Federal effort to boost Maine's wood pellet industry sees strong returns
$11.4 million federal effort to boost Maine's wood pellet industry, early returns seem to indicate that the investment was a sound one with money helping drive Maine toward a stronger sustainable forestry economy and reduced dependence on foreign oil.
By Matt Hongoltz-HetlingStaff Writer
As the sun sets on an $11.4 million federal effort to boost Maine's wood pellet industry, early returns seem to indicate that the investment was a sound one.
The money helps drive Maine toward a stronger sustainable forestry economy and reduced dependence on foreign oil, according to one expert.
School Administrative District 74 Superintendent Ken Coville shows off a wood-pellet boiler at Garret Schenck School in Anson. Staff photo by Erin Rhoda
The U.S. Department of Forestry spent the money in the Fuels for Public Buildings grant to help bring 24 biomass conversion projects to fruition in schools, hospitals and public buildings across the state.
In central Maine, the grant has funded projects at schools in Phillips, Anson, Oakland and Waterville; and municipal buildings in Strong, Thorndike and Gardiner.
The last project, which is scheduled for completion in Ashland on May 7, will also serve as an education center, which grant administrators hope will help to keep the ball rolling by stimulating the creation of more biomass boilers in the state.
Future Metrics, a Bethel-based company owned by economist Bill Strauss, has been hired by Northern Maine Community College and the federal government to audit the grant-funded projects.
It will take a couple of months to gather the data and produce a report, he said, but he already has a strong feeling about what the bottom line will be.
"I can tell you in very general terms, it's been a real good payoff," he said.
Forestry industry boost
Strauss said an investment in a biomass boiler has a "huge multiplier effect" for the public.
"The obvious one is the supply chain," Strauss said. "You're creating jobs for the people who are harvesting and transporting the wood."
According to Robert Fitzhenry of the U.S. Forest Service, during the construction phase, an estimated 335 full-time jobs were created or retained.
There is also a potential for the United States to develop a market to build biomass boilers. Most of Maine's boilers came from Europe, although local companies have assembled and installed them.
In addition, he said, the $1.2 million that is being pumped into Maine's forestry industry to buy wood pellets will support 13 full-time forest worker jobs.
Fitzhenry said the program does more than reduce taxpayer heating costs. It also has a ripple effect that stimulates the market for low-value wood, he said.
Maine's forestry industry has long been focused on the high-value part of the tree — thick trunks and hardwood that can be converted into lumber and wood products.
The wood that's left behind, treetops, remnants, and small trees culled during woodlot thinning, has much less value.
"Our view is the higher those low-value markets rise, and the more sustainable fuel sources we tap for energy, the better off forest owners, woods-workers and Maine forests are," Fitzhenry said.
Scott Kinney, 43, and his brother Kevin, 45, have been logging the Maine woods for decades. They use automated equipment that makes it easy for them to harvest the smaller wood, so they are well-positioned to take advantage of the increased wood pellet market.
Kinney said he has seen an improvement in the market since grant-funded biomass boilers began to come online.
"These grants have been wonderful," he said. "It gave us the diversity of another market for the biomass."
The increased demand for wood pellets, he said, has given him a steadier source of revenue and allowed him to do jobs for owners of small wood lots who have a hard time finding someone willing to work their land.
"If I didn't have the increased market to be able to get rid of the supply that was available, those jobs wouldn't be feasible to me," Kinney said.
Kinney said he is also aware of positive changes that go beyond his own finances.
"The whole 'green' energy fuel craze is a good thing to me, and it has a strong impact," he said. "Any time we can become less dependent on foreign oil, its a good thing."
Less oil
A reduction in foreign oil dependence was another economic benefit cited by Strauss.
Maine's Legislature established a goal of reducing the state's consumption of oil by 30 percent by 2030, and by 50 percent by 2050, compared to 2007 levels.
The state is ahead of those goals, the Governor's Energy Office announced Wednesday. According to the report, home use of oil has decreased by 26 percent from 2007 levels. In the commercial sector, there was a 20 percent reduction; and in the industrial sector, there was a 40 percent reduction, which, according to the announcement, "will enable the state to meet the 2030 goal without additional actions."
Strauss said the switch from foreign oil to home-grown wood also affects the state economy positively.
"When you buy heating oil, 78 percent of that dollar spent goes away," he said. "Some goes to refineries in the Gulf Coast. A lot doesn't even go to the U.S. The top suppliers are Mexico, Venezuela, and Saudi Arabia."
By contrast, he said, almost every penny of a dollar spent on wood chips stays in Maine, creating not only jobs, but adding to tax revenue.
Lower heating costs
Strauss said another, less obvious economic effect comes as a result of reduced heating costs.
Instead of spending $3.3 million on 900,000 gallons of oil each year, taxpayers in the affected rural communities throughout the state will spend $1.2 million each year on wood and pellets.
"Wood pellet fuel is half the cost of heating oil," he said. "In Maine, a typical home spends north of $3,000 per year on heating. You've cut their heating bill in half."
Some portion of the extra $1,500 saved, he said, is spent in the local economy, stimulating further growth.
While the news about biomass heating is good, there is a theoretical limit.
"You have to stay within the boundaries of sustainability," he said. "It's renewable. It has to renew. You cannot shrink the stock of trees."
While there's a point at which Maine's forest couldn't sustainably meet the demand for wood pellets, Strauss said, there's plenty of room for growth today.
Industry reports show that about 16 million tons of wood were harvested in Maine two years ago, well short of the 20 million tons that would represent the maximum sustainable capacity, according to Strauss.
"There's room," he said. "The forest sector will evolve with the energy sector."
Matt Hongoltz-Hetling — 861-9287