Showing posts with label sell-through. Show all posts
Showing posts with label sell-through. Show all posts

Wednesday, June 10, 2020

States take on the EPA in controversial wood stove proposal

Mary Uhl of WESTAR testifying at a
2018 air quality meeting.
Industry touts economic strain on stove retailers, but outdoor wood boiler and furnace manufacturers are also behind campaign for more time

Updated on June 17 - A virtual EPA hearing on June 8 pitted states against the EPA over emission limits from wood stoves, boilers and furnaces.  The EPA is proposing to ease the emissions compliance timeline for wood stoves and boilers but over a dozen states urged the EPA to withdraw its proposal.  Minnesota formally told the EPA and the wood heating industry that stoves and boilers must comply with the existing timeline that was set in 2015 for sales and shipments in their state.  California’s Air Resources Board took a more combative tone and said they are considering a lawsuit for the illegal sale of non-compliant stoves after May 15.

“Minnesota incorporated the 2015 NSPS and its 2020 timetable into state laws … which means that the May 15, 2020 compliance deadline is enforceable in Minnesota. EPA’s proposed revision will not change this deadline,” said Anne Jackson, an engineer with the Minnesota Pollution Control Agency in her written testimony.

Peter Solac, a long-time Minnesota
based stove retailer who may not be
able to take advantage of a federal
time extension 

Peter Solac, of Woodland Stoves and Fireplaces, is a stove retailer based in Minnesota who testified that he needed the additional time for 15 Step 1 stoves that he was not able to sell due to Covid-19.  He did not address the predicament that his state will not allow it.   Central Boiler may face an even greater problem, as its manufacturing facility is in Minnesota, and they apparently still had some Step 1 boilers they want to sell.  On June 17, Rodney Tollefson of Central Boiler said in an email that "we have almost zero inventory of 2015 level certified units.  We are not asking for a sell through for us.   Our testimony was requesting sell through for our dealers that have inventory."

US Stove has also indicated their interest to ship units from their manufacturing facility during the proposed sell-through.  On May 29, Brandon Barry of US Stove wrote that “our inventory levels are confidential. I will say that sell through would be beneficial for us at both the manufacturing and retail level.  Some product came back to our location and could be sold if sell through comes to fruition.” On June 10, Mr. Barry said that AGH had misunderstood his previous email that that “We have been buying product back from retail. All that does is hurt our cash flow, which ultimately impacts our ability to manufacture new 2020 products. We understand that this is a “retail” sell through under consideration and not a manufacturers sell through.”

List of registered speakers at the
June 8 EPA hearing
However, England Stove Works, another major value stove manufacturer that also had buy back agreements clearly said that they do not have inventory they need to sell during a sell-through but like many other stove manufacturers, they support the ability of their retailers to use a sell-through.  Other manufacturers who indicate that they do not have Step 1 inventory themselves include Blaze King, Empire, Hearthstone and SBI, but all support the sell-through for their retailers.  David Kuhfal, CEO of Hearthstone said, “Hearthstone proactively sold down all step 1 products however; we absolutely support the opportunity for our dealers to have some time to liquidate their Step 1 inventory.”  Hearth & Home Technology, the largest manufacturer of more expensive stoves, say that they have no Step 1 inventory and their retailers should have been able to clear out their Step 1 inventory on time as well.

AGH asked HPBA if they were also seeking a sell-through for manufacturers and received this reply from Emily McGee, their Communications Director: "the reason we didn't reply to your question was that we don't have a position on that specific issue (manufacturers selling Step 1 products during a potential sell-through). Our focus has been on the retailers and remains so."  Many retailers have gone further, saying that the sell-through should not be open to manufactuers.

Of the 17 people who testified, about half were in favor of the sell-through and half were against it.  As with previous hearings and written testimony on the EPA wood heater regulations, all states and regional air agencies representing states were against extending deadlines.  Several retailers, a distributor, two manufacturers and HPBA representatives testified in favor of it.  Three non-profits were represented with the American Lung Association and EarthJustice speaking against, and the Alliance for Green Heat who favored a limited sell-through.  AGH is urging the EPA to only allow the sell-through for retailers, not manufacturers and also to limit it to stoves, not to central heaters.  Manufacturers of central heaters have been at the forefront of the fight for extended deadlines and sell-through and pose the largest threat to increased air pollution.

John Crouch, in upper left, in Crested
Butte, CO in 1989 with Bob Ferguson.

The arguments made by both sides were relatively predictable, with very little common ground.  However, Roger Ayers of Dreamstyle Remodeling focused on the need to regulate fireplaces that he estimates emit 44 grams of particulates per hour. Why focus on the difference of a gram or two between Step 1 and Step 2 when any home can still install unregulated fireplaces.  John Crouch of HPBA reminded everyone that many Step 1 stoves were already under 3.5 grams an hour and “the EPA has done no in-home testing of Step 1 or Step 2 stoves and has no way of knowing if these Step 2 stoves are an improvement or not.” 

Industry has asserted that there should have been a sell-through period built into the timeline from the start, like there was in 1988.  Mary Uhl of WESTAR countered that contention in her testimony, saying “In contrast to the original 1988 NSPS, in which manufacturers and retailers were allowed only two years to transition to more stringent standards, they received five years in the 2015 NSPS update.” 

Most of the states and air agencies argued that the EPA lacked a legal basis for the proposal,  did not do any regulatory impact analysis and is proposing to substitute two of the worst sales months for two of the best.  Maria Smilde of EarthJustice closed her testimony saying “Considering that respiratory difficulties have been a common COVID-19 symptom, the EPA should not use one public health crisis to rationalize extending another, nor does the Clean Air Act permit it to do so.”  Anne Jackson made a similar point, arguing that, “Given the health burden of fine particulate matter, there is no good reason to provide additional time to sell noncompliant devices, especially hydronic heaters, in the face of fighting a deadly, respiratory virus pandemic.”

Possibly the most surprising arguments against the sell-through came from the Minnesota Pollution Control Agency. “Minnesota was expecting full support from EPA to notify manufacturers and retailers about the approaching May 2020 deadline, and to undertake enforcement as necessary, especially with internet sales, as that is the most difficult for Minnesota to monitor. With EPA’s announcement of a proposed sell-through period along with lax enforcement, Minnesota must now undertake a nation-wide communication effort to notify manufacturers and retailers that Minnesota law does not allow sales in Minnesota of non-Step 2 wood-burning appliances.“

California is an anomaly as stationary sources of pollution are controlled by local air districts, not by the state.  Their Air Resources Board commented “Many states, and over half of California’s 35 local air districts, including the largest air districts, have delegated EPA authority to enforce the NSPS.  Under Clean Air Act section 304, states, other jurisdictions, and private citizens can also file citizen suits for sale of Step 1 stoves before any sell-through is finalized.  EPA may have chosen not to enforce the Step 1 sales ban in the period before any sell-through is finalized, but others can.”

The EPA will be transcribing all the testimony from the hearing and entering it into the official record, as they consider whether to approve a sell-through. 

Related stories

Sunday, May 31, 2020

EPA proposal to relax wood stove rules sows division between states and industry – and between industry factions

Some states may disallow sell-through, but selling-through has already begun

Rep. Peterson (D-MN) seen here with
constituent Dennis Brazier of Central
Boiler, was the strongest advocate for
a sell-through in Congress.
Updated: Oct. 28, 2020 - The EPA proposal to relax the Obama-era timeline for wood heater emission compliance is setting up another showdown between the stove and boiler industry and states and air quality agencies.  At issue are sales of more polluting wood stoves and wood boilers.  The far cleaner pellet stoves and pellet boilers, favored by some states as an important renewable alternative to fossil fuel heat, are not as contested.

The sell-through was expected to be at least for 2 months, most likely October and November but as of the end of October, the EPA had still not announced whether it would approve a sell-through and it may not be likely that any announcement will be before mid or late November, leaving barely a month  before the end of the year.

While many European countries are moving forward with incentives for pellet stoves and boilers as part of a broader policy to reduce fossil fuels, the US wood heating community is embroiled in fights about whether the dirtiest cordwood appliances should get a new lease on life.  The main wood heat industry association, the Hearth, Patio and Barbecue Association (HBPA) also represents gas appliances, so it is not making the case that these wood and pellet heaters are a low-carbon, renewable technology.

The stakes are not as high as they were in 2017 when Congress nearly passed a 3-year extension to stove and boiler emission deadlines, or in 2018 when the EPA proposed a full two-year sell-through.  But the way this sell-through proposal finally emerged is opening old wounds, not only between industry and states, but also within industry.  It led to the two highest volume stove manufacturers leaving HPBA and left the association without a meaningful victory during Trump’s presidency.

The EPA has opened the public comment period on whether to allow a window in the fall to sell now out-of-production higher emitting Step 1 stoves that were scheduled to be illegal to sell after May 15. The EPA will also host a virtual public hearing on June 8 to solicit input.  Most experts believe some fall sell-through period is extremely likely but its length and potentially some smaller details still hang in the balance.  In the meantime, hundreds or possibly thousands of non-compliant new wood stoves and boilers continue to be openly advertised and sold across America two weeks after the stricter EPA standards took effect.

While many retailers and manufacturers took the May 15 deadlines seriously, some continue to advertise and/or sell Step 1 heaters on their websites, showroom floors, or through Craigslist, eBay and other sites.  EPA has made enforcement a low priority which does not preclude letters and visits by EPA enfrcement. HPBA has also been consistently educating retailers about how to comply with the new regulations.  In addition, HPBA has been reminding both manufacturers and retailers that even though the EPA may not very active at higher level enforcement, state and local authorities can still be active.
HPBA has continually
updated its education
effort for retailers.

Industry highlights mom and pop hearth stores in their advocacy efforts to get a sell-through, but the needs and goals of manufacturers is the crux of the problem.  Mom and pop stores still have Step 1 stoves as a result of the many different relationships that they have with manufacturers, some of whom pressured them to keep buying Step 1 stoves, some of whom didn’t even have Step 2 stoves until recently – and some who were ahead of the curve and started selling Step 2 stoves in 2018.  

Some manufacturers still really need the sell-through because they have unsold inventory of Step 1 stoves, boilers, and furnaces and may have to buy back many thousands of Step 1 appliances.  Five years lead time could have been enough, but there was a widespread belief that the 2020 deadline would not stick under a Trump administration.  As late as the winter of 2020, some manufacturers were still in disbelief that their industry association didn’t get any significant results in the courts, Congress, or with the administration.  

Conversely, the good news for the progressive pellet and wood heating community is that the Obama-era regulations are still intact, 5 years after they came into force.  Pellet stoves and boilers are
2020 compliant pellet stoves show a
strong correlation between lower 
PM, lower CO and higher efficiency.
significantly cleaner and more efficient not just in test labs, but in the homes of more than a million families, many of whom want them not just to save money, but to stop paying a heating bill to multinational oil companies.

The stakes are not as high for some New England states like Vermont that have been giving hefty incentives to mostly European designed, clean burning pellet boilers and don’t experience severe weather inversions that trap wintertime pollution close to the ground. (Vermont and other other New England states do experience regular, more localized inversions in valleys.)  But a potential sell-through of dirtier cordwood appliances represents a greater threat for West Coast communities struggling with excessive wood smoke from California’s central valley to the Canadian border.

Nowhere is the sell-through more controversial than in the warm air furnace sector, where two small companies with Step 2 compliant units would be significantly harmed by an initiative enabling a larger manufacturer to sell their older, higher polluting units.  

The stakes may the highest for upper mid-west states like Minnesota where outdoor wood boilers are
On per capita basis, wood smoke
concentrations are highest in states
with more outdoor wood boiler
installations like Wiconsin and
Michigan.
as popular as they are controversial, having subjected hundreds of towns and neighborhoods to excessive smoke.  A sell-through could result in hundreds of additional Step 1 boiler installations that will continue to emit heightened levels of smoke for a decade or more.  Warm air furnaces are also higher sellers in Mid-Western states, as they experience some of the coldest weather in the country. 

Minnesota is home to Lamppa Manufacturing, a small Step 2 warm air furnace manufacturer that is vehemently against any sell-through, as their company would suffer if Step 1 furnaces were allowed to come back on the market.  Lammpa Manufacturing is not a HPBA member because it and other manufacturers like Woodstock Soapstone oppose HPBA’s history of advocating for more lax standards for outdoor wood boilers and stoves.

EPA adds to confusion

On May 20, EPA Administrator Wheeler defended the proposed sell-through at a Senate hearing, adding to the confusion and myths about wood heaters.  The Administrator mistakenly said that the EPA is only proposing to allow stoves to be sold that we allowed by the 2015 standards and  “we’re not talking about standards that are 20 or 30 years old.”  But 90% of stoves met the 4.5 gr/hr. standard when Washington State adopted that standard in 1995.  The EPA adoption of it in 2015 barely moved the needle at all and allowed stoves tested as far back as 1990 to remain on the market.

The Administrator also incorrectly told the Senate Committee that most retailers sell off their
Administrator Wheeler's performance
at a recent Senate Hearing showed limited
understanding of sell-through details.
inventory in the spring.  In actuality, the spring is the slowest sales period of the year and the Coronavirus shutdown disrupted sales (though far less than industry claims). Administrator Wheeler further added to the confusion by implying that it was the manufactures who were most imperiled because they had to buy back unsold stoves from retailers.  

Meanwhile, the EPA’s Office of Enforcement, OECA, has not designating Step 1 heaters as “Out of Production” but says that they are in the process of changing their database.   The Alliance for Green Heat (AGH) believes that all out-of-production stoves should be consistently designated, and the EPA should not be operating under the assumption that there will be a sell-through until one is formally approved.  (The EPA made this change to their list 2 months after this blog was initially posted.)

The EPA database of certified stoves is also riddled with errors and omissions but it remains a vital resource for states, air agencies manufacturers, retailers, consumers.  Many of the errors are minor and its important to note that the EPA maintains this database as a public service, not because it is legally required to do so. If the certification of a unit, or other details are in doubt, the most authoritative document is the certication test report that manufacturers are required to post on their websites.  Moreoever, some stoves may be fully certified but not appear on the EPA's database.  It may take up to 40 days for the EPA to post an appliance on their database after it is certified because manufacturers are required to email the EPA showing the link where they have posted their test dart on their website before the EPA adds them to the database.  This helps ensure that manufacturers comply with the requirement to be transparent about their testing, which manufacturers used to keep confidential prior to 2015.   

Dispute over $75 million change-out fund and one-year sell-through offer

During the May 20th Senate hearing, both Administrator Wheeler and Senator Capito (R-WV) took
Senator Carper (D-DE) has become the
leading voice in the Senate for stricter
wood heater emission standards.
aim at Senator Carper (D-DE), noting that he had previously supported a sell-through but now opposed it.  The day before the hearing, Jack Goldman of HPBA sent a letter highlighting this supposed contradiction, and the main reporter following this issue, Sean Reilly, called it a “flip-flop” by Senator Carper.   But the attempt to embarrass Carper may have backfired as it brought back a controversial chapter in this saga into the limelight.

Senator Carper introduced a bill in 2018 that would have established a $75 federal change out fund and provided a one-year sell-through.  Although the bill was historic opportunity to get both a sell-through and a significant fund to subsidize the sale of wood stoves and boilers.  HPBA refused to support it at the time because it would have also codified Step 2 emissions limits as of May 2020, and the association still thought they could roll back much of the 2015 New Source Performance Standards (NSPS), or at least delay by three years.  Only in retrospect can the wood heater industry appreciate what an opportunity Carper’s amendment was, and how little industry ended up securing in subsequent years.  HPBA’s decision to try for a three-year extension instead of a one-year sell-through and a $75 million change-out fund may have exposed differences between central heater manufacturers who really needed a three-year delay, stove manufacturers who were already meeting Step 2 emission standards, and retailers who would have been a main beneficiary of a large change-out fund.

This moment may have represented industry’s high point in influence in Washington but the moment was squandered and such an opportunity has never come back.

AGH asked HPBA how decisions about wood heater policy are made within the organization. Jack Goldman, CEO of HPBA responded in writing that, “All policies of HPBA go through the appropriate internal approval process that includes staff, committees, sections, and leadership.”  HPBA members interviewed for this story say that policy is normally set by the Solid Fuel Hearth Appliance Section and that central heater companies do not have any inordinate influence but HPBA must represent all its members, even if that means working for “the lowest common denominator.”  One HPBA member who was distressed by HPBA’s lack of support for Carper’s amendment said they did not recall any vote on that policy decision, and that there was a lot of inconsistency on what matters were voted on, and what was decided by HPBA government affairs staff.

In hindsight, industry would have benefited far more from Senator Carper’s amendment. At the time, however, industry felt that, between Congress, the courts and the Administration, they still had lots of cards to play, according to industry members interviewed for this blog.  Industry had the opportunity to promptly litigate the legality of the 2015 NSPS but instead chose to delay litigation and take their grievances to Congress and the Administration.  Briefs for the court challenge are due in August but it is unclear if there is anything meaningful left to litigate other than some technical issues that don’t implicate timelines and emission standards.  It’s also unclear how much appetite manufacturers have for litigation if it needs to be funded with assessments in addition to normal membership dues.

States and programs that may not allow the sell-through

A number of states, such as Minnesota, may have incorporated the 2015 NSPS and its 2020 timetable into their state laws even before they anticipated a sell-through and thus cannot allow a sell through per state law.  New York has publicly said that a sell-through may violate state laws, leaving open the question whether retailers can safely sell Step 1 appliances in the Empire state.  Most change out programs and incentive programs that account for potentially up to 15% of annual stove sales only make Step 2 units eligible.  Some of those programs operate with funds tied to the EPA that could not be redirected toward Step 1 stoves.  

In addition, it’s unclear if the sell-through will be allowed in parts of Canada that have expressly adopted the 2015 NSPS.  The provinces of Quebec and British Columbia, home to a third of Canada’s modest 37 million population (less than California’s) adopted the 2015 NSPS.  It’s also unclear if local jurisdictions, including major urban areas, could disallow a sell-through.  Depending on the number of states that reference the 2015 NSPS deadlines, there may emerge a patchwork of regulations disallowing the sell-through.  This kind of patchwork is often what all industries try to avoid, as it makes commerce more difficult.

Central heater manufacturers spearhead the fight for relief

Central wood heater companies appear to have played an outsized role in the effort to delay the EPA’s wood heater deadlines, frustrating HPBA members who would rather have leaders of companies with more modern technology be the face of industry.  Frank Moore, President of Hardy Manufacturing, a Mississippi based outdoor wood boiler company, represented the wood heater industry at a Senate hearing in 2017.  However, Hardy Manufacturing had no intention of making a Step 2 heater and has since gone out of business.

As recently as February of 2020, HPBA said they “invited two HPBA members – Central Boiler and U.S. Stove Company” to a private meeting with officials at the Office of Information and Regulatory Affairs (OIRA), which is part of OMB.  These two companies dominate the outdoor boiler and warm air furnace markets.  It is unclear why HPBA invited them to the meeting.  AGH asked HPBA why they invited those two companies to this meeting, and in a written response, Jack Goldman said, “we do not discuss internal deliberations as to how we make such decisions.”

   
The appearance that HPBA policy was being driven more by the needs of companies making central boilers caused considerable friction within industry.  One HPBA member, who asked that his name not be used, said that some companies did not renew their membership in HPBA in 2020 because the “NSPS assessment fees are not in the interest of the company,” referring to the fees manufacturers paid to fight the EPA’s 2015 NSPS.  The initial success of HBPA’s advocacy efforts, which led to a proposed 2-year sell-through for central heaters but not for stoves, was a deep disappointment for some HPBA members that only made stoves.

The February meeting left a paper trail on the record, giving insight into the number of Step 1 central heaters these larger manufacturers have in their own warehouses. John Vorhees, Director of Compliance for US Stove Co., said in a memo to the EPA that, “We, as a manufacturer are also stuck with inventory. We currently have $730,000 of WAF and $670,00 of AAA products.” (WAF stands for warm air furnaces, regulated under Subpart QQQQ of the NSPS, and AAA refers to stoves, which are regulated under Subpart AAA of the NSPS.)
"Thank you Congressman Peterson" says a
sign held by Central Boilers employees in
2017, after Peterson  introduced HR 453

Central Boiler did not disclose in their memo that they had any Step 1 boilers in their possession but said that 210 of their dealers had 596 Step 1 boilers, or an average of 2.8 boilers apiece.  Oddly, the memo does nothing to explain how many Step 2 boilers those dealers have, or when the company stopped selling Step 1 boilers to their dealers and started helping them stock up on Step 2 boilers.  As a result, this memo, like scores of other comments submitted to the EPA in support of a sell-through, fails to provide the EPA with the kind of data that demonstrates a sell-through was warranted and that manufacturers acted timely and in good faith to provide Step 2 heaters to retailers.

The 2018 EPA proposal for a 2-year sell-through for boilers and furnaces, but not for stoves, would have extended the sales of the most polluting units the wood heater industry had to offer.  The irony was not lost on many in the stove industry, who privately complained that it was the outdoor boilers who brought on stricter scrutiny from state and federal air quality agencies in the first place.  Now, they were being teed up to get relief. But the plan stalled, and the EPA public comment process resulted in a denial of the sell-through for central heaters, which they unofficially announced in November 2019.  

After industry failed to secure a two-year sell-through that would have allowed them to build up a two-year inventory of Step 1 heaters, US Stove Company laid off 25% of their workforce and also dropped their membership in the HPBA.  England Stove Works also dropped their membership but reportedly did not have any such large-scale layoffs. These two companies are by far the largest volume stove manufacturers in the US, as they sell to big and small hardware chain stores and have buy-back agreements.  
Hardware chains such as Home Depot,
Lowes, Menars, Habor Freight Tools,
Northern Tools and  True Value, sell
the majority of stoves in some areas.

There has long been tension between US Stove Co, England Stove Works and the makers of more expensive stoves that get sold through specialty stove retailers.  US Stove Co and England Stove Works have always offered EPA certified stoves for under $1,000 and rarely sell stoves that cost more than $2,000.  After the 2008-09 recession, these companies picked up a larger slice of the stove market, putting more pressure on specialty hearth stores whose stoves often start at $2,500 and can go up to nearly $5,000.  Brandon Barry of US Stove Company told AGH that "we have tried in all instances to maintain similar price points in the marketplace, even with increased cost on our 2020 models, leaving those stoves as some of the most cost effective for consumers in the market."

Similarly, when the cleanest and most efficient wood pellet boilers are being sold for $10,000 - $20,000, US Stove arguing for a 2-year sell-through told the EPA that, “We have determined and experienced if a forced-air furnace is priced at retail beyond $1,500, the consumer looks for alternative models or appliances with different heating sources (i.e. electric, gas, geothermal, and etc) for their central heating requirements. It is important to note we are the largest producer of wood burning forced-air furnaces in the industry.”  In addition, Brandon Barry of US Stove told AGH that "record low fuel prices were and still are a driving factor of not introducing a furnace for this year."

The EPA’s low priority enforcement policy

The EPA has adopted a more low priority enforcement approach across a broad range of regulated industries.  With wood heaters it has appeared to be somewhat low-priority for many years, far before the Covid-19 pandemic.  The EPA is not expected to engage retailers who continue selling Step 1 appliances, but HPBA has still doggedly implored them to abide by the legal timeline and avoid any possibility of infractions. 
Acme and EZ Boiler do not advertise
their units as commercial only

The EPA’s lack of enforcement may be most pronounced by the continued open sale of uncertified outdoor boilers and furnaces.  Several outdoor boiler and warm air furnace companies still brazenly ignore EPA laws and operate with apparent impunity.  Companies like Acme Furnace Co based in Missouri, EZ Boiler based in Michigan and Hyprothermboiler based in Arkansas continue to make uncertified residential wood boilers and furnaces.  We are not aware of any EPA enforcement activity despite being contacted numerous times in recent years.   

Follow the money

HPBA is a small industry association by Washington standards with about a $6 million-dollar budget.  HPBA emerged from the Wood Heating Association founded in the 1970s during the wood stove boom years.  It later merged with the barbecue industry association, but barbecue manufacturers only pay a fraction of the dues that hearth industry manufacturers pay.  Three quarters of HPBA’s revenue comes from its annual Expo and only 22% from membership dues.  The loss of membership dues from US Stove Co. and England Stove Works may be less significant than the loss of revenue from them buying booth space at the annual Expo, but since they don’t sell to independent hearth retailers, their motivation to have a booth at the Expo is not as important as other stove manufactures that rely on small retailers.

Retailers are members of regional HPBA affiliates and do not pay dues to the national HPBA, even though affiliates share a small amount of retailers membership dues with the national HPBA.  Test labs also pay dues to regional affiliates based on their income, ranging from a high of $1,050 for Omni Test Labs to $350 for Intertek, each year.  (AGH is also a member and pays a non-profit rate of $350 per year.)  Between membership dues and fees for manufacturers and renting booth spaces at the Expo, HPBA remains mostly a manufacturer-driven industry association.

The Solid Fuel Section of HPBA is the committee that “promotes and protects the interests of HPBA members that produce wood and pellet hearth appliances,” according to the HPBA website.  The Section also funds specific legislative, regulatory, and consumer initiatives.  If the Section votes to litigate or pursue Congressional legislation, the effort is funded through a special assessment based on the size of each company in the Section, not by barbecue or gas section members.  Some companies resisted expensive efforts to undermine or stall the NSPS, but still had to pay the special assessment, and others refused to pay any more special assessments after the EPA’s only proposed a sell-through for central heaters in 2018.  The 2019 assessment for additional NSPS advocacy approved by the Solid Fuel Section was reportedly less than $100,000, but previous years may have been much higher.

The March 2020 Expo in New Orleans was nearly cancelled but carried on with smaller attendance.  This was the first Expo to showcase all 2020 compliant appliances and was notable that the only two stoves considered for Vesta awards were both automated.
The annual HPBA Expo is a networking
hub not just for industry, but also EPA and
air quality experts who attend parallel
events.

The main purpose of the annual Expo is to provide a forum for manufacturers to sell to retailers and that in turns provides HPBA with much of its annual operating expenses.  HPBA largest expense by far is putting on the Expo.  Its next largest expense is its advocacy and government affairs department, which reportedly spends nearly $1 million a year, mainly in salaries.  In addition, regional affiliates, with far smaller budgets, engage in local lobbying and advocacy.  By far the biggest issue in recent years for the Government Affairs staff has been trying to extend the 2015 NSPS deadlines and dismantle parts of it.  But increasingly HPBA and its regional affiliates are engaged in fighting against restrictions on natural gas and the electrification of heating.

It’s unclear what percentage of membership dues, assessments and booth fees companies like Central Boiler and US Stove Company pay to HPBA.  Hearth & Home Technologies, by far the largest higher end stove manufacturer in the US who owns top brands like Harman, Quadrafire and Vermont Castings, already pulled out of HPBA’s annual Expo several years ago, which was an even bigger financial blow to HPBA.   It’s unclear if the departure of US Stove Co will help other factions regain more clout and leadership within HPBA.

Companies making and supporting some of the cleanest, most efficient, and most automated wood heating technologies have formed a smaller trade association, Biomass Thermal Energy Council (BTEC), that initially broke off from the Pellet Fuel Institute (PFI) so it could more aggressively fight for modern pellet heating policies in Washington DC.  (AGH is also a member of BTEC and its President John Ackerly is on the Board of BTEC.)

Impact of sell-through sales of Step 1 appliances

The proposed sell-through would clearly benefit some companies and reduce the sales of others.  Manufacturers that took the deadline seriously would have to compete with those who were counting on an extended timeline and can now offer cheaper or more discounted products.  Some retailers who cleared out their Step 1 products also would be unhappy with the sell-through for this reason, but the majority who have some Step 1 stoves left support it.  Retailers that have no Step 1 stoves could also buy more from manufacturers who have left-over Stove 1 inventory.

For the states and air agencies opposing the sell-through, the issue has little
A smoke capturing inversion in
Fairbanks, Alaska.
to do with issues within the trade association, and everything to do with the additional pollution that will result from the sell-through.  Upper Midwestern states where central heaters are popular and Western states that have frequent inversions are struggling to determine how many more Step 1 boilers, furnaces and stoves are left to sell.  One data point causing great concern is that a relatively small number of manufactures who sell to “major home center chains, and report that over $10 million worth of product will not sell in time and must be repurchased,” according to a letter from HPBA’s Jack Goldman to EPA Administrator Andrew Wheeler.  It is not clear how much was repurchased, or still needs to be repurchased, what percent is furnaces and boilers, and how much of that could back on the market before Nov. 30.  Brandon Barry of US Stove told AGH in a written response to questions that “our inventory levels are confidential. I will say that sell through would be beneficial for us at both the manufacturing and retail level. ... 
 Some product came back to our location and could be sold if sell through comes to fruition. Some has already been destroyed."  Pellet Stove Parts 4 Less, a Massachusetts company said they bought more than 100 Englander Step 1 pellet stoves in April at bargain prices so they could take them apart and sell the individual parts.

The other controversial area is how much more polluting Step 1 appliances are in the field, compared to Step 2 appliances.  HPBA’s position is that Step 1 appliances are “perfectly good” and a sell-through “ultimately has a minimal impact on the environment as the products in this sell-through provision are already clean burning.”  In written answers to questions submitted by AGH, Jack Goldman added, “We certainly hope that the Step 2 appliances may be better than Step 1 products in people’s homes … EPA simply has no data confirming that there is a distinction in the field between a 2.0 g/h laboratory number and a 4.5 g/h laboratory number.” 
Emission standards for lab testing dropped by more than a
 half for stoves and even more for most boilers and furnaces.

While pellet stoves are the least concerning, as many Step 1 pellet stoves were already under 2 grams an hour, outdoor and indoor boilers, also known as hydronic heaters, have the widest differences between Step 1 and Step 2 and are likely the appliance type where there is a very appreciable emission difference.  Furnaces are even more complex as they didn’t even have a voluntary emission program prior to 2015, so they have had to go from an uncertified class of appliances very quickly.  In 2015, their Step 1 standards were ≤ 0.93 lb. of PM/mmBtu heat output but their Step 2 dropped the most drastically, all the way to ≤ 0.15lb/mmBtu heat output.  It’s hard for any wood heating combustion expert to expect that such a drastic drop in required lab certification limits would not impact emissions in the real world. 

For states and air quality agencies, there is also a much more antagonistic relationship with HPBA than there was decades ago, before this bitter fight over the 2015 NSPS.  The apparent leadership of central boiler companies within HPBA has not helped the relationship, and it will likely lead to more robust comments opposing the sell-through and a potential increase in state enforcement activity.

What comes next

US Stove Co and Englander dropped their memberships for different reasons, but the loss of their membership dues and assessments is overshadowed by a far more imminent threat to HPBA’s financial health: whether they can have the next expo in Nashville in March 2021.  The association is actively exploring whether to hold a virtual trade show but that may not provide the revenue, even after the far lower expenses, that it relies on.  Many trade associations and other groups are facing similar, longer term disruptions to the business models as a result of the Cover-19 pandemic.
NESCAUM's Lisa Rector  demonstrating
the IDC test method to EPA staff at the
2018 Wood Stove Design Challenge on
the National Mall.

Then, there is the next NSPS which could begin as soon as 2023.  Many people in industry worry that the 2 grams of PM2.5 per hour standard is just a precursor to 1 gram an hour.  But the next NSPS is likely to be far more complex and will focus on adopting an entirely new test method that may abandon measuring pollution in grams per hour, and adopt grams per unit of heat, which is the way boilers are already measured.  HPBA members have already paused development of the broadly accepted ASTM E3053 cordwood test method, that was mainly designed by the HPBA manufacturing community.  HPBA members developed the underlying data for this ASTM cordwood test, and it has become very popular, with 57 out of the 120 Step 2 wood stove models using the ASTM test.
Now the Northeast States for Coordinated Air Use Management (NESCAUM) is developing the underlying data for a series of Integrated Duty Cycle (IDC) tests, mostly with funding from the New York State Energy and Research Development Authority (NYSERDA).  The EPA informed HPBA in January that they plan to use the IDC framework as the basis of the future Federeal Reference Method (FRM), the officially designated certification test method.

The question will likely be about how much data NESCAUM releases and when, and whether HPBA feels that it has been sufficiently included in the process and ultimately whether the EPA has enough data to adopt a FRM.  The amount and quality of test data developed for the ASTM will be a reference point.  Developing test data for a test method is a lengthy and expensive process and also can become political and controversial based on who can witness testing, how much data is shared, how long it takes to share data, what new instrumentation is required, and what the next set of timelines looks like.   The process could lead to another lawsuit – and special assessments from the HPBA’s Solid Fuel Section, if manufacturers feel their ability to certify products is too unpredictable.  Alternatively, if the acrimony around this proposed sell-through diminishes, a more cooperative and inclusive process could emerge and result in a genuinely improved test method that will encourage innovation to make stoves burn well in homes, not just in labs.

Friday, May 15, 2020

May 15, 2020: a historic day for wood heat technology

The end of an era for some iconic stove models and the beginning for others
Quadrafire's Mt. Vernon AE is
one of many popular, iconic stove
lines going out of production 

Ten years in the making, modern wood heater emission standards are finally here, today on May 15. Hailed by many and derided by many, May 15 brings to a close a major chapter  in the book of wood heater regulation- though not the last chapter by any means. The EPA, industry and states continue to work on cordwood test methods, parts of the Hearth, Barbecue & Patio Association (HPBA) lawsuit are still outstanding, and public comment will soon be open about a likely proposal for a fall sell-through of Step 1 stoves.

To draw an analogy from biology, today marks a mass extinction of heater models unparalleled since the 1988 – 1990 period when even more heater models died off because they could not meet basic emission standards. The largest genus of stoves to die off back then was the Fisher family of stoves, though they live on in tens if not hundreds of thousands of American homes.  A few that go extinct today are also akin to famous dinosaurs, like the Ashley circulator line of stoves, that appear to lack a 2020 compliant version for wood.  Granted, some of the most iconic stove models quietly slipped out of production years ago, like the Acclaim, Intrepid and Vigilant, which have sold more units than most current models ever will, between their catalytic and non-catalytic versions.

For pellet stoves, May 15 marks the end of the Whitfield era.  Whitfield pellet stoves are still renowned for their simplicity and durability and they lived on via the Montage model made by Lenox and then by IHP.  As of May 16, Jerry Whitfield’s legacy is alive and well in the history books but gone from showroom floors.  The Mt. Vernon AE, another classic and popular pellet stove made by Quadrafire is also gone the way of the dinosaur, (the company continues to build the slightly similar Mt. Vernon E2).
The classic Jotul F 602 endures
with a 2020 compliant version

Then there are stoves like the classic Jotul F 602 that was popular when it was introduced in the 1930s. It’s virtually identical looking modern version is 2020 compliant, and still popular. 

The millions of dedicated, experienced wood stove enthusiasts in the US may be a nostalgic lot, who fondly remember the old models and the days when emissions limits were not as strict.  But May 15, 2020 is also a milestone in stoves becoming cleaner and more efficient, a point that often seems to get lost in the acrimony about the how the EPA is managing the process.  

It’s tempting to say that the 2015 wood stove rules, that culminated today in a 2 to 2.5 gram an hour standard, will give the stove industry a new lease on life, like the 1988 EPA regulations did.  The jury is still out on how much better these stoves are than the ones allowed to emit up to 4.5 grams an hour and some models were likely brought to market too quick, before they were sufficiently field tested.  Instead of touting the new prowess of these cleaners stoves, almost all industry leaders have  been saying there is no appreciable difference between a 2-gram standard and a 4.5 standard.  Part of this is a messaging tactic to oppose stricter standards or possibly they know more about how test labs can produce ever lower emissions data from virtually the same stove.   

The sell-through that kept falling through

The May 15 deadline was a sour one for many retailers and industry members who thought that there would be a sell through.  First, the EPA raised their hopes by proposing a sell-through in 2018, only to reverse course and deny it in March 2020.  The March ruling was a blow to industry morale even though the EPA agreed to publicly tell industry in October 2019 that they should stick to the original
Senator Carper (D-DE) has emerged
as a leading voice for stricter stove
regulations in the Senate
timetable.  Then HPBA rallied again in March 2020, apparently thinking they could get a Direct Final Rule, allowing a sell-through starting on May 16, and everyone’s hopes went back up again.  And, Mandy Gunasekara was back at the EPA, after more than a year absence. But Direct Final Rules are for non-controversial changes that won’t be opposed by any stakeholder.  Senator Carper from Delaware quickly made sure that they EPA knew how contentious a sell-through was.  

It wasn’t until early May that it became clear to HPBA that getting a Direct Final Rule was like threading a needle in a hurricane, even with some high-ranking friends in the Trump Administration.  Then, HPBA seemed to quickly change course, urging industry to ignore the possible sell-through that they had fought so hard to secure.  HPBA unveiled a promising  Stoves to Homes Initiative that would allow retailers to give away their unsold Step 1 stoves to a charity who would then install them in low-income homes.   [Update: At 5:00 PM on May 15, the EPA released the details of a proposed sell-through window in the fall, ending on Nov. 30, and after public comment and an online hearing.]

HPBA worked hard on behalf of its membership on all three branches of government: Congress, the courts and the Administration.  HPBA came extremely close to victory in Congress, passing a far-reaching three year delay Bill in the House, championed by Rep. Collin Peterson (D-MN) who represents Central Boiler's district.  This was far more than a retailer sell-through and industry could not secure support from key democrats in the Senate when the initiative failed.  Many assumed industry could secure relief from the Trump Administration, as so many other industries have, and the 2018 EPA sell-through proposal was the fruit of those efforts.  Some speculate that the 2018 departure of EPA official Mandy Gunasekara left HPBA without a high-ranking benefactor to shepherd through the sell-through proposal.  It may have been left to lower
As manufacturers tried to
assure their retailers they were or
would be ready for 2020 back in
2017 and 2018 with ads like this,
the EPA saw an industry that did
not need a sell-through
level EPA staff who sided with states and air agencies that the case for a sell-through was weak.  What the EPA may have failed to grasp, was that even through many stoves were certified to 2020 standards in 2016, 2017 and 2018, many manufacturers did not make those models available to retailers until later in 2019, leaving retailers no option but to continue buying Step 1 models until the very last heating season.  

Finally, in the third branch of government, the courts, HPBA’s legal strategy seemed to unravel as it requested extension after extension and as time passed, more and more stoves were certified to the 2020 standards, including the 2.5 gram an hour cordwood standard. HPBA had a strong claim the EPA lacked sufficient data to set a cordwood standard, but then its members began favoring the looser ASTM cordwood standard.  After 5 years of advocacy, industry had little to show to the retailers, many of whom are now angry.  

Fortunately, 2018 and 2019 were mostly good years for much of the manufacturing and retail industry, according to a number of detailed articles in Hearth and Home Magazine.  The wood and pellet heater industry entered 2020 on decent footing, though many manufacturers and retailers increasingly make profits from their gas and electric lines of appliances, not wood and pellet.  Then the coronavirus hit with a broadside slam that appears to be lingering not just through the spring and summer, but potentially could have a major negative impact in the fall of 2020 and well into 2021.  The pellet stove and boiler sector is also particularly susceptible to low oil prices, which simultaneously accompanied Covid-19 in its swath of destruction through the economy.

In addition, the industry’s right-leaning, anti-regulatory tilt has built friends in Congress and the Administration, but not necessarily with the leaders of the renewable energy movement, who seem to be increasingly looking to electrify residential heat. Privately, many HPBA members say they wish the association had not tried to fight the regulations so hard, even though the outdoor boiler and warm air furnace sectors were pushing them to do just that.  If Senator Biden is elected in November, industry would likely do well to try to quickly reposition themselves and be part of coalitions that could stand to benefit from a pro-renewable administration.  Pellet heating technologies should be best positioned to benefit from some form of green new deal and potentially help end the difficult, cyclical boom-bust nature of pellet heater sales.

Certified stoves on May 16
 
A screen shot of the EPA database on
May 15, showing 610 certified stoves.
The number of stoves on the EPA’s list certified room heaters is about to plummet downward, from 610 to 211 stove models.  Hundreds of models that design firms, engineers, lab technicians, production line workers brought to market, will be things of the past.  They represent millions upon millions of stoves that families gathered around in the evening, that kept them warm during power outages, and helped them save enough money for groceries and other essentials.  My grandparents, my parents and my family used many of those stoves, considered to be the best technology of their era.  One of them, a pellet stove made in 2014 and has worked beautifully since then, heats my home as a I write this.

So we put our faith again into the hands of the engineers and lab techs to come up with even better stoves, that will be even cleaner and more efficient. We won’t see the huge PM reduction and efficiency gains that we experienced in 1988- 1990, but chopping lab numbers in half, from 4.5 to 2 or 2.5 grams is no easy feat and should be embraced by all of us.  We should applaud the engineers who do this for us, and especially those who are working not just to achieve these numbers in a lab but who are trying to ensure stoves are cleaner in our living rooms.  
Both wood stoves up for
awards at the HPBA 2020
Expo were automated, a
sign that the stove industry
is movig forward.

Reducing average stove emissions by a gram or two or three per hour from a stove is a major achievement that will protect the lungs of not just those that buy stoves, but their kids, their parents, their grandparents – and their neighbors.  Granted it will take decades for these cleaner and more efficient stoves to be commonplace in homes across America.  After all, there are still millions of uncertified, pre-1988 stoves in homes.  

But we should not forget that the drop to 4.5 grams an hour actually happened more when Washington State changed their standards in 1995, than it did in 2015 when the EPA adopted that change.  Those two decades of sales of cleaner stoves all across America were a blessing that has had long-term ramifications.  Two decades from now, I hope we will be able to look back and appreciate the engineers who designed these cleaner 2020 appliances and gave a new lease on life to this vital renewable energy technology.