The U.S. and Australia have Similar, but Distinct, Stove Regulation Strategies.

Australia is in the process of developing stricter emission standards for wood heaters and their approach is a fascinating glimpse into another regulatory culture. The strategies and cost – benefit analysis in Australia should be a valuable comparison for the EPA as it finalizes its New Source Performance Standards (NSPS) for US wood heaters. This post is an overview of an Australian report showing the financial gains created by stricter regulations on wood heaters.

In 2011 the Council of Australian Governments (COAG) identified air quality as a Priority Issue of National Significance and agreed that the COAG Standing Council on Environment and Water (SCEW) would develop a National Plan for Clean Air to improve air quality, and community health and well being, to be delivered to COAG by the end of 2014. The first stage of the National Plan for Clean Air will focus on particle emission reductions and a consultation Regulation Impact Statement which assesses alternative policy options that could be employed to reduce emissions from wood heaters in Australia, and establishes their relative costs and benefits.

The current Australian Standards that cover wood heater emissions and efficiency set a criterion of 4 grams of particulate matter (PM₁₀) per kilogram of fuel brunt (4g/kg). There is currently no efficiency criterion, but efficiency results must be reported on a label permanently attached to the appliance.

The report showed a large range of potential policy measures that could be implemented to reduce emissions from wood heaters. The potential measures fall into three major categories:

• wood heater design or performance standards;
• measures to promote compliance of retail models against these standards; and
• measures influencing the in-service operational performance of wood heaters.

These measures could be delivered through a range of policy 'vehicles'. The policy delivery approaches examined are a voluntary national program, a collaborative approach or a national regulatory approach.

Under the business-as-usual or 'base case' scenario, particulate emissions from wood heaters in Australia are expected to fall by around 5000 tons (or 12%) over the next twenty years, as old heaters are progressively replaced with new, lower particulate emitting heaters. The reduction in annual particulate emissions from wood heaters under the policy options examined, over and above the business-as-usual reductions, range from 3% to 18%.

The estimated costs to government of implementing the different policy options range from $15 million over the next twenty years to around $39 million. The estimated costs to manufacturers range from $240,000 to $17 million, the strictest boasting an efficiency standard of 60% as well as an emission limit of 1.5 g/kg. The health benefits of the options are estimated to range from $760 million to around $1,850 million over the twenty year assessment period. Although the greatest emission reductions are estimated for the most expensive option, the highest health benefits are estimated for another which has a shorter phase-in period for the new standards. The estimated benefits far outweigh the estimated costs of all options included in the analysis. The present value of the net benefits range from around $750 million to $1,800 million.

The report concludes the greatest net benefits are likely to be achieved via a national regulatory approach for managing wood heater emissions, rather than through a voluntary or collaborative approach. This could be achieved either through a Commonwealth regulation, a National Environment Protection Measure (NEPM) or through mirror legislation.

View the full report here.

Senators Propose Adding Wood and Pellet Heat to Renewable Energy Incentives

For years, homeowners have enjoyed a 30% tax credit on the cost of installing solar panels on their home or adding geothermal heat.  In Europe, virtually every country also includes automated, high efficiency pellet stoves and boilers. Why hasn’t it happened here?

Senators Angus King (I-ME), Susan Collins (R-ME), and Jeanne Shaheen (D-NH) introduced the Biomass Thermal Utilization (BTU) Act to do just that. The tax credit for solar panels has disproportionately benefited wealthy urban and suburban residents, who can already afford fossil fuel energy, but want to help the planet. By adding tax credits for modern wood and pellet stoves, you benefit a more rural demographic that is not necessarily trying to be “green” but who are merely wanting to use a more affordable fuel than fossil fuels to heat their homes. 

Congress can pick and choose which technology it wants to favor, and which demographic it wants to favor.  But a more technology neutral approach has many benefits and the case for high-efficiency wood and pellet appliances is a strong one: it displaces about the same amount of fossil fuel as the average solar panel installation. Wood and pellet stoves have a shorter payback period, which makes it more likely that a middle-income family chooses a pellet stove. The technology is less expensive thus it costs the tax-payer far less to displace the same amount of fossil fuel. Utilizing thermal biomass helps ordinary families without access to natural gas that struggle to pay high heating bills. The BTU Act extends technology options to low and middle income families.

The BTU Act will add a provision to include biomass fuels to the list of existing technologies that qualify for the residential renewable energy investment tax credit in Section 25d of the Internal Revenue Code. To qualify, the property utilizing biomass fuel must operate at a thermal efficiency rate of at least 75% HHV and be used to either heat space within the dwelling or to heat water. The BTU Act allows for both wood and pellet appliances to be eligible but the 75% higher heating value (HHV) means that only the most clean and efficient ones will be incentivized.

The justification for solar subsidies is not just the displacement of fossil fuel, but also to help an emerging technology off the ground so that it can be cost competitive without subsidies.  Pellet stoves and boilers need a similar boost.  The higher up front cost of a pellet stove or boiler is a major deterrent and until there is greater demand, when the per unit cost is likely to drop. Like solar, there needs to be a more robust infrastructure to permit, install and repair the appliances.  Over 10 million Americans use wood or pellet stoves to heat their homes but only perhaps 20% have modern high efficiency appliances that do not emit smoke. If our country is to switch to modern, clean, high efficiency wood and pellet heating, we need to incentivize those appliances.  Our current approach is not working.

Urge your Senator to become a sponsor of the BTU Act, click here:

http://www.forgreenheat.org/act/act.html

For more information: BTEC link

http://www.biomassthermal.org/legislative/action.asp

Liberal and Conservative Organizations Unite Against Wasteful Ethanol Spending

The National Taxpayers Union and US PIRG-Education Fund, a conservative and liberal organization, teamed up to produce a list of Federal programs that can be cut at no adverse effect to the American public in a report entitled, “Toward Common Ground: Bridging the Political Divide to Reduce Spending.” While most of the recommendations concern wasteful military programs, there are two programs listed that relate to biomass.

The first program is the refundable tax credits for ethanol. The tax credits targeted go to oil companies that blend ethanol with gasoline, instead of the ethanol producers themselves. The reasoning the report gives is that the oil companies already makes significant profits and the ethanol industry should be mature enough at this point to not be subsidized by taxpayers. Additionally both industries have very healthy profit margins with the subsidy and could likely make a profit with no subsidies.

The second program is to reduce funding for public timber sales that sell at a loss. They claim that, “The Forest Service has spent more on federal timber sales in recent years than it has collected from the companies that harvest the timber.” The report does not address whether the Forest Service has other goals, such as thinning or other forest health reasons.

Overall the authors say the recommendations in the paper could result in $600 billion in savings by 2015, if implemented.

Appendix

Excerpts from “Toward Common Ground”

1.Plan: Eliminate refundable tax credits for ethanol

Explanation: Large oil companies that blend gasoline with corn-based ethanol, rather than the ethanol producers themselves, receive billions of dollars in subsidies each year. The credits combined with the Renewable Fuels Standard set up a taxpayer subsidized mandate, which is bad fiscal policy.

Savings: By 2015, cutting this program will have saved $ 22,650 million.

Source: Joint Committee on Taxation

Link: http://www.jct.gov/publications.html?func=startdown&id=3642

2. Plan: Reduce funding for public timber sales that lose money

Explanation: The Forest Service has spent more on federal timber sales in recent years than it has collected from the companies that harvest the timber. This is an unwise use of taxpayer dollars.

Savings: By 2015, cutting this program will have saved $ 279 million.

Source: CBO 2009 Budget Options

Link: http://www.cbo.gov/ftpdo