August 21, 2015

PFI Standards Program News

At the final meeting of the 2014-2015 PFI Board of Directors, the PFI Board approved a series of changes to the PFI Standards Program. Some of the changes to the program simply update language in the program manuals to make it clearer and more concise. More substantive changes include:

• A clarification that the program is not a weights and measures program
• Reduced sampling frequency for manufacturers who demonstrate and maintain compliance with the program and who commit to setting up more rigid on-site testing and monitoring protocols
• Conformance criteria reduced from 95% to 90%
• The inclusion of Annex A.1 in the QA/QC handbook outlining the rules of using the PFI Quality Mark
• A modified range for acceptable bulk density to 40-48 lbs. per cubic foot 

The Co-Chairs of PFI’s Standards Committee, Chris Wiberg of Timber Products Inspection and Bob Sourek of Bear Mountain Forest Products, talked to us about the changes, what they mean for current and potential enrollees to the program, and how the updated program compares to other graded fuel programs. 

Why were these changes necessary? 
When PFI started this program in 2010, it was brand new – and we’ve learned a lot since then. We now have a better idea what works and what doesn’t. As we implemented the program, we started keeping a list of things we needed to do to improve the program. I’d say that 80% of these changes included clarifications, addressing typos, and various changes to the language in the program documents to make them more easily understood. The rest of the revisions are more substantive changes, the biggest of which is the reduction of sampling frequency. In several instances it was clear that sampling at a frequency of 1 sample per 1,000 tons of production was more than was necessary. Producers demonstrating a high level of compliance tend to have robust on-site QA/QC practices and do not need to be tested as frequently. 

How will these changes affect current program enrollees?
Most significantly, producers that qualify for the reduced sampling frequency will see a considerable reduction in the program costs due to having to test fewer samples. This can be up to an 80% reduction in testing costs.  

Another component that is different for producers is how bag weight is being monitored. The original program makes references only to 40-lb. bags, so there was confusion as to whether the program enforced bag weights as being strictly over 40 pounds. Many states have their own rules for weights and measures allowing a certain level of variance. It was decided that the different rules from state to state were too difficult for PFI to enforce so the program was modified to remove references to 40 lb. bags and to include language clarifying that the PFI Standards Program does not enforce weights and measures.

Two other changes have to do with the allowable diameter and bulk density. Once the program was implemented it became apparent that the bulk density and diameter limits were set too tight. The revisions allow for a larger range for bulk density and incorporate Note 6 under table 1 to allow for an increase of the diameter range upon EPA review. This will allow producers with slightly higher bulk density and/or diameter to comply with the allowed grade criteria.

Finally, “conformance criteria” has been modified from 95% to 90%. The previous 5% conformance criteria allowed for only one non-compliant test sample for every 20 samples tested. With 10 parameters tested per sample this is essentially one failed parameter per 200 parameters tested, which was too strict. Dropping this to 90% allows for a more reasonable level of compliance. This is also applied with what we call the 10%-2% rule. If material is over a specified limit by not more than 10% (2% for durability) then it can still be sold as long as it is not more than 10% of your production (was formerly 5% of your production).

How will the changes affect potential program members?
We hope the changes will encourage more producers to enroll. The option for a reduced sampling frequency will do a lot to reduce program costs and will hopefully make participation more affordable. In addition, with the widening of some of the grade criteria some producers that did not qualify previously will now be able to participate without making modifications to the production process.

How does the PFI Standards Program compare to other graded fuel programs?
There are a lot of differences between the PFI Standards Program and the other graded fuel programs that were approved by EPA’s New Source Performance Standards (NSPS), ENplus and CANplus. The earlier versions of all three programs were more similar but now they have matured in different directions. The PFI program has much more robust third party monitoring and oversight, which gives a greater level of assurance that the material in the bag complies with the standard. PFI’s changes hone the third party verification process and compliance requirements. ENplus and CANplus are very similar to the PFI Standards Program in many ways, but only require a single audit per year and one audit sample to verify compliance. ENplus and CANplus are also focused on the entire supply chain to include pellet traders and the entire distribution network, whereas the PFI Standards Program is focused on production.

Do you expect to see growth of the PFI Standards Program following the release by the EPA of the final NSPS rule? 
With the release of the EPA’s NSPS Rule earlier this year, appliances manufactured after May 15, 2015 will be required to burn fuel that has been produced under a licensing agreement with one of the approved graded fuel programs, one of which is the PFI Standards Program. This will create a market for compliant fuel and no doubt producers will want to sell product to this sector of the industry. As such we do anticipate additional producers will want to qualify their product under the PFI Standards Program. We have already seen an increase in calls and activity to this effect.

Indeck Energy Qualifies for PFI Standards Program

PFI Annual Conference: Williamsburg Review

The PFI (Pellet Fuels Institute) recently concluded its successful 2015 Annual Conference July 21^st in historic Williamsburg, VA. Nearly 200 attendees from over 125 companies participated in three days of industry presentations, supplier exhibits, networking and fun.

Two dozen industry experts gave presentations and industry updates on a wide variety of subjects, including:

• The global wood pellet market, and how it is changing
• Pellet operation enhancements and tools
• The Waste to Wisdom Initiative that is converting biomass residues into usable feed stocks
• Policy updates on state and national initiatives that impact wood pellets
• New pellet fuel and wood burning appliance requirements relating to EPA regulations
• Progress on the Wood to Energy check-off program
• Carbon accounting and what it may mean to our industry
• New market opportunities for pellet manufacturers

Each presentation contained valuable details and expert advice. Some of the interesting facts that were shared at the 2015 PFI Annual Conference include:

• World pellet consumption has grown to 24 million tons, and could reach 50 million tons by 2020
• Italians purchased 275,000 pellet stoves in 2014 while American purchases were around 60,000
• Waterproof wood pellets are being made in Alabama
• The world’s top pellet producing regions are: 1) Europe @ 48%; 2) North America @ 32%; 3) Russia @ 7%.
• The world’s top pellet consuming countries are: 1) United Kingdom, 2) Italy, 3) USA
• The Wood to Energy check-off program currently could allow the wood pellet industry to market itself much like other successful agricultural products (Beef-“Beef: It’s what’s for dinner”, Pork-“The other white meat”, Eggs-“The incredible edible egg”)
• U.S. and Canadian pellet exports to the growing South Korean market have seen a decline due to low-cost, low-quality imports from Vietnam. 

Plans are well underway for the 2016 PFI Annual Conference, and we will be announcing the dates and location soon.  For exhibitors and sponsors, you’ll soon be able to view the conference prospectus and determine your level of participation in the conference. More details will be available in the weeks to come on www.pelletheat.org/pfi-annual-conference. 

Legislative and Regulatory Affairs Update

Clean Power Plan: On July 31, a House letter supporting biomass energy as a “sustainable, responsible, renewable and economically significant” energy source” was sent to the Secretaries of the U.S. Department of Agriculture, Department of Energy and the EPA Administrator. The letter also underscores the need for the Administration to recognize the carbon neutrality of biomass. It was signed by 154 members of the House—over one-third of the chamber. We worked hard to recruit many of these signatories, coordinating our outreach with our allied trade associations in the forest products and biomass energy value chain. This communication follows closely on the heels of an identical Senate letter sent two weeks ago which boasted nearly half the Senate as signatories. Both communications were signed by legislators from both parties and from every region in the country.     

These communications were timely as they were sent just prior to finalization of the Clean Power Plan—EPA’s massive regulatory package that sets carbon emission limits for electric utilities. The rule package, which was signed at a White House ceremony August 3, included a proposal known as the Federal Plan, which will serve as the model for states to use in crafting their own compliance regimes and will be the plan for those states that do not comply. The Federal Plan piece of this package is in the proposed stage and EPA is soliciting comments on a number of issues around forest-based biomass. 

There is considerable—largely favorable—discussion in both the Clean Power Plan and the Federal Plan about biomass and its potential to contribute to the underlying carbon reduction goals that form the premise of the rule package. However, nothing in the package is definitive with respect to whether biomass will ultimately be recognized as a compliance pathway for states to use. We need to continue our momentum and work with our industry allies to ensure that EPA makes the correct decision on this critical issue, which is the centerpiece of our industry’s sustainability platform. As mentioned in the last Pellet Wire, PFI will be submitting comments on the industry’s behalf. You are also encouraged to submit your own comments. More information will be provided to you on how to provide comments to EPA.

Biomass Program for Advanced Biofuels: We have had productive discussions with officials in the Rural Business-Cooperative Service Agency within the Department of Agriculture regarding the Sec. 9005 Farm Bill program that affords direct payments to advanced biofuels producers. Staff indicates that a regulatory proceeding is underway to reform the manner in which the program is currently administered. Stay tuned for more information in the coming weeks.

Energy Bill: On July 30, the Senate Energy and Natural Resources Committee reported legislation--the Energy Policy Modernization Act of 2015—by an 18-4 vote. The bipartisan nature of the mark-up was evident throughout the proceedings as many Senators offered and withdrew more controversial amendments and announced their intent to bring them up again when the bill is heard on the Senate floor. Chairman Murkowski (R-AK) stated that she intends to bring the bill to the Senate floor this September, but there are a limited number of legislative days in September and it will be a challenge for the bill to see floor time due to competing priorities such as the federal budget.

The underlying bill contained a number of positive provisions promoting biomass heating. Those provisions remained in the package that was favorably reported by the committee. The one piece that was left out was an amendment opening up the existing definition of “renewable energy” to include thermal energy. Senators King (I-ME) and Portman (R-OH) sponsored the amendment, which we are told was given clearance by committee leadership for consideration.  However, the amendment evidently was held up by committee staff for reasons that are not quite clear at this time. In any event, the amendment did not make it into the committee package and we will be pursuing another opportunity for its inclusion on the Senate floor.

If you are a member of PFI, you may read more details about PFI’s legislative and regulatory activities by visiting the members section of the PFI website.

National Bioenergy Day

Don’t forget that October 21 is National Bioenergy Day. Pellet mills are encouraged to host facility tours or participate in some other way. This year’s video, due out in September, will prominently feature Northeast Pellets, a pellet mill in Northern Maine that manufactures pellets for home heating appliances.

Please visit www.bioenergyday.org for more information or to sign up. Contact Carrie Annand at [email protected] with any questions. 

Pellet Fuels Institute
 www.pelletheat.org | [email protected] | 206-209-5277