[Senate Hearing 115-488]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 115-488

        EFFICIENT APPROACHES TO REDUCING INDUSTRIAL ENERGY COSTS

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION
                               __________

                            OCTOBER 6, 2017
                               __________


                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                  
                  
                       Printed for the use of the
               Committee on Energy and Natural Resources

        Available via the World Wide Web: http://www.govinfo.gov
        
        
                              ___________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
27-433                    WASHINGTON : 2019



               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
STEVE DAINES, Montana                AL FRANKEN, Minnesota
CORY GARDNER, Colorado               JOE MANCHIN III, West Virginia
LAMAR ALEXANDER, Tennessee           MARTIN HEINRICH, New Mexico
JOHN HOEVEN, North Dakota            MAZIE K. HIRONO, Hawaii
BILL CASSIDY, Louisiana              ANGUS S. KING, JR., Maine
ROB PORTMAN, Ohio                    TAMMY DUCKWORTH, Illinois
LUTHER STRANGE, Alabama              CATHERINE CORTEZ MASTO, Nevada

                      Brian Hughes, Staff Director
                Patrick J. McCormick III, Chief Counsel
             Dr. Benjamin Reinke, Professional Staff Member
           Angela Becker-Dippmann, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
           Spencer Gray, Democratic Professional Staff Member
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENT

                                                                   Page
King, Jr., Hon. Angus S., a U.S. Senator from Maine..............     1

                               WITNESSES

Johnson, Dr. Mark, Director, Advanced Manufacturing Office, 
  Office of Energy Efficiency and Renewable Energy, U.S. 
  Department of Energy...........................................     4
Doran, Dana A., Executive Director, Professional Logging 
  Contractors of Maine...........................................    14
Robbins, Alden J., Vice President, Robbins Lumber Incorporated...    22
Linkletter, Robert, President, Maine Woods Pellet Company........    30
Thibodeau, Mark, Regional Manager, ReEnergy Biomass Operations 
  LLC............................................................    35
MacDonald, Suzanne, Community Energy Director, Island Institute..    44

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Doran, Dana A.:
    Opening Statement............................................    14
    Written Testimony............................................    18
Industrial Energy Consumer Group:
    Statement for the Record.....................................    61
Johnson, Dr. Mark:
    Opening Statement............................................     4
    Written Testimony............................................     8
King, Jr., Hon. Angus S.:
    Opening Statement............................................     1
Linkletter, Robert:
    Opening Statement............................................    30
    Written Testimony............................................    33
MacDonald, Suzanne:
    Opening Statement............................................    44
    Written Testimony............................................    47
Robbins, Alden J.:
    Opening Statement............................................    22
    Written Testimony............................................    26
Thibodeau, Mark:
    Opening Statement............................................    35
    Written Testimony............................................    39

 
        EFFICIENT APPROACHES TO REDUCING INDUSTRIAL ENERGY COSTS

                              ----------                              


                        FRIDAY, OCTOBER 6, 2017

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                     Searsmont, ME.
    The Committee met, pursuant to notice, at 11:00 a.m. at the 
Robbins Lumber Mill, Searsmont, Maine, Hon. Angus S. King, Jr., 
presiding.

         OPENING STATEMENT OF HON. ANGUS S. KING, JR., 
                    U.S. SENATOR FROM MAINE

    Senator King. This hearing of the United States Senate 
Committee on Energy and Natural Resources is now in order.
    I will make a brief opening statement and then we will have 
statements from our witnesses, and I will ask a series of 
questions.
    I want to begin by apologizing because, as I arrived today, 
Jimmy said, ``Where are the rest of the Senators?'' You've only 
got me. However, this is an official hearing of the Committee, 
authorized by the Chair, Lisa Murkowski of Alaska.
    In a sense, this is a reciprocal hearing. I went to a 
hearing with her in Alaska about two years ago on very similar 
kinds of issues, and we were hoping we could get her up here, 
but this is the beginning of a week-long Congressional recess 
so everybody is scattered around the country.
    I could imitate Lisa Murkowski and Bernie Sanders and Al 
Franken, but I certainly couldn't do Al Franken justice.
    [Laughter.]
    In a sense, where we are today and what we are talking 
about, for me, began with a cold automobile ride a year and a 
half ago. I was at Jackson Lab in Bar Harbor. In fact, Jackson 
Lab is a combined heat and light project, a major one, that 
uses a lot of wood products from Maine. That day, the head of 
the Federal Economic Development Administration was there. It 
became apparent as we were talking about this that he did not 
have a ride to Portland. Thinking quickly, I said, let's see, 
two hours, two and a half hours in the car with the head of the 
Economic Development Administration of the Federal Government? 
I'll take it.
    We rode together down toward Portland, and I made the case 
to him at that time that we had lost five paper mills in four 
years and that what Maine had really experienced was equivalent 
to a hurricane. It was a slow motion, economic hurricane that 
devastated one of the most important industries, probably the 
single most important industry, in our state and that we should 
treat it that way. We should treat it as something that 
required resources, coordination, and good thinking, and he 
agreed. I mean, what choice did he have? He was stuck in the 
car with me for three hours.
    [Laughter.]
    And out of that grew a project that Senator Collins, Bruce 
Poliquin, and I initiated with 13 federal agencies to try to 
come together, come to Maine, and see how we could work 
together to rebuild the forest products industry.
    Of course, there is no single solution, and it is not all 
the Federal Government. It is not all state government or local 
government. It is mostly private sector. But what could we do 
to offer some support for what was going on? I think it is 
important to put into perspective two things about the loss of 
our paper mills.
    Number one, it is not all over. We have paper mills in the 
state that are doing very well, that are growing, that are 
investing. We have a representative from Sappi here today, for 
example, that is making a major investment in their mills in 
Skowhegan and Hinckley. And we know that there are new paper 
machines at Woodland, out in Washington County. So the paper 
mill, the paper industry, is still a critically important part 
of Maine and the Maine economy.
    The second thing is in terms of the scope of the loss. As 
we saw these mills being lost over the short period of time, I 
wondered, is this just Maine? So I did some research, and it 
turns out that during the same period, 125 paper mills closed 
in the United States. What we are talking about is a national 
phenomenon. I mean, we often think that it must be our fault or 
that what is happening here is not happening other places.
    Of course, it is related to things like the decline in the 
use of paper. One of the main products made in our mills in 
Maine was coated paper. That was made in Bucksport and Madison. 
If you have gone to the magazine stand lately and seen how thin 
magazines are, the demand for coated paper has dropped 30 to 50 
percent. When demand for your product drops 30 to 50 percent, 
there are going to be losses. So this is a nationwide, indeed, 
a worldwide phenomenon.
    But the important thing for us is that we lost $1 billion 
worth of economic activity in Maine. Forest products are still 
the most significant part. It is about $8 billion a year in 
terms of our state economy, which is roughly about 17 percent. 
But the losses were, nonetheless, real.
    One of the problems with the way the losses occurred is 
that the headlines are about mill jobs and losses of jobs in 
Madison or in Bucksport or in Old Town. Those are very real, 
direct, and of deep concern to everyone. But what you don't 
read about are the losses of jobs in the woods and in the 
trucks, and the people who harvest the wood and who carry the 
wood around. There is a whole ancillary industry, and many of 
you in this room are part of the total economy of wood products 
in Maine.
    One of the results of this, and I suspect Alden might 
address this and I know Dana will, is the loss of the market 
for low-grade wood. The market has just dried up. Millions of 
tons of low-grade wood had a home before in pulp, but then the 
decline, at the same time, of the biomass industry created a 
huge problem for the forest products industry.
    Number one, there wasn't a market for the low-grade waste 
wood in the forest, and there wasn't a market for the residuals 
from sawmills, which had been a valuable side product for 
sawmills. Suddenly it became a liability if you had to landfill 
it or pay someone to take it away. So what we are here to talk 
about today is a creative, important initiative that really 
hits a lot of these issues.
    By the way, did I mention energy? Because what we are 
talking about here is a project that will make electricity but 
will use low-grade and waste wood. It will provide steam for 
the kilns. It will provide steam for, we hope, an adjacent 
manufacturer or an adjacent user on the same property. It will 
provide ash that can be used in aggregate for roads or for land 
treatment, another valuable product. In other words, as I said 
on the radio this morning, we are going to use everything from 
the pig but the squeal.
    [Laughter.]
    We are getting the maximum value out of the use of this 
resource which, in turn, creates jobs throughout the Maine 
economy, particularly the economy that was hardest hit by the 
loss of those paper mills.
    And that, really, is what we are talking about today. We 
are talking about efficiency because typically a power plant 
runs at 30 to 40 percent efficiency, but if you use the side 
products in other ways, then you are increasing the efficiency 
of the plant significantly. And we will hear testimony about 
that today.
    So I consider this an exciting opportunity for Maine and 
the country. It is one of the reasons that Chairman Murkowski 
authorized me to hold this hearing. There is a record being 
kept that will go to Washington and will go to the Committee.
    I want to especially recognize Ben Reinke. Ben, where are 
you? Oh, Ben. He's sitting in the typical staff seat.
    [Laughter.]
    Ben is Senator Murkowski's staff person on the Energy and 
Natural Resources Committee, and I am delighted that he is here 
and that he helped us to facilitate this hearing, along with 
Morgan Cashwell, Jake Springer, and Adam Lachman from my 
office.
    With that as background, I want to welcome our witnesses. I 
think we are talking about the future here. We are talking 
about future opportunities for this tremendous resource that we 
have in Maine and how we can use it most efficiently, most 
effectively, to maintain and create value here in Maine.
    Twenty-two years ago, when I first ran for office in Maine, 
I said that no fish should leave Maine with its head on. Most 
people in Maine got that, that I was talking about value added 
here in Maine. The Wall Street Journal, on the other hand, said 
it was the most bizarre political promise in the history of 
American politics.
    [Laughter.]
    But you know what I meant. What we are talking about today 
is making use of the resources that we have in the state, 
extracting value and jobs from it, and supporting the economy 
and the people of our state.
    With that, I will turn to our witnesses now.
    I want to have, let's see, introductions. Well, I will do 
them mostly off the top of my head.
    Dr. Mark Johnson, I am really happy to have you here. Mark 
is with the Oak Ridge National Laboratory in Tennessee. A lot 
of people don't realize that we have these gems of national 
laboratories. Oak Ridge in Tennessee; Los Alamos in Sandia, New 
Mexico; Lawrence Livermore in California; and Idaho National 
Lab in Idaho. They are the think tanks of the Federal 
Government in terms of science.
    Oak Ridge happens to specialize in additive manufacturing, 
3D printing, and one of the outcomes of this project that I 
mentioned involving the federal agencies was to bring Mark up 
and have him develop an agreement, an understanding, a 
relationship between Oak Ridge and the Composites Center at the 
University of Maine. I am going to let him describe that and 
describe the work that they are doing. This is another 
opportunity for high level utilization of the forest resources 
that we have here in Maine.
    So, Mark, welcome to Maine.

STATEMENT OF DR. MARK JOHNSON, DIRECTOR, ADVANCED MANUFACTURING 
OFFICE, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY, U.S. 
                      DEPARTMENT OF ENERGY

    Dr. Johnson. Thank you.
    Thank you very much, Senator King. And they said to hold 
the microphone to my side like this.
    Oh, I get a different microphone, okay, good. Thank you, I 
appreciate it.
    Thank you, Senator King, and thank you for the opportunity 
to join you here today to speak about the important role of new 
energy-related advanced manufacturing technologies and combined 
heat and power, in particular play in the economy.
    I do do a lot of work with Oak Ridge National Laboratories 
and through my office, I actually direct the Advanced 
Manufacturing Office. I think it's interesting you thought that 
I do work at Oak Ridge because I'm out at the national labs 
more than I'm in D.C. it seems like as well, which is a good 
thing.
    I direct the Advanced Manufacturing Office in the 
Department of Energy's Office of Energy Efficiency and 
Renewable Energy. I oversee a program with the specific mission 
to work with the U.S. economy, to make it more competitive 
through the support of research and development of new 
technologies related to energy and manufacturing. To accomplish 
this work, we partner with universities, national laboratories, 
companies, both for-profit and non-profits, state and local 
governments, and other stakeholders all across the nation.
    Before I get going here, I actually want to make a quick 
mention. People, this is a national day today. It's National 
Manufacturing Day. It's an opportunity we recognize the 
important role manufacturing plays in both the history and 
future of our country. Highlighting the importance of 
manufacturing in our nation we can go back to a quote from 
Treasury Secretary Alexander Hamilton who delivered a report to 
Congress on manufacturing 226 years ago when he said, ``It's 
not only the wealth, but the independence and security of a 
country that appear to be materially connected with the 
prosperity of manufacturing.'' So today on Manufacturing Day 
over 2,000 firms, small and large, across the country open 
their doors to the public in a celebration of modern 
manufacturing meant to inspire next generation, including 
events right down the road here in Maine, for instance, in 
Belfast, where Front Street Shipyard is hosting tours of its 
manufacturing facilities right now.
    There's two issues I hope to cover today. First is the 
importance of technology innovation in the areas related to 
energy and manufacturing. Second is how specific new 
technologies, working with combined heat and power and 
microgrids can impact manufacturing, particularly in energy and 
resource intensive manufacturing processes, like wood products, 
which represents an opportunity for economic growth in 
communities across the nation overall and here in Maine, 
specifically. Maine has a proud history of manufacturing. 
Maine's manufacturing sector is reported to have generated $5.3 
billion of output in 2015 and supports 51,000 jobs.
    The Department of Energy is partnering with manufacturers 
to ensure, through continued technological innovation, 
manufacturers in Maine and across the country stay competitive 
in a dynamic, modern economy.
    So, as you mentioned, this past January, I joined Senator 
King in Orono, to announce the launch of an innovation 
partnership between our Oak Ridge National Laboratories in 
Tennessee and the University of Maine. That meeting was the 
first step in a long-term effort to explore new uses for forest 
products using all the way from the, everything but the 
whistle, hopefully.
    For instance, using 3D printing, using composite materials 
for tooling and structures used in things like aviation, boat 
manufacturing and construction with a focus on forest-based, 
biological feedstocks. By combining the expertise in Oak Ridge 
with additive manufacturing or 3D printing with the University 
of Maine's expertise in bio-based materials technology, new 
applications for Maine's forest products are being 
investigated, researched and developed.
    To give you an idea of the progress on that program we 
announced, the university lab led team is already making 
headway. A research project that they started has identified a 
range of thermal plastic materials, resin materials, that use a 
different amount of wood content, both micro and nano-cellulose 
content, in developing these materials. These composite 
materials are undergoing mechanical testing at the University 
of Maine and thermal and print testing at Oak Ridge right now. 
And in fact, a team from Oak Ridge is going to be up the week 
after next and do their quarterly review together. So I'm 
really excited that that's moving forward.
    The new technology enabled transformation in manufacturing 
by the private sector is also on display right here at Robbins 
Lumber in Searsmont. For example, there's a state-of-the-art, 
eight and a half megawatt combined heat and power system, or 
CHP for short, that's being built just across the way that we 
just had a tour of. Combined heat and power systems represent 
an important opportunity for manufacturers. They can provide 
reliable, flexible, cost-effective, energy efficient power to a 
variety of industrial, commercial and institutional energy 
consumers in our communities.
    AMO's role in CHP is to support early stage research and 
development of advanced CHP systems and components that can be 
better integrated and interact with the electric power grid and 
microgrids and provide resilient and energy efficient resources 
to our communities. CHP can help manufacturing while delivering 
a number of key advantages.
    First is energy security. We have onsite and microgrid-
based CHP provides localized, autonomous systems that eliminate 
transmission line power losses and enables the integration of 
generation and storage from a variety of sources providing 
greater security against power interruptions for industrial and 
commercial users and a stronger, more resilient grid for the 
nation as a whole.
    They lower costs. CHP technologies offer flexibility in 
terms of fuel sources and energy outputs, lowering costs while 
providing protection against risks from power outages, loss of 
critical heating and cooling services or volatile fuel prices.
    In efficiency, CHP offers flexible power generation 
technologies to meet America's energy needs reliably and 
safely.
    In terms of cleaner air, efficient power generation 
systems, such as CHP, lower the emissions by reducing overall 
fuel use utilization usage, utilizing domestic fuel resources 
and incorporation the latest in low emission technologies.
    And resiliency for both natural and manmade disasters, such 
as both hurricanes and system-wide power blackouts, 
highlighting the need for securing critical infrastructure for 
national and regional security, economic continuity, public 
health and safety.
    And then microgrids. Microgrids are localized, electrical 
grids that can disconnect from the traditional grid and operate 
autonomously in times of stress. A great recent example of this 
nationally for CHP is related to the recent flooding that 
happened around Hurricane Harvey in Texas at the University of 
Texas Medical Branch, or UTMB. Back in 2008 Hurricane Ike came 
through the Houston area and devastated the UTMB campus in 
Galveston with eight feet of flood water. As a result, the site 
elevated its utility infrastructure and in 2016 began the 
operation of a newly installed seven and a half megawatt CHP 
system. That system remained fully operational without 
interruption during Hurricane Harvey in August 2017, a month 
and a half ago. And while much of Houston and the surrounding 
areas were faced with uncertainty as Hurricane Harvey made 
landfall, the Texas Medical Center, which is the largest 
medical center in the world, was able to sustain its systems 
throughout the storm, thanks to CHP.
    Here in Maine, CHP is helping meet Maine's energy needs, 
but has significant room to grow. At the beginning of 2017 
Maine had 934 megawatts of capacity across 38 installations. Of 
that, 906 megawatts were installed in 16 industrial facilities 
with both pulp and paper in the wood sector, while 26 megawatts 
were installed across 19 commercial and institutional 
facilities, including such diverse applications as St. Mary's 
d'Youville Pavilion Nursing Home, the Augustus City Center, the 
Lewiston-Auburn Waste Water Treatment Plant, the Cumberland 
County Jail and Togus Veterans Affairs Medical Center.
    Recent DOE-supported studies estimate the technical 
potential for additional CHP in Maine at about 3,400 megawatts, 
much of it in emerging commercial and institutional 
applications.
    The United States is also in a position to lead the world 
in manufacturing of CHP systems. America's abundant energy 
supplies is a strategic advantage that positions the U.S. 
companies as global leaders in the manufacturing of energy-
related technologies of tomorrow. One example is a company 
called Capstone, an American microturbine CHP manufacturer, 
that has almost 60 percent of Capstone sales are made in the 
United States and actually sold outside of the United States in 
North America and beyond.
    So DOE continues to explore fundamental knowledge gaps that 
hindered new applications and designs for CHP. Going forward we 
hope to be able to continue to work with Maine and other states 
to take advantage of the sufficient, resilient and affordable 
technology.
    I thank you, the Committee, Robbins Lumber and everybody in 
our audience here, for the opportunity to meet with you all 
today.
    I look forward to answering questions you may have.
    [The prepared statement of Dr. Johnson follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator King. I just want to give you an idea on the format 
because I am sure everybody is thinking, I want to ask some 
questions. We are going to go through the formal hearing part. 
I will be questioning the witnesses, and then we are going to 
break for lunch. During lunch, it is going to turn more into an 
informal roundtable where everyone can participate, ask 
questions, and discuss.
    Next, I want to call on Dana Doran. Dana is the Executive 
Director of the Professional Logging Contractors of Maine. I 
went to Dana's dinner a couple years ago and just as I walked 
in, they were auctioning off Jimmy Buffet tickets.
    [Laughter.]
    That was one of the most expensive dinners that I have ever 
been to in Maine.
    [Laughter.]
    But the concert was great, so Dana, welcome.

 STATEMENT OF DANA A. DORAN, EXECUTIVE DIRECTOR, PROFESSIONAL 
                  LOGGING CONTRACTORS OF MAINE

    Mr. Doran. Thank you very much, Senator, and thank you for 
inviting me here today and thank you for your leadership on 
this issue.
    I would like to challenge you to change one analogy and to 
move away from the fisherman analogy. And your new analogy 
should be no tree should ever leave the Maine forest without 
its head. If you follow me.
    [Laughter.]
    Okay.
    Senator King. Thank you.
    Mr. Doran. Use that one from now on.
    As Senator King said, I'm Dana Doran. I'm Executive 
Director of the Professional Logging Contractors (PLC) of 
Maine. PLC is a trade association that represents loggers and 
truckers throughout the State of Maine. We were formed in 1995 
to give independent contractors a voice in our rapidly changing 
industry.
    As of 2014, logging and trucking contractors in Maine 
employed over 4,700 people directly and were indirectly 
responsible for the creation of an additional 3,000 jobs. The 
employment and the investments that contractors make attributed 
almost $1 billion to that $8.5 billion forest products 
industry.
    Today I'm going to talk about three primary things.
    One, what has happened? Senator King did a great job giving 
an overview. I'm going to give a little bit more detail to 
that. I'm going to talk about what Maine is trying to do to 
right the ship, especially with respect to wood energy, and 
then I'll go into it briefly about what our friends at the 
federal level, we believe, can and should do and are already 
doing to help right the ship.
    So obviously Senator King said the forest products industry 
in Maine is in the midst of a crisis. In the past four years 
Maine has experienced a closure of five pulp and paper 
facilities and the periodic idling of two wood energy electric 
facilities. As a result, Maine has lost 50 percent of its 
softwood pulp market. And in the last two years it's also seen 
a two-million-ton reduction of biomass utilization.
    Between 2014 and '16 the total economic impact of the 
forest products industry has dropped by about $1.3 billion and 
over 5,000 jobs have been lost. This crisis has gone all the 
way to the tree stump, impacting more than 400 logging 
contractors in Maine and at least 500 jobs in logging and 
trucking.
    To put this in perspective over just the last three years, 
we're talking about the loss of 121,000 undelivered truckloads 
of wood, or 30 percent of the total amount of fiber consumed by 
Maine mills prior to.
    Looking prospectively, if electricity prices don't increase 
and there isn't a viable pathway for the full utilization of 
stand-alone biomass electric facilities, we could be facing a 
doomsday situation by the end of 2018 with a total loss of 
biomass in Maine, other than of the good projects like Robbins 
and Linkletter, that you're going to hear about later today. 
But really that means about 400 direct jobs at those biomass 
electric facilities and 900 indirect jobs and potentially the 
loss of $300 million per year to the Maine economy.
    Over the years loggers have become adept at finding a 
market for every portion of a harvested tree, including low 
value tree tops and limbs. The revenue brought in by selling 
these products is part of the business plan of every logger in 
Maine and generally represents about 20 to 30 percent of their 
business operation. Take that revenue away and many logging 
companies and associated businesses will shut jobs or close 
entirely, but that's just the beginning of the problem.
    Biomass market serves another vital need in the forest 
products industry and that is the disposal of residuals. 
Without these markets, loggers are limited on the wood they can 
sell to sawmills and papermills and these mills are left with 
literally millions of tons of sawdust, chips, and bark with 
nowhere to go.
    The costs and environmental impacts of this must be taken 
into account when weighing the value of programs that aid the 
biomass market. In 2016, Maine's legislative and executive 
branches came together and supported Maine's rural economy to 
approve contract incentives for the producers of biomass 
electricity to maintain stability in those markets. This 
decision came after careful consideration and months of review, 
but in the end, we believe it was the right decision. However, 
knowing that a life line and a bridge is not necessarily the 
long-term solution.
    The Maine legislature also approved a bipartisan commission 
to study the economic environmental energy benefits of the 
biomass industry. Bob Linkletter sat on that Committee, along 
with some other folks that are in this room today.
    Short-term solutions were vital, but it's the long-term 
road map that's so essential. And so, over the fall of 2016 
this group got together and they looked at biomass from a very 
broad perspective, not just with respect to harvest residuals 
but also at the entire value chain to understand how 
intertwined each component is with each other from a current 
use perspective. The Commission quickly learned that biomass is 
more than just harvest residuals. It's also sawmill and 
manufacturing residuals. It's pellets. And it also represents, 
not just an asset, but an opportunity for rural Maine to fully 
utilize wood, or energy from wood.
    In the end, the Commission came up with a long list of 
policy initiatives. In fact, there were roughly ten of them. 
They have, for instance, and I'll run through them very 
quickly. Benchmark other regional and global solutions where 
there are best practices with respect to utilization of wood 
for thermal biogas recovery; activated carbon in biofuel 
applications; expand Maine's RPS and also include a thermal 
carve out and potentially an economic benefit REC that would 
help our stand-alone electricity generators in the long run; 
require our state's energy office, Efficiency Maine Trust, to 
look at economic benefits and not just efficiency when 
providing grants or incentives; address high backups and 
standby electric charges by creating a process where a consumer 
stays connected to a transmission and distribution utility; 
enable co-location and other projects, which you're going to 
hear about from Bob and from Alden; require biomass to be more 
specifically considered in the state's comprehensive energy 
plan; renew and expand the state's community-based renewable 
energy pilot program; and then finally, encourage and use, use 
of wood for thermal systems wherever if possible with 
commercial businesses, schools and public institutions, 
effectively making Maine the Saudi Arabia of wood.
    Clearly many of the solutions that we're reviewing here in 
Maine are on the state level. However, there certainly is much 
that can be done to provide further stability from the top, 
down.
    Senator King, who is a member of the Committee we're before 
here today and his colleague, Senator Collins, have taken the 
lead on this. And I urge the Committee, who obviously aren't 
here today, to take the lead as well and join them in doing the 
same. Specific policies at the federal level that are now on 
the table include permanently codifying the principle use of 
biomass carbon neutrality with all federal agencies, a step 
that was done in the fall of 2017 and we hope will be done 
permanently this fall with the budget, budget negotiations that 
are ongoing. So the Federal Government treats biomass the same 
across all agencies which is a step in the right direction.
    Two, pass the Biomass Thermal Utilization (BTU) Act of 2017 
which Senator King is a primary sponsor and introduced in the 
Senate and Congressman, excuse me, Senator King and his 
colleague, Senator Collins, is also a co-sponsor. On the House 
side there's an equivalent bill and both Congressman Pingree 
and Congressman Poliquin have also sponsored.
    Specifically, the BTU Act would underscore that heat from 
biomass is an underutilized energy source in the U.S. and it 
would add biomass fuel property to the list of existing 
technologies that qualify for the residential renewable energy 
investment tax credit. This would provide a great path forward 
and to encourage the use of pellet and wood chip thermal 
heating systems putting biomass on par with other renewables 
like solar and wind and geothermal.
    And finally, Senator Franken, a member of this Committee, 
has introduced a new energy title from the Farm Bill which, I 
think, is very appropriate. Amongst its many provisions the 
energy section will support advanced biofuel production which 
could include wood-based fuel and will improve the market for 
Ag feed stocks. However, one concerning part of the bill 
includes a sizable portion for BCAP which was approved a few 
years ago and we just encouraged the Committee to be a little 
wary with respect to how that funding is utilized going forward 
and make sure that it does, in fact, help loggers and truckers 
along the way.
    In closing, I'd like to thank you for hosting the hearing 
and for bringing these issues to the forefront. If we can all 
work together, in the end we could lower compliance costs for 
industrial ratepayers; new markets could be created for the 
utilization of biomass with thermal projects; the stand-alone 
generators could become more efficient; Maine businesses could 
pay less for electrical demand and bear some of the risk that 
they are on the hook for right now; and rural Maine could 
benefit from co-located businesses that in the end, energy 
policy would spur economic development, saving and creating 
jobs that every logger, trucker, and politician in this room 
could be thankful for.
    From the landowners who cultivate it, to the foresters who 
oversee it, to the loggers who harvest it, to the truckers who 
deliver it, to the sawmills that create it, to the generation 
facilities that utilize it, to the pulp and paper facilities 
that also utilize it and the citizens who benefit. We have a 
holistic, viable, energy pathway that can provide a future for 
Maine and use our indigenous source of energy.
    Thanks for the opportunity to appear before you. I'd be 
happy to answer any questions.
    [The prepared statement of Mr. Doran follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator King. Thank you, Dana. We will definitely do that.
    Again, I think, and your testimony suggested this, this is 
one part of an overall strategy to figure out new uses for 
forest resources. That is really what we are talking about. For 
100 years, it was lumber and paper. What we are talking about 
now is lumber, paper, and something else. And what Mark was 
talking about with 3D printing, which is really, in many ways, 
the future of manufacturing. It never occurred to me to ask 
before I was in Orono, what is the stuff that you print with? 
3D printing is the printing of an object. It could look like 
this.
    Traditionally, the material that's laid down by the 3D 
printer is an oil-based kind of plastic. What we are 
experimenting with and what is exciting to me is that a forest-
based, cellulosic substance could make car parts or rocket 
parts or gavel bases or whatever we are talking about. Although 
wood does pretty well for that.
    But in other words, when I was a kid, we learned about 
George Washington Carver, who was a scientist in the South, who 
figured out 106 things to do with peanuts. What we need is 106 
things to do with wood fiber and new products that we have not 
thought about. That is a big part of what this effort is all 
about.
    Mark, you mentioned Hamilton. I have to tell you a recent 
Hamilton story. I serve on the Intelligence Committee, the 
Chairman of which is a guy named Richard Burr. I was with him 
recently and complimenting him on the great job that he was 
doing. I said, Richard, you are doing great. You are working on 
a bipartisan basis. You are taking this very seriously. As they 
say in Hamilton, history has its eyes on you. Richard stepped 
back and sort of smiled and said, I don't know if you want to 
quote Hamilton to me, Angus, since my great, great, great 
grandfather shot him.
    [Laughter.]
    I hadn't thought of it that way before.
    So anyway, next I want to call on our host, Alden Robbins, 
the Vice President of Robbins Lumber, who set up this visit 
today. I want to thank him for hosting us, for the donuts, and 
for the tour. Alden, tell us about this project and how it fits 
into this strategy.

 STATEMENT OF ALDEN J. ROBBINS, VICE PRESIDENT, ROBBINS LUMBER 
                          INCORPORATED

    Mr. Robbins. Thank you, Senator.
    Senator, staff, members of the public, it's my pleasure to 
welcome you to Searsmont, Maine.
    My name is Alden Robbins. I'm the Vice President of Robbins 
Lumber, Incorporated. We are a vertically integrated forest 
products manufacturing center with 27,000 acres of timber land, 
a high-tech, white pine board mill, that hopefully most of you 
got to tour, producing up to 30 million board feet of lumber 
and value-added products annually.
    I own the business with my sister, Katherine Robbins-
Halstead, and my brother, James Robbins. Together we make up 
the fifth generation of Robbins to operate a sawmill in this 
valley.
    Our great, great grandfathers, Otis and Frank Robbins, 
purchased a water-powered mill here from George Dire in 1881. 
In 1947, the mill converted from water power to diesel electric 
power and then finally, in 1964 we started using power from the 
electric grid. In 1975, my uncle, Jennis Robbins, and father, 
James L. Robbins, both are in this room, built a co-generation 
facility on this current site and continued to upgrade the 
infrastructure throughout the decades. As you can see, the 
issues of power are always on the minds of saw millers.
    I'm proud to announce that the current generation have 
embarked on the most ambitious power project to date with the 
construction of a $36 million 8.5 megawatt combined heat and 
power facility adjoining our current biomass facility. Our 
journey toward this investment started with the first 
announcements of the paper mill closures in the state, as some 
of the previous speakers have already alluded to.
    As a by-product of our sawing operations, we produce 
approximately 100 tons of paper quality chips along with 50 
tons of sawdust and over 30 tons of bark every day. Paper mills 
have notoriously been the major market for a number of these 
by-products. With the closure of these mills, sawmills are in a 
situation where residuals have gone from being a revenue stream 
into a potential liability, as the Senator spoke about earlier. 
This comes as an unfortunate time as I believe the forest 
products industry is at the dawn of a new age of prosperity. 
The comeback of the housing market, along with new markets such 
as mass timber construction and products that Mr. Johnson had 
spoken about earlier.
    We heard a speaker at Rockland a couple weeks ago talk 
about Finland and their plan for the future of their forest 
products economy. And I thought it was interesting that not 
only were they going to grow their economy, half of that growth 
was going to come from new products that they weren't even 
producing at this point. So that went hand-in-hand with what 
you were talking about. This points to a bright future for the 
forest products in this country.
    Senator King, I want to thank you for your support of the 
Timber Innovation Act which is helpful for the mass timber and 
other products and new markets for wood.
    Maine is poised to take advantage of this renaissance. We 
are one of the most forested states in the nation with well 
managed timberlands located close to major metro markets like 
Boston and New York and top-notch research facilities like the 
previously mentioned Advanced Structures and Composite Center 
at the University of Maine in Orono.
    In order to complete this picture, we need to find a market 
for the residuals coming off in the existing sawmills and the 
logging operations needed to supply them. My sawmill struggles 
every year to bring in our raw material because the loggers, 
that Dana's group represents, can no longer realize the revenue 
from the residuals and the low-grade pulp wood they once did. A 
vibrant biomass market through the widespread dispersement of 
CHP plants is one way to help address this problem.
    After looking at various options for our residuals and 
speaking with peers such as Mr. Linkletter, we learned about 
the Community Based Renewables Energy Program, or CBREP, in 
late 2015 which had been reopened for project mills for a 
three-week window. And after a quick discussion, we decided to 
submit a proposal. In early 2016 we were informed that we were 
awarded a contract. We were off to the races since the CBREP 
program required that projects would be completed and 
generating by the end of 2018--that is not a lot of time to 
undertake a project of this scale.
    We immediately started working with our lender, Farm Credit 
East, who is invaluable in providing financing for our project. 
The construction of this plant will have many benefits to 
Robbins Lumber, Incorporated, the logging community, the 
landowners and the surrounding community, all of which can be 
replicated throughout the state, the benefits of which, some of 
them have been talked about previously, it will allow Robbins 
to focus on the core competence of manufacturing our top 
quality, Eastern White Pine products without the concern of our 
residuals. It helps to support the local loggers which bring in 
the lifeblood to our business, the Eastern White Pine saw logs. 
It will help us maintain the health of our forest land which 
you haven't spoken about as much today and helps to reduce 
wildfire danger. It helps diversify our income stream, attract 
new investment through co-location opportunities.
    The job creation and retention benefits of CHP plants go 
far beyond the construction jobs which is where many other 
renewable energy sources stop in their benefit. I have included 
a table in my submission that shows the in-plan study that we 
produced for this project and it's quite impressive the 
economic impact of building one of these plants and what it has 
ongoing.
    Grid security, as Mr. Johnson spoke about earlier, and of 
course, energy costs, which are obviously a key factor since 
Maine's forest products companies compete, not only locally, 
but globally. And the Northeast has some of the highest energy 
costs in the country.
    CHP facilities can help control an important variable for 
manufacturing centers. In order to encourage the construction 
of facilities such as ours, they need to be financed. In order 
to be financed, the payback has to be shown.
    Stable, federal policy that recognizes and supports the 
benefits of CHP plants such as our own, is imperative. The 
House Energy and Commerce Committee, right now, is considering 
modernizing the Public Utility and Regulatory Policies Act, or 
PURPA, a bill adopted years ago to promote renewables energy 
and CHP. I believe that no matter what Congress does on PURPA, 
it should maintain the key provisions that are necessary for 
maintaining equitable treatment of industrial CHP. Examples of 
this include, reasonable backup and standby power rates and the 
requirement that the utilities purchase excess power through 
contracts of sufficient length that they help industries obtain 
financing for new or expanded CHP facilities.
    Senator King and Senator Collins' efforts to recognize the 
carbon neutrality of biomass have also been greatly appreciated 
and helpful toward keeping biomass competitive.
    Thank you for the time to come to Robbins Lumber, 
Incorporated today, and I encourage you to use these ideas 
presented to foster the opportunity for CHP in this state. They 
can supply the power and the steam to drive innovation and make 
the products of the 21st century, as well as support the 
traditional businesses such as Robbins Lumber and help keep a 
sixth generation sawing pine in this valley.
    I'd like to add my own little political statement that we'd 
like to see the day that no logs would have to leave the state 
in log form.
    [The prepared statement of Mr. Robbins follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator King. There you go.
    [Laughter.]
    I was thinking today what if we could learn how to grow 
square trees?
    [Laughter.]
    I recently learned, and I should have known this a long 
time ago, we are the most forested state in the United States, 
which sort of surprised me. I thought it would be somewhere out 
West, but according to the forest products people that I have 
been talking to in Washington, we are the most heavily forested 
state in America, so, that is where we have to find the value 
and the jobs.
    Bob Linkletter is the President of Maine Wood Pellet 
Company. He has a project completed that is similar to the one 
that we are seeing in construction here.
    I've been to it. It is an absolutely fascinating--an 
incredibly high-tech facility over in Athens, Maine, and I am 
delighted to have him with us.
    Bob, tell us about your project.

          STATEMENT OF ROBERT LINKLETTER, PRESIDENT, 
                   MAINE WOODS PELLET COMPANY

    Mr. Linkletter. Hey, good morning, Senator King, Committee 
members, guests and the Robbins Family, thank you for hosting 
this meeting today. My name is Rob Linkletter. Along with my 
brothers, Richard and Bruce, we are owners of Athens Energy, 
Maine Woods Pellet Company, Linkletter and Sons and Linkletter 
Timberland. My family has been working in the woods for 53 
years. Our company structure, by design, goes from stump to 
customer.
    With the recent completion of Athens Energy, the puzzle is 
now complete. I'd like to explain that. We own 45,000 acres of 
land, we have our own forest crews, we have trucking and we 
sort and high-grade the wood. We use every bit of the wood.
    The biomass goes to the biomass plant. But before it can be 
put in the biomass plant, it is screened and it will screen out 
any good chips and make pellets out of it. The pulp wood will 
go to the pellet plant. And the logs will go to the sawmills 
which we then, in turn, repurchase the sod that's in the chips 
from the sawmills to making the pellets or biomass. We also 
repurchase back from the sawmills. So we're pretty integrated 
with most of the companies in the State of Maine.
    There is no waste, and we're looking into something else to 
eliminate waste. We're trying to get the highest and best use 
of our ash. We're currently getting rid of it all now on either 
farmer's fields or other situations, but we're looking into 
some other things we can do with our byproducts like biochar or 
activated charcoal. So there's all kinds of innovation trying 
to go on in the woods.
    The idea for Athens Energy was conceived four years ago 
when we had very low temperatures and very high electrical 
costs. Maine Woods Pellet could not sustain the cost of 
electricity that winter.
    So Athens Energy was built on the site that the 
developmental company has so we were able to utilize multiple, 
multitude equipment, between both companies.
    I spent plenty of time traveling to Sweden and British 
Columbia to observe operations of existing power plants mated 
up to either sawmills or pellet mills, and they're very 
impressive.
    CHP is prevalent in other countries where they have been 
utilizing biomass in the electrical portfolio for many years. 
We found each situation that we looked at to be different and 
built to best serve their host and user companies. Some 
companies were making steam. Some companies went the route I 
did with organic rank and cycle and we're making hot air and we 
were drying that way.
    When you run a pellet mill drying is one of the most 
expensive costs there is. We have to reduce. It takes two tons 
of wood to make one ton of pellets. Fifty percent of all of 
your wood goes up the stack as moisture. We evaporate a 55-
gallon barrel of water every minute.
    Athens Energy is an eight and a half megawatt CHP that 
delivers, not only power, but nine million BTUs of hot water 
and 36 million BTUs of hot air to Maine Woods Pellet which is 
used in drying other pellet stock. It's pre-drying the stock.
    The new CHP provides stability for the pellet company by 
mitigating the cost of drying frozen wood in the winter months 
and allowing us to run at full speed during months when pellets 
are in most demand. It also allows us to expand production in 
the future which we hope will increase jobs.
    Athens Energy is an organic rank and cycle which is 
different than most CHP. The ORC boiler and the turbine medium 
is not water, it is oil. The oil is completely circulated and 
filtered and reused over and over again. And we go down once a 
year, and we may add to it. We'll check the stability of the 
oil. The only thing we have to watch out is that we don't burn 
the oil, then it will be ruined. It has to be replaced. But the 
computer takes care of that for that.
    Since operations began about a year ago, we've seen boiler 
efficiencies, by itself, in the 30 percent. And when we 
calculate the use of the waste heat that we are able to get out 
of oil, we're 62 percent efficient which is pretty amazing for 
CHP.
    Athens Energy has been a real boost for the loggers, 
truckers, landowners, part suppliers and many of the local 
businesses within 100 miles of Athens. Currently, Athens Energy 
purchases waste back and chips from about 21 sawmills.
    The CHP model, if spread across Maine, could truly be a 
shot in the arm for the economic growth and stability of 
Maine's forest industry. Also, if situated correctly around 
Maine, could truly benefit rural Maine and could help boost and 
stabilize the grid.
    We have a great resource in Maine, our woods. It is 
imperative to utilize every bit of it. We must have a market 
for the biomass generated from the logging operation. This 
keeps the woods floor cleaner, not only for faster 
regeneration, but also reduced fire hazard.
    The idea of CHP is based on a stable, long-term, power 
purchase agreement with utilities. This, along with stable RECs 
from state's recognizing the value of baseload and renewable 
power, is crucial.
    The two programs we were able to take advantage of in 
building Athens Energy were the new market tax credits and 
investment tax credits. These programs were essential to get 
the power plant built.
    During this huge undertaking, we were bound to encounter 
some pitfalls from the power purchase agreement to the inner 
connection agreement, the electrical connection to the first 
power to the grid.
    The learning curve was daunting. From the financing, the 
transportation, the construction during the winter months in 
rural Athens, at times, these steps seemed never ending. With a 
prize in sight, though, at the end we have persevered.
    CHP is an efficient approach to reducing energy costs. I 
believe that they not only reduce energy costs, but they could 
also stabilize those costs for years to come. Additionally, 
they will promote many internal efficiencies between the host 
and user companies. They also promote efficiencies in companies 
such as sawmills who don't have to landfill their waste by-
products.
    But we need the carrot on a stick to get people to invest 
millions of dollars on CHPs that now show some savings to both 
host and user companies. We need a thermal REC class, federal 
or regional, that rewards the baseload at biomass plants that 
is either a stand-alone federal or carved out of existing 
regional RECs that are now available. Both New Hampshire and 
Massachusetts have adopted thermal RECs, and I believe that 
Maine and the Federal Government should take a look at these 
positive aspects that are happening in these two states.
    Another thing that's happened is that the State of Vermont 
has mandated that by 2030, 60 percent of all public and school 
buildings shall be heated by biomass, either pellet or chip 
form.
    Just look at the positives. Maine has the highest biomass 
boiler conversion potential in the Eastern U.S. We have 
millions of acres of renewable forests, and Maine has the most 
capable logging industry available.
    Yes, our power costs are high, but most of our power costs 
are transportation and distribution charged by utilities. I 
have found that these costs are historically higher than the 
cost of the power itself. It is possible to eliminate the T&D 
by locating insulation such as Robbins Lumber, near an existing 
facility, while possibly enticing new businesses with thermal 
RECs getting them to relocate and have a symbiotic 
relationship.
    Additionally, the advantages to the environment are many. 
The carbon neutrality, the reduction of CO2 and the decreasing 
dependency on foreign oil, top the list. Imagine the emissions 
savings when you compare the transportation of biomass from a 
50-mile radius of a facility to the transportation of oil from 
the southern part of the United States or worse yet, Saudi 
Arabia.
    Even at the current rates biomass and pellets are cheaper 
and cleaner heat source than oil and propane.
    In closing, I believe my experience with CHP has been 
positive. The marriage with other businesses will help control 
energy costs, the disposal of waste byproducts, job creation, 
energy efficiency and is a win/win for the State of Maine, 
Maine businesses today, both existing and in the future.
    Thank you for allowing me to share my thoughts, and I'm 
open for any questions.
    [The prepared statement of Mr. Linkletter follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator King. Thanks, Bob.
    Our next guest is Mark Thibodeau, who is a Regional Manager 
for ReEnergy which owns, is it two plants in Maine?
    Mr. Thibodeau. Four.
    Senator King. Four plants in Maine. I know the Ashland one 
the best. These are stand-alone biomass plants, as opposed to 
what we are looking at here.
    So talk to us about that part of the industry. Is it 
possible to convert it to make more thorough use of the 
resources that you have?

STATEMENT OF MARK THIBODEAU, REGIONAL MANAGER, REENERGY BIOMASS 
                         OPERATIONS LLC

    Mr. Thibodeau. Alright. Thank you, Senator King and members 
of the Committee. I appreciate the opportunity to submit 
testimony regarding biomass energy.
    Today I'm going to discuss the role of biomass energy in 
the rural forest economy, a significant role it could play in 
reducing energy costs for adjacent industrial users and how the 
Federal Government could support the biomass energy sector and 
efforts to increase home grown energy and reduce costs.
    My name is Mark Thibodeau. I'm a lifelong Mainer. A 
graduate of Maine Maritime Academy, I live in Carrabassett 
Valley and I serve as Regional Manager for ReEnergy Biomass 
Operations. I have worked in the Maine biomass power industry 
for the past 14 years. I've been fortunate to have been a plant 
manager at five of the six remaining viable biomass plants in 
the state. I also spent two years in the California biomass 
industry. And I think it's important to recognize the 
similarities and some of the lessons learned, some of those 
valuable lessons that we can learn from other states' biomass 
industries.
    I've been involved with numerous business development 
opportunities to co-locate industry next to a stand-alone 
biomass plant, but unfortunately, none of those projects have 
come to fruition. There have been many hurdles, including 
regulatory and financing challenges and a need to secure off-
take contracts.
    But one of the biggest hurdles has been the uncertain, 
long-term viability of the biomass plant itself. All the plants 
in Maine participate in volatile energy and REC markets. This 
volatility and fear of a biomass facility closure often 
encourages would-be investors to look at other states, 
countries and forms of energy.
    In Maine, ReEnergy employs approximately 100 people and 
supports an estimated 700 indirect jobs. The company's annual 
economic impact in the state exceeds $90 million. We own and 
operate four biomass power facilities in Maine. These 
facilities are located in Ashland, Fort Fairfield, Livermore 
Falls and Stratton.
    We use sustainably harvested forest residue as fuel to 
generate homegrown, renewable electricity. We support jobs in 
the logging and trucking industries and at mills providing an 
end market for wood residues. ReEnergy's facilities generate 
1.2 million megawatt hours of baseload, renewable electricity 
each year which is enough to supply power to about 154,000 
homes. Our facilities have achieved certification through the 
sustainable forestry initiative standard which verifies that 
our biomass procurement programs promote land stewardship and 
responsible forestry practices.
    Our facilities are an integral part of Maine's forest 
products industry, as a lot of the testimony has spoken to 
today which has suffered a great deal in recent years with the 
paper mill closures, loss of some biomass plants. And we 
recently analyzed a list of fuel suppliers here in Maine and 
determined that we conduct business with 88 logging and 
trucking contractors, 20 mills--comprising of sawmills, chip 
mills, pellet mills and pulp and paper mills--and eight 
industrial landowners.
    Unfortunately, ReEnergy's facilities in Maine are 
struggling financially due to record-low prices of wholesale 
electricity, and our two facilities in Aroostook County, Fort 
Fairfield and Ashland, are struggling more than others because 
they must pay transmission outcharges to wield their power to 
ISO New England power grid.
    For those of you who aren't familiar, Northern Maine, 
Aroostook County, is on its own transmission system, its own 
power grid. It's not connected to ISO New England. It is 
connected to New Brunswick. We believe our power plants 
represent a significant economic development tool. Thus far, 
however, that promise has remained unharnessed. We hope to 
change that to preserve our plants and also to offer a benefit 
to existing and new industry interested in co-locating with us.
    All of our facilities are located in rural areas. They are 
located adjacent to large tracts of vacant land that would be 
perfect sites for new industry and new jobs.
    Some of our plants are adjacent to already existing 
industrial consumers. Our plant in Ashland, for example, is 
located in an industrial park and town leaders there are 
working aggressively on a plan to recruit new industry to that 
park.
    Our biomass plants are capable of delivering cost-effective 
thermal energy, steam and hot water, electricity and CO2 to an 
industry or industries located on adjacent property. If we 
could sell our energy directly to a co-located industry we 
would become more efficient and we would gain some revenue 
certainty instead of simply bidding into the volatile day-
ahead, wholesale electricity market.
    A company has already located next to us and companies 
interested in moving next to us would benefit if they were able 
to make use of affordable electricity and/or steam. Energy 
costs would, by definition, be more competitive in market rate 
energy.
    Since electricity and steam supply provided directly from a 
ReEnergy facility would avoid capital and maintenance costs, it 
would avoid electrical transmission and distribution costs and 
a long-term agreement would hedge market price risk for us.
    I don't believe microgrids are as viable an option for the 
State of Maine as they are in some European countries. I feel 
the infrastructure to build a microgrid in rural areas is cost 
prohibitive in its purest form. There may be some hybrid 
versions of a microgrid that could hold merit in Maine, but I 
feel we are better suited to focus on co-location opportunities 
surrounding our existing standalone biomass plants, similar to 
what Mr. Linkletter has talked about today and is similar to 
what Robbins Lumber is executing now.
    In addition, the surrounding infrastructure is already 
built and has been paid for the past 20, 30 years and wouldn't 
need to be replicated. The surrounding markets, the trained 
workforces, the transmission lines, the utilities and roadways 
are well established around our facilities which would 
significantly reduce future capital costs.
    Our long-term viability depends upon finding a co-located 
industry in using our combined heat and power capabilities, 
that our facilities have some significant combined heat and 
power capabilities due to the size of them.
    We are working on a plan with Ensign Technologies to locate 
a renewable fuel oil manufacturing facility next to our plant 
in Ashland, but we are capable of servicing more load than 
that. In order to further our goals ReEnergy will soon issue a 
request for proposals to companies interested in a co-location 
opportunity. We're doing this request for proposals for all 
four of our sites in the State of Maine.
    The challenges are significant. Direct connections between 
a power plant and an industrial user tend to be challenged by 
the regional T&D utility and are likely to be legally 
impossible if they cross the public right away. There are 
significant infrastructure costs to construct power and steam 
lines and add this to the fact that our plants are already 
struggling due to low electricity costs.
    Senator Angus King, a member of the Committee, has been a 
leader in championing biomass energy with efforts such as 
carbon neutrality legislation and the BTU Act. I urge the 
Committee to join him in supporting the biomass energy sector, 
generally, so our projects are more sustainable and able to 
pursue projects like co-location projects that make use of 
combined heat and power. I ask the Committee, specifically, to:
--Pursue federal policy parity across renewables. Biomass 
    provides forest management services it is not compensated 
    for and competes in an unfair marketplace in which other 
    renewable forms of energy receive Section 45 production tax 
    credits that are not open to us. FERC also does not 
    properly value baseload sources of energy, facilities that 
    run consistently and are needed to supplement intermittent 
    sources like wind and solar. EPA has withheld final clarity 
    regarding the carbon benefits of biomass power. And 
    recently, the DOE-proposed rule on baseload power supply 
    with fuel storage is something that was just recently 
    introduced and we feel it could be a very positive 
    influence on biomass power in the future, especially around 
    the recent natural disasters the country has faced.
--Protect and expand the Renewable Fuel Standard. Ensure that 
    advanced biofuel continues to be eligible to sell Renewable 
    Identification Numbers, or RINs. In addition, encourage EPA 
    to rule that biomass electricity qualify for the Renewable 
    Fuel Standard for powering electric vehicles.
--Support the use of biomass power as a source of secure, 
    resilient power at U.S. military installations. ReEnergy 
    owns and operates a 60-megawatt biomass plant located 
    inside a fence line at Fort Drum Army Base in New York.
--Support continued funding for our grants and loans to support 
    rural energy-related infrastructure.
    And finally, in closing, I just thank you. Thank you, 
Senator King. I appreciate the opportunity to speak to you 
today. Thank you to Robbins Lumber for hosting and providing a 
great tour. I welcome any questions.
    [The prepared statement of Mr. Thibodeau follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator King. Finally, we have Suzanne MacDonald, who is 
the Community Energy Director of the Island Institute. The 
islands, of course, have some unique challenges when it comes 
to energy.
    One of the interesting things about Alaska that I learned 
when I went to Bethel, Alaska, with Senator Murkowski, was that 
Alaska largely has no grid. It is so large and so dispersed 
that all they have are little, individual pockets of energy 
except around the larger cities like Anchorage which creates 
the unique challenges that they have been dealing with. That is 
something that Lisa Murkowski and I have been trying to address 
together.
    So, Suzanne, give us a perspective of a different 
orientation to this discussion.
    Thank you.

  STATEMENT OF SUZANNE MACDONALD, COMMUNITY ENERGY DIRECTOR, 
                        ISLAND INSTITUTE

    Ms. MacDonald. Great. Thank you, Senator King, for the 
opportunity to testify here today and to the Robbins Family for 
hosting us. It's great to be in Midcoast Maine with you all.
    As Senator King said, my name is Suzanne MacDonald. I'm the 
Community Energy Director at the Island Institute. We're a 
community development organization who works, that works here 
on the coast of Maine. For the past decade I've been working 
with island communities to help them better understand and 
confront their very unique energy challenges. I'm honored to be 
here today to bring to you a community perspective of how 
microgrids and CHP are important to the State of Maine, 
especially on our islands.
    For 34 years the Island Institute has worked to sustain 
Maine's island and coastal communities and exchange ideas and 
experiences to further the sustainability of communities here 
and elsewhere.
    One hundred years ago, there were more than 300 islands 
with year-round populations in Maine, and now only 15 remain. 
We have, sort of, our own crisis here. Shifting economic 
opportunities, particularly related to fishing and commerce, 
coupled with an increasing cost of living are really 
threatening these places that we consider to be a part of the 
identity and heritage of our state.
    Energy is a part of the problem. The people we serve pay 
some of the highest energy costs in the nation, up to $0.70 per 
kilowatt hour and up to $1.00 or more per gallon for heating 
fuels than what folks pay on the mainland.
    We partner with grid-tied and islanded grid communities to 
improve energy systems, not out of a drive to be innovative, 
but out of a need to survive. On a daily basis, we are 
confronted with how high energy costs can make or break the 
viability of a business or be a factor that forces families to 
consider moving off island.
    Four recommendations have emerged from our work on 
microgrids and other community energy initiatives: Make 
meaningful investments that blend infrastructure upgrades with 
investment in local leaders; take a holistic approach to 
tackling energy challenges to enhance economic and community 
development outcomes; share what works to leverage lessons from 
elsewhere; and create reasonable exceptions for remote or 
islanded communities to avoid unintended impacts of policies.
    The story of nearby Monhegan Island illustrates many of 
these themes. The small island recently held a ribbon-cutting 
ceremony for a USDA-funded, community-owned project that 
integrates diesel-fired microturbines, the Capstone ones 
referenced earlier, with heat recovery and some solar. The new 
system is more reliable and cleaner burning, but what really 
stands out in this story are the Herculean efforts of community 
members. First just to keep the lights on and then to use this 
project as a platform for broad community benefit. Essentially, 
to be as resourceful as they can and do the most with what they 
have in opportunities with this project.
    For years my friend and plant operator, Chris Smith, would 
have to come off his lobster boat in the evenings and be faced 
with persistent failures in equipment that came from a vendor 
that had since gone bankrupt and was unable to help him. 
Bookkeeper Marion Chioffi spent winters trying to balance the 
municipal power company's cash flow so that they'd have enough 
money in the bank when the fuel boat arrived again in the 
spring. Once awarded from funds from USDA, Chris had to 
navigate new Tier 4 emissions requirements and then mobilize a 
power system upgrade dealing with the logistics of being 12 
miles in the middle of the ocean. Marion would spend evenings 
working on grant administration after a full day working as an 
innkeeper on the island. Together, with Jenn Pye, the curator 
at the nearby museum, Monhegan Museum of Art and History, they 
found a way to make use of the power station's waste heat, 
providing a more affordable source for space heating and 
dehumidification for its world-class collection. The students 
in the one-room schoolhouse tracked the project closely and 
even invested in their own, curriculum-based, energy efficiency 
projects. They had a pizza party to celebrate when they cut 
their electric bill. By linking energy to other community 
priorities, Monhegan is enhancing its sustainability, its 
survivability.
    Fortunately, Monhegan didn't have to go it alone or 
reinvent the wheel. Community leaders were able to make use of 
the DOE-funded, Islanded Grid Resource Center network, to gain 
critical, on-the-ground insight from peers on the front lines 
on other New England islands, in Alaskan villages and even from 
Hawaii. They searched far and wide to find a set of committed 
and resourceful engineers and vendors and had an extra set of 
hands from an Island Institute fellow who helped them with 
community outreach. Now, as they think about the next steps of 
their energy transition, they're benefiting from technical 
assistance from DOE and NREL.
    We believe that microgrids, CHP and other innovative energy 
strategies can greatly benefit the natural resource based 
industries in rural communities in this state and beyond and 
that the Maine islands can provide some important lessons. But, 
as you've heard today, these projects can be a really heavy 
lift, especially in remote areas.
    Senator King, you noted a couple of years ago at one of our 
events that we're in the midst of an energy revolution and that 
the islands are Bunker Hill. We hope that as we move forward, 
we can continue to take lessons from what we're doing here and 
find ways to invest in project leaders and their host 
communities.
    Please think of these stories as we think about the future 
of the sector and to put in my own little plug for policy, we 
do think that the isolated microgrid components of the Senate 
bill 1460 are a really great way to do this.
    In making such investments, we believe that energy projects 
will result in more robust economic gains and truly help rural 
communities to thrive.
    Thank you again, Senator King, for the opportunity to 
testify. I want to recognize the very hard work of your very 
committed and resourceful staff and also to DOE for its 
continued investments here on the coast of Maine.
    Thank you.
    [The prepared statement of Ms. MacDonald follows:]
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    Senator King. Thank you. I want to also acknowledge the 
staff. I can share with you the secret of leadership in one 
sentence. You might want to write this down.
    [Laughter.]
    Hire good people and take credit for what they do.
    [Laughter.]
    It has worked for me for 25 years.
    When you watch Senate hearings on television, one of the 
things you can't tell is that in front of each of us is a 
little digital clock, and as soon as the questioning begins, it 
starts to click down, usually from five minutes. So I am going 
to impose that on myself. I am going to ask a series of short 
questions here. I know a lot of you have questions and 
thoughts. We are going to break, and when we return it will be 
more informal. We will have some sandwiches and have a more 
informal discussion. So I am not going to take the five-minute 
segments of every member of the Committee, but I am just going 
to limit myself to a few minutes.
    Dr. Johnson, what is the George Washington Carver type of 
work going on in terms of how we can develop new products from 
the forest products industry? Talk to me about the additive 
manufacturing, for example.
    Dr. Johnson. Happy to, thank you very much.
    Yes, in fact that's what we're looking at doing. If you 
look at bio-based feedstocks, that is what these scientists 
like to refer to it as, but basically, it's the tree, 
everything. I was thinking my analogy is everything but the 
whisper on the pine, right, that you want to be able to make it 
out of. And what they're looking at saying, there's a lot of 
materials that are being used for things like carbon fiber 
composites and things like that, advanced polymers. As people 
have noted, these wind up coming from things like petroleum-
based feedstocks.
    There's no reason why we can't wind up using domestic bio-
based feedstocks, but that takes an entirely new set of 
everything from the chemistry and literally the fundamental 
knowledge on the chemistry up to how you can wind up doing 
things like using the super computers that we have through our 
national lab systems due to the modeling and simulation of how 
those reactions work. So then you can wind up making the end 
use part.
    I'm going to give you one simple example here. People think 
about 3D printing as being a small part that's, you know, a 
gavel sized thing. We actually, about a year and a half ago, or 
actually, it's now three years ago, at Oak Ridge National Labs, 
built an entire car by 3D printing it, and I have actually 
driven it around. When I say car, it's not a model. It goes 
about 85 miles an hour.
    Senator King. It looks like a Shelby Cobra.
    Dr. Johnson. Yes, it does, in fact, look like a Shelby 
Cobra, oddly, and drives about as fast as the original Shelby 
Cobra. It's an electric vehicle. But what that points to is 
you're able to actually use these advanced technologies in 
those areas.
    One more recent project that's going on is working with the 
Precast Concrete Association. So if you think about when they 
do precast concrete, they wind up taking wood parts. They build 
these molds up, but you're, kind of, limited in that case to 
flat surfaces you wind up building. If instead, and actually 
this is what the Oak Ridge project is working on right now, is 
if you wind up taking that woody based fiber as a precursor, 
you could actually make more complex shapes for those molds 
that then people can put into architectural structures. At the 
end of the day you're actually making the tooling for these 
things where it's a new market you'd wind up utilizing out of 
it.
    So there's a number of places where people are doing that 
work. The key part is how do we wind up getting the researchers 
and probably the most important set of researchers, isn't the 
professors and people like me out there, it's the 22-year-old, 
the 23-year-old, that they look at this and they say, wow, I 
can actually build a future out of this and wind up doing the 
research on this and that they get dedicated to that work.
    Having that integrated team where we've got students from 
the University of Maine, for instance, working down at Oak 
Ridge in the summer, coming back up here and researchers from 
Oak Ridge coming up and working with the students up here--
that's actually a key part of making sure because I can't tell 
you in advance exactly what the outcome of the research is. It 
wouldn't be research if we knew that, but we're doing that 
research.
    Senator King. I can't resist asking--isn't the Composites 
Center at the University a cool place?
    Dr. Johnson. Oh, it's fantastic.
    Senator King. Any of you who have not visited the 
Composites Center at the University of Maine in Orono, it is 
just amazing what they are doing there.
    Bob and Alden, it seems to me that part of the key to your 
project is having a power purchase agreement for a period of 
time to give you stability. That is essential, isn't it? I 
mean, you couldn't finance without some stable source of 
revenue.
    Mr. Linkletter. That's correct. Yeah, that's what we need 
and the stable RECs also.
    Senator King. Yes.
    Mr. Linkletter. That's the key, and that's the trouble with 
the existing plants now.
    Senator King. I had not really thought about it until you 
said, Mark, it is difficult for you to get a co-locator, 
another company, to come and use your steam because you cannot 
guarantee that you will be there to supply it. Is that 
essentially the issue?
    Mr. Thibodeau. Yeah, that's exactly the issue with numerous 
business development projects that we've worked on over the 
last 10, 15 years, is just that. It's the long-term viability 
of the plant.
    If you're going to build a $100 million manufacturing 
facility next to one of our facilities, can I guarantee the 
biomass plant will be there for 20 years to supply steam and 
power?
    Senator King. So you are selling power into the grid, 
essentially, on a day-to-day market rate?
    Mr. Thibodeau. That's correct, Day-Ahead Market.
    Senator King. And that can be really high or really low, 
depending upon the circumstances.
    Mr. Thibodeau. Yup, exactly.
    Senator King. You are familiar with the app, ISO to Go?
    Mr. Thibodeau. Yes, very familiar.
    Senator King. ISO to Go is an app that is put out by the 
Independent System Operator, and it gives the wholesale price 
of electricity in New England, minute-to-minute, and it updates 
it all the time. It also tells you where all the electricity in 
New England is coming from at any given moment, which is 
absolutely fascinating.
    I wouldn't say unfortunately, but the reality is between 55 
and 60 percent of our electricity in New England today is from 
natural gas. Right now, natural gas is at an all-time low 
price. That is the good news. The bad news is when you are 55 
percent dependent upon one source that is a fossil fuel and 
subject to significant price variations, as we know, that is a 
long-term risk.
    I have always thought of plants like yours as a kind of 
insurance policy because you have a more stable fuel price.
    Alden, talk to me about the obstacles to getting your plant 
online in two years. I have never heard of something happening 
that fast. You obviously must have gotten pretty good 
cooperation from the DEP, hopefully?
    Mr. Robbins. We did, actually, yeah.
    I mean, I'm happy to report that the DEP was very 
cooperative. They were very professional, you know, they 
require that we follow the letter of the law, but they really 
act as a partner in helping this economic development. So I'm 
pleased to report that the DEP really worked hand-in-hand with 
us to make sure that we were doing things right.
    And actually, they gave us tips as far as, you know, you're 
talking about a system for wastewater, have you tested this? Is 
this fail proof? You know, you want to make sure that it's not 
just important for the environment but for the viability of the 
plant that if you don't have a plan for your water then plants 
need a lot of water and you have wastewater. If you don't have 
a plan for that that's resilient, then that could cause your 
plant to go down. So they were wonderful to work with.
    Senator King. That is great. That is really good to hear. 
We want to credit the Governor and the leadership of the 
Administration for that. I think that is a good sign.
    You mentioned that your plant will utilize your own 
residuals, but that is only about 50 percent. You are going to 
be dealing with some of Dana's people and landowners for the 
rest.
    Mr. Robbins. Exactly. Sure, just like Bob's plant, and 
that's a big deal. Without loggers that pile out back there 
starts to shrink, as it did this summer, faster than we'd like 
to see it. So, if we can provide a market for the head of the 
fish, that the head of the tree, that the limbs and the tops. I 
thought Dana's comment was perfect, you know, that it's not 
just the viability. Everything is a synergy. The health of the 
forest, the economic benefit to the landowner, the economic 
viability of the logger, residuals for the mill, log supplies 
for the mill. It's all interconnected, and CHP is a wonderful 
way to achieve that.
    Senator King. I don't think it was exactly clear, Bob, in 
your case. You are using the waste heat from the power plant 
for the pellet mill. Is that right?
    Mr. Linkletter. That's correct.
    Senator King. That's the combined?
    Mr. Linkletter. That's the combined, yes. It's pre-drying 
the pellet stock.
    Senator King. So it makes both the power plant and the 
pellet mill more viable?
    Mr. Linkletter. More viable, yeah. Jobs more secure, yup, 
because one of the problems in a pellet mill in the winter 
months is the stock you receive is frozen solid. So, it takes a 
lot of energy to get it out, more so than the summer months. 
And that's when everybody wants pellets is in the winter. So 
your production goes down. But with this new addition the 
production actually has increased, even with cold, frozen wood, 
it doesn't matter. So we're pre-drying it with the waste heat 
we're using from the boiler.
    Senator King. I have always thought one of the important 
parts about pellets and this whole use of wood energy is, and 
you made this point, this is energy that comes from here.
    Mr. Linkletter. That's right. That's right. Money stays in 
the state.
    Senator King. It doesn't have to be shipped across the 
ocean or----
    Mr. Linkletter. That's right.
    Senator King. ----or trucked up from----
    Mr. Linkletter. All the dollars stay here, and all the 
taxes stay here, and we supply all the pellets for Jackson Lab. 
So, we're all integrated. We're all----
    Senator King. Yes.
    Mr. Linkletter. You know, we're all together. That pellet 
mill supplies a lot of energy for them and other schools that 
are in the State of Maine currently.
    Senator King. Well, I think it is important too because 
that is a benefit that is hard to quantify, but if you add the 
transportation costs and the energy that is used--I like the 
idea of stabilizing energy prices in Maine and also stabilizing 
the economy for people like those who Dana represents.
    Well, thank you all for joining us. I have exceeded my five 
minutes, but that is the prerogative of Lisa, who is not here 
to whack me. I really enjoyed this discussion.
    We are going to break now. We are going to have a little 
something to eat, and we will turn this into a more informal 
roundtable when we return.
    Again, thanks to our witnesses, thanks to the staff who 
helped put this together, and thanks very much to Robbins 
Lumber for hosting us today.
    This hearing is adjourned.
    [Whereupon, at 12:40 p.m. the hearing was adjourned.]

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