Wed October 19, 2011
New Massachusetts Rules Could Hurt New Hampshire Biomass
Massachusetts is expected to announce new rules that will raise the bar on the definition of green energy.
NHPR’s Sam Evans-Brown reports that shift could cost NH electric producers millions of dollars.
Massachusetts is on track to pass new regulations aimed at cutting the amount of greenhouse gasses going into the atmosphere.
The focus is on power from biomass – basically, burning wood to make electricity.
Dwayne Breger of the Massachusetts Division of Energy Resources, says there are two good reasons to get the most out of every tree.
Breger: We have a limited resource of biomass material available to us through sustainable supplies, and we really want to reduce the carbon debt associated with the use of this biomass, we want to use the biomass in the most efficient way that we can.
The new rule will require biomass plants to burn at 40 percent efficiency or more.
That bar is too high for every substantial producer of wood-based power in New Hampshire.
The Public Service of New Hampshire plant in Portsmouth, Schiller Station, is the state’s largest.
Company spokesman, Mike Skelton, says what Massachusetts has in mind will make a difference.
Skelton: depending on what the final product is it’s certainly a possibility that Schiller would no longer qualify to sell RECs in Massachusetts, and MA has been one of our primary markets to date.
Those things Skelton mentioned – RECs – are worth around six to nine million dollars a year to PSNH.
In the energy world, a REC stands for Renewable Energy Credit.
It’s sort of a unit of green-ness that can be sold to power brokers to offset the dirtier energy they sell.
It’s complicated, but at the end of the day, this system says greener power is worth more to society, so let the market put money in the pockets of those who produce it.
The Massachusetts shift means the wood-based power in New Hampshire won’t be green enough to go up for bid in the Bay State.
Eric Kingsley, an industry expert, says generators can still sell their RECs elsewhere but their value will fall.
Kingsley: How far could they potentially drop? With a flooded market it’s certainly in the realm of possibility that they could drop to near zero.
PSNH can absorb that kind of a loss.
But in Northern New Hampshire six smaller, older biomass plants are teetering on the financial brink.
Kingsley says the new rules would push them closer to the edge.
Kingsley: we’d expect those markets to become depressed, potentially to the point where it’s difficult to support ongoing operations.
Together, those plants employ a little over a hundred workers with a total estimated value of 45 million dollars a year to the New Hampshire economy.
One of the groups most directly affected are loggers.
Adam Sherman with the Biomass Energy Resource Council says these power plants buy otherwise worthless wood chips.
Sherman: The further loss of that market would be crippling to the harvesting sector, um, the loggers
Despite that dire prediction, the impact is unclear.
Wood chips represent a small slice of logger revenues.
In addition, the new policy in Massachusetts might not take full effect for a couple of years.
But people in the timber business are worried, and think that Massachusetts is about to put bad policy into place.
Charles Lavesque, a private forestry consultant, thinks that the Massachusetts rules are too much, too soon.
Levesque: So we’ve got existing plants, they’re existing… do you want to shut these down and try to find another way to generate electricity that comes from renewable sources? That’s a difficult thing. No-body wants to build anything. Look at the controversies around the wind-farms.
Dwayne Breger, from the Massachusetts DOER says that though the new standards might be painful in the short-run, they are the way of the future.
Breger: We don’t believe this is necessarily the end of Biomass it’s just going to be a redirecting of biomass projects into generally smaller, distributed Combined Heat and Power units.
The type of plant that Massachusetts would like to see have ways to use the waste heat that electrical generation produces.
They have begun to spring up around New England.
But these plants tend to be much smaller, and it will be some time before they match the demand for wood chips that exists today.
New Hampshire loggers could be caught between the pace of change that Massachusetts wants and the speed with which new plants come on line.
Final approval of the Massachusetts regulations is expected sometime this fall.
For NHPR News, I’m Sam Evans-Brown