Reduced buying power may lead to more reliance of wood to heat homes

Median household income has declined 4.4% since the official end of the recession in 2009, and is 6% lower than when we went into the recession in 2007. This enduring reduction in the buying power of the American consumer may lead to a continued increase in the use of wood and pellets, as more Americans seek cheaper alternatives to oil, propane, and electric heating.

Source: The Washington Post. Fletcher, Michael.
"Four years after end of recession, incomes remain depressed

It is likely that the surge in wood heating between 2000 and 2010 was partly due to reduced buying power and job loss. During that time, wood and pellets were the fastest growing heating fuel in America. States where unemployment was the highest typically saw even higher growth in wood heating.

New studies show that lower income families have locked in that reduced buying power since the end of the recession. Income growth in America over the past 10 years has disproportionately gone to the top and very top income groups. Those income groups may be installing high-end outdoor kitchens and fireplaces, but they rarely use wood or pellets as a primary heating source. Rather, the lower income groups are more likely to rely on wood as a primary heating fuel, according to Census Bureau statistics.

The long-term reduced buying power of Americans is also likely contributing to the growth in the sales of less expensive wood stoves such as those sold at big box stores.  Industry experts say sales of wood and pellet stoves at large hardware chains has grown significantly in the last 5 years.  It also may be leading to more sales of very cheap stoves that are exempt from EPA emission standards.  And, it is likely leading to more families continuing to rely on older stoves, instead of upgrading to newer, cleaner and more efficient stoves.

Inflation adjusted median household income is now about $52,000, compared to about $56,000 before the recession. What is notable is that while unemployment continues to drop, from a high of 10% to 7.5%, median income has not risen.  Energy costs take a much bigger bite out of the incomes of families who are below the median income range, leading to energy insecurity and reduced use of HVAC systems.

Source: The Washington Post. Fletcher, Michael. "Four years after end of recession, incomes remain depressed"

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.

Do Electric Rates Impact Wood Heat?

Electric heat is clean in the home,
but not when its made and line
losses are significant.

When the price of oil goes up, it goes up for everyone.  But electricity rates vary widely by state with residents of some states paying double what they pay they other states.  New York and Connecticut saddled with the highest electricity rates in the country, which may have contributed to the rapid rise of wood heating in those states.  Conversely, in the south where electricity rates are the cheapest, the use of wood heat decreased in most states between 2000 and 2010. 

Electric heating has surged in recent years – though not as fast as wood heat – in part because of more efficient heat pumps.  Residential geothermal heat is slowing gaining traction but requires a lot of electricity to pump the heat from the earth through the home, leading some experts to regard it simply as very efficient electric heat, not as a renewable. (Electricity for geothermal heat costs an average of $10.43 per million Btus compared to $12.63 per million Btus if you purchase cordwood.)

The economic disadvantages of fuel oil and propane as heating fuels are often discussed, but electricity is a more complex story.  More than a third of American homes use electricity as the primary source of heat (US Census) and another 24% use it as a secondary heat source (EIA).  Granted many of them are in the south, where the heating load is smaller but more northern states can have surprisingly high rates of electric heating.  For example, 15% of homes in Connecticut, where electricity is second in price only to Hawaii, primarily use this form of heating (US Census).  

An electric boiler costs an estimated $35.05 per million Btu, according to EIA, and an electric space heater, a common appliance used for secondary heating, costs an estimated $34.32 per million Btu.  An EPA certified wood stove running at 72% efficiency, in contrast, is estimated to cost only $12.63 per million Btu.       

These EIA calculations assume that electricity costs only 11 cents per kWh.  However, half of the U.S. averages more than that amount.  In northeastern states such as New York and Connecticut where electricity costs over 17 cents, the cost of using an electric heater can be as high as $56.42 per million Btu.  This may make consumers think twice before buying an electrical space heater instead of a wood stove as a secondary space heater. 

Map of average U.S. electricity prices by the Alliance for Green Heat. Click to enlarge.

Consumer rates in Alaska, California, Maryland, New Jersey and Washington DC are on the high side, ranging from 14 - 17 cents per kWh (an average of $41 - $50 per Btu for electric heating).  The majority of homeowners in the south, west and midwest pay 9 - 13 cents per kWh for their electricity, which works out to about $26 - $38 per Btu.  That is a much cheaper rate than some states, but still twice the cost of heating with wood.

Pacific northwestern states with a strong hydro-electric presence and Appalachian states with an abundance of coal typically average electricity costs below 9 cents per kWh.  Idaho has the cheapest average electricity rate of any state at 7.99 cents per kWh, thanks to low demand and a large number of dams on the Snake River.    

To compare heating fuel costs in your home, download the EIA’s comparison calculator here: www.eia.gov/neic/experts/heatcalc.xls  

Counting Stoves: Dirty vs. Clean Burning

Ever wondered how many of the approximately 10 million wood stoves in the field today are clean-burning? According to a new article written by James E. Houck and published in Hearth & Home magazine, 35% of free-standing cord wood and pellet stoves are EPA-certified. The estimate is based on manufacturing records supplied by HPBA and the American Housing Survey, and does not include fireplace inserts. 

Finding accurate data on certified vs. uncertified stoves was no easy task, Houck writes, because many home occupants don’t know the status of their heaters. To make matters worse, many states in the South and Mid-Atlantic region have few regulations or programs to encourage the purchase of new lower-emitting wood stoves. Oregon remains the only state that requires uncertified stoves to be removed when a home is a sold. It seems much more must be done before the reality of wood heat catches up to the precedent set by the New Source Performance Standard, passed over two decades ago.

Residential Heating Fuels Show Diverse Growth Patterns

Wood was the fastest growing heating fuel nationally between 2000 and 2010, and in 25 states. But in some regions, electricity, natural gas, propane and even oil are experiencing rapid growth. Wood grew the fastest (+34.6%), followed by electricity (+26.8%) and natural gas (+4.9%), and both propane (-16%) and oil (-21.9%) experienced significant declines. But regional differences abound.

In decline just about everywhere else, the South was the only region to have seen substantial gains in residential oil use. Texas (84.6%) had the greatest increase in oil use of any state by far, with Arkansas (36.75) and Oklahoma (35.7%) rounding out the top three. In both Texas and Oklahoma, oil grew the fastest of any fuel source. In Arkansas, it finished second to electricity (48.2%).

The Northeastern United States experienced some of the biggest shifts in natural gas and propane use over the past ten years. Maine (44.8%), New Hampshire (39.4%) and Connecticut (27.1%) currently lead the U.S. in residential propane growth, and Vermont also ranks second among the states where natural gas is rising the fastest. In each of these New England states, however, wood still remains the fastest growing source of residential heating fuel.

Other than Vermont, gas heating rose the most in Nevada (51%) and Idaho (41.1%). Propane use saw large increases in Pennsylvania (22.2%) and Washington (21.1%), in addition to the aforementioned New England states.

Unlike wood and propane, the large increase of electricity in the U.S. is not confined to any particular geographic region. The states with the three biggest increases were Georgia (54.7%), Iowa (49.5%) and South Dakota (49.2%).

Wood heat use grew fastest in the Northeast and Great Lake States, and fell in most of the south. If history is any lesson, the South may rise again, and heating demographics will continue to provide a fascinating and often surprising growth trends.

Changes in rank

In addition to regional growth rates, state ranking of primary heating fuel use is another lens through which we can understand the growth of wood heat. In 2000, wood was among top the top four heating fuels in 26 states, exceeding at least propane or oil. In 2010, wood was among the top four fuels in 33 states.

In 2000, wood was the third most common heating fuel in two states (Oregon and Idaho), exceeding propane and oil. In 2010, it was the third most common fuel in five states (Idaho, Oregon, Vermont, Washington and West Virginia).

Finally, in 2000 and 2010, wood was the second most common heating fuel in one state (Maine) after heating oil.

Wood is not the most common heating fuel in any state, and it is unlikely that it ever will be – or ever should be.

Facts and Analysis on 2010 Census Heating Fuel Data

· The top ten states of per capita primary wood heating are: Vermont (15%), Maine (12%), Montana (8%), New Hampshire (8%), Oregon (7%), Idaho (7%), West Virginia (6%), Alaska (5%) and Wyoming (5%).

· Four of the eight most populous states - New York, Pennsylvania, Ohio and Michigan - experienced increases in wood heat of at least 65%.

· Rapid rise in wood heat is not just confined to states with very high use of heating oil. In Michigan and Ohio, for example, where the relatively inexpensive natural gas is dominant, wood heat still soared.

· West Coast states, where laws regulating wood heating tend to be stronger, had modest increases in wood heating (6 – 12%) but it is unclear to what extent those regulations kept wood heat growth in check and to what extent other factors were responsible.

· The only part of the country where wood fell as a primary heating fuel was the Deep South, where states experienced a 2 – 13% decline with the exception of Florida that declined 21%.

· In a significant milestone, since 2000 wood has overtaken propane as a primary heating fuel in three eastern states: Maine, Vermont and West Virginia. This is the first time that wood has topped propane in an eastern state since 1970.

· In Europe there has also been a rapid rise in wood and pellet heating, which has more to do with generous government incentives to help homes reduce fossil fuel use. Many European countries have had 25 to 50% incentives for much of the previous decade.

· The US had a 30% tax credit up to $1,500 for only two years, 2009 and 2010. Currently the tax credit is only for 10% with a maximum of $300.

· The number of homes heating with wood fluctuates much more quickly than other fuels because most families who use wood as a primary heat source also have a fossil fuel back-up which they use more of when or if that fossil fuel is more affordable.

· According to the US Forest Service reports, a majority of Americans who heat with wood cut or collect their wood.

· Some states with a more than 90% rise in wood heat have very high unemployment, such as Michigan and Nevada, ranked 1 and 3 for highest unemployment rates. But in New Hampshire, which also had more than 90% rise, unemployment is among the lowest in the US.

· A disturbing trend is that in some of the states with the greatest increase in wood heat, inefficient traditional outdoor hydronic heaters that often create excessive smoke are still allowed to be installed, such as Ohio, Michigan, Wisconsin and Minnesota. These four states have more than half of all such outdoor heaters in the US according to a 2006 NESCAUM report. (13 states, mainly from the Northeast and the West Coast, ban the installation of these devices but most allow cleaner, EPA qualified ones to be installed.)

Sources:

2010 US Census, American Community Survey data: http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t

2000 US Census, American Community Survey data: http://factfinder.census.gov/servlet/ACSSAFFHousing?_sse=on&_submenuId=housing_1

Historical: http://www.census.gov/hhes/www/housing/census/historic/fuels.html

Urban/rural data: http://0-www.census.gov.iii-server.ualr.edu/housing/ahs/data/ahs2009.html

EIA Residential Energy Consumption Survey, 2009, Table HC1.1 &Table HC2.4: http://205.254.135.24/consumption/residential/data/2009/

Background on government incentives: http://forgreenheat.org/toolkit.html