pellet stoves both increased by an average of 4% each ($101 for Quadrafire, $122 for Harman). Harman’s wood and pellet stoves increased in price by an average of $122 per stove. US Stove and Woodstock Soapstone had the greatest average price increases of any brand at 15% each (Woodstock Soapstone has frequent sales which we did not take into account). US Stove’s stove prices increased by an average of $155 per stove and Woodstock Soapstone’s increased by an average of $408 per stove.

The EPA regulations had a much larger impact on prices on companies making unregulated outdoor wood boilers and unregulated wood furnaces.  Prices for boilers rose at a sharper rate than stoves, although we did not track those prices and cannot offer any estimates.