PFI's Weekly Newsletter



October 27, 2017

In this Week's Pellet Wire:

Government Affairs Update

Tax Reform

This week, the full House approved the Senate-passed FY 2018 Budget Resolution by the narrowest of margins, 216-212. Every Democrat and 20 Republicans voted against the measure. House passage of the budget resolution is a key development as this is the vehicle that will allow for passage of a yet-to-be unveiled tax bill by a mere simple majority in the Senate instead of the 60 votes that would normally be required.  

We are hearing that the House Ways & Means Committee will release legislative text of the tax reform plan in the next week to ten days. One of the issues that has surfaced and will be a challenge for negotiators as this bill moves through the process is the State and Local Tax deduction, which it targeted for elimination. Nationwide, nearly 30 percent of the population benefits from this deduction and Members of Congress are hearing about it from their constituents. 

At this point, it is difficult to predict our prospects for thermal tax incentives in the context of tax reform. Last month, Republican Congressional leadership and the Administration released a "unified tax plan" that included a number of items popular with the business community, including a new 25 percent tax rate on S-Corps and other pass through entities, as well as repeal of the estate tax, repeal of the alternative minimum tax and full expensing of new investments in depreciable assets. The document, however, was high level and short on specifics and did not cover specific areas of importance to PFI-namely how renewable energy will or will not be incentivized. Regarding the latter, we could see a scenario in which all incentives for energy production-fossil fuel and renewable-will be eliminated.  

In the meantime, we continue to lobby aggressively for our tax priorities, namely enactment of the Biomass Thermal Utilization Act and extension of the pellet stove credit. Regarding the former, PFI secured a key Republican to be the lead on the bill in the House-Rep. Mike Kelly (R-PA). Successful recruitment of Congressman Kelly was key as he sits on the all-powerful House Ways & Means Committee, which is the arbiter of all matters related to tax policy in the House. So far we have six cosponsors of the legislation (H.R. 3161): Rep. Kelly; Rep. Peter Welch (D-VT) Rep. Ann Kuster (D-NH); Rep. David McKinley (R-WV); Rep. Chellie Pingree (D-ME) and Rep. Bruce Poliquin (R-ME). The cosponsor list has built out in a solid bi-partisan fashion, which is encouraging. 

In the Senate, Senators King and Collins (Republican and Independent from Maine, respectively) are our leads on the companion bill, S. 1480. There are also a total of 6 cosponsors on this bill, mostly Democrats, and we are working hard to secure more Republican support in the upper chamber. In any event, Senator Collins will be critical as the tax reform process unfolds in the Senate as she is a key vote to court if Republican leadership hopes to pass tax reform in the upper chamber. In other words, she is in a prime position to negotiate for her priorities, one of which is the BTU Act.  

As soon as details of the House Ways & Means Committee bill are available, we will share them with you and thoughts about a path forward for our priorities.

Farm Bill

PFI has been advocating for a more robust Community Wood Energy Program (CWEP) in the next Farm Bill. This program, contained within the Farm Bill's Energy Title, would help create a sustained domestic demand for wood pellets by incentivizing deployment of biomass heat and power projects across the country. CWEP was originally authorized to provide grants to projects that install wood heating systems in hospitals, schools, community centers and entire towns. Currently, the program has authorization, but no money for the actual grants. We are working with numerous interested groups as part of the Forests in the Farm Bill Coalition in advocating for reauthorization and meaningful mandatory funding of $50 million annually over the life of the next Farm Bill to fulfill CWEP's objectives, which include supporting: "capital investments for advanced wood energy and combined heat and power in public and private facilities and to support other uses of low value, low quality wood, with a preference for projects that use byproducts of wildfire, forest health treatments and wood product manufacturers, projects in areas that need markets for low value, low quality wood, or have limited access to pipeline natural gas."

We have made several Congressional visits with House and Senate Agriculture Committee staff. The feedback we received is that the proposal would find more traction if the scope of CWEP were broadened to include incentives for manufacturing in rural areas. To that end, language was added to qualify "innovative wood product facilities (IWP)" meaning a manufacturing or processing plant or mill that produces:

  • Building components or systems that use large panelized wood construction, including mass timber;
  • Wood products derived from nanotechnology or other new technology processes; or
  • Other innovative wood products that use low value, low quality wood.

While the Farm Bill does not expire until 2018, efforts have already begun to write the next bill's provisions. We met this morning with Senate Agriculture Committee Majority staff on this proposal and we have another meeting with their House counterparts tomorrow morning. In addition, we are working hard now to build support for this provision from individual members of the House and Senate Agriculture Committees so that it will be included in any final Farm Bill agreement that comes together. The challenge will be funding. Money is tight headed into the Farm Bill negotiations. Securing $250 million for this program when it currently receives zero is definitely a stretch goal, but that is our starting point for negotiation. We will keep you apprised of progress and will likely be leaning on you for help as Farm Bill negotiations kick into full gear.  

U.S. Forest Service 2018 Wood Innovation Grants - Webcast on Monday, Oct. 30

This U.S. Forest Service is holding a pre-application webcast on Monday, Oct. 30, at 1pm Eastern for all in the wood energy industry interested in learning more about the agency's annual Wood Innovation Grant program. Over the life of the program, the Forest Service has awarded millions of dollars to wood energy and low value wood utilization projects across the country.

The Wood Innovations Grants funding supports traditional wood utilization projects, expands wood energy markets, and promotes using wood as a construction material in commercial buildings. These grants and cooperative agreements support the Agricultural Act of 2014 (Pub. L. 113-79), Rural Revitalization Technologies (7 U.S.C. 6601), and the nationwide challenge of disposing of hazardous fuels and other wood residues from the National Forest System and other forest lands in a manner that supports wood energy and wood products markets. 

The Forest Service supports proposals that significantly stimulate or expand wood energy and wood products markets that support the long-term management of National Forest System and other forest lands. The 2018 Request for Proposals focuses on the following priorities:

  • Reduce hazardous fuels and improve forest health on National Forest System and other forest lands;
  • Reduce costs of forest management on all land types; and
  • Promote economic and environmental health of communities.

Learn more about Wood Innovation Grants on the U.S. Forest Service website. Please contact Carrie Annand for details on how to join the webcast. 

Check Out PFI's Updated Events Page to Plan Ahead for Industry Events

Plan ahead for pellet, barbecue and forestry industry events! Be sure to check our updated online calendar with information on many events happening during the remainder of 2017 and into 2018. Most important, mark your calendars for next year's PFI events! 

Breakfast & Biomass at the HPB Expo in Nashville, TN - March 8-10, 2018

PFI Annual Conference in Myrtle Beach, SC - June 24-26, 2018 

If our calendar is missing any events that you're planning to attend, please send an email to Carrie

Follow PFI on Facebook and Connect with us on LinkedIn! 

We'd like to connect and interact with PFI members and anyone else involved in pellet fuels production! 

Here's how you can help us build our online community:

  1. Follow us on Facebook and LinkedIn!
  2. Encourage your colleagues and other business associates to follow us.
  3. Send Carrie Annand news or other ideas to post on LinkedIn.

Have News to Share on Pellet Wire?

We'd love to feature your company's news in a future Pellet Wire! We want to be the first to know your company's recent developments to share them with the wider pellet fuels industry.

Please be in touch with Carrie Annand at [email protected] with information on your company's growth, job openings, promotions or other news. 

Join a PFI Committee

We welcome and encourage all interested PFI members to get involved in our committees. There are many opportunities to help steer the association. No matter where your expertise and interests lie, we have a committee that will suit you. Help us plan our next conference, shape our policy agenda, lead communications outreach or grow the PFI Standards Program. Visit PFI's website for more information. 

Upcoming Industry Events

March 8, 2018: HPB Expo

March 9, 2018: 2018 PFI Breakfast & Biomass

April 16, 2018: International Biomass Conference & Expo

March 20, 2018: International Mass Timber Conference

May 1, 2018: Heating the Midwest

Connect with PFI
Join PFI

Fuel Availability

Are you a PFI member pellet manufacturer or distributor that has fuel available? Email [email protected] to have your listing updated or added to the PFI website.

Industry News

Astec Bullish on Pellet Plant Market Outlook 
Biomass Magazine

Though some design flaws at two of the large-scale wood pellet plants Astec delivered required unexpected investments this quarter, CEO Benjamin Brock said the company is still confident in the sector and its place in the company's future.

The design fixes collectively resulted in a negative impact of 59 cents per share impact for the quarter and year-to-date. The design upgrades, which Brock described as significant, were announced in early October, following a 45-day assessment. "Upon learning those flaws, design flaws that were different at each plant, we identified a clear path at both sites to achieve the necessary results for our customers in the near term," Brock said. "...we have a high level of confidence that we have identified the issues, and are underway in making the necessary upgrades to achieve full production in Georgia and Arkansas."

Read Full Article

After 15 years of Decline, Demand for Manufactured Maine Wood Products is Booming
Maine Public Radio

Maine has lost more 2,400 papermaking jobs over the last six years, but analysts say the state is making some strides in manufacturing that are infusing segments of the wood products industry with new hope and vitality. The goal is to find new products that require more skill to make.

If you've ever bought cigars with wooden tips, they may have come from Pride Manufacturing in Burnham. The company, which employs 145 people, has been a world leader in cigar tips for more than 60 years, and also cranks out millions of golf tees from white and yellow birch.

A couple of years ago, Pride landed a contract with K'Nex, the Pennsylvania-based company that sells Lincoln Logs - the toy invented more than 100 years ago by John Lloyd Wright, second son of the architect Frank Lloyd Wright. Randy Dicker, senior manager of manufacturing at Pride, says it has become a big part of the Burnham plant's future.

As the pieces of maple are spit out from molding machines in varying lengths, Dicker inspects them for a uniform light maple color while also ensuring that protective coatings are applied evenly across each surface.

Read Full Article 

EIA Releases Monthly Biomass Densified Fuel Report, July 2017
U.S. Energy Information Administration

Data for two pellet types in Tables 4 and 5 were combined this month because of privacy concerns. The joint category is called Wood Pellets Premium/Standard. These two pellet types will be combined for the rest of 2017.

Data were suppressed for July for the Compressed Bricks/Logs category in Tables 4 and 5 because of privacy concerns.

As of July 2017, the monthly data collection included 88 operating manufacturers of densified biomass fuel. These manufacturers had a total production capacity of 11.92 million tons per year and collectively had an equivalent of 1,987 full-time employees

In July 2017, the monthly respondents purchased 1.04 million tons of raw biomass feedstock, produced 0.58 million tons of densified biomass fuel, and sold 0.49 million tons of densified biomass fuel. Note that feedstock purchases do not directly relate to production in the same reporting period.

Pellet Fuels Institute |  [email protected]   | 206.209.5277