[Senate Hearing 115-488]
[From the U.S. Government Publishing Office]
S. Hrg. 115-488
EFFICIENT APPROACHES TO REDUCING INDUSTRIAL ENERGY COSTS
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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
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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
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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.]
APPENDIX MATERIAL SUBMITTED
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