New England fuel dealers plot their future in a rapidly electrifying world

ROCKPORT — Most northern New England residents see climate change as a serious threat. A majority of them support state government policies that encourage a full-scale conversion to heat pumps powered by renewable electricity.

That is, until they are told how much the shift will cost them in new equipment and higher electric bills, plus the risk of cold-weather power outages on a fragile electric grid. Then support drops off.

Instead, it may make more sense for people to keep their oil units and run them with a cleaner-burning, vegetable-based blend that’s available today. Soon they’ll have a climate-friendly, liquid heating fuel made from forest waste, a technology being developed in Maine.

These are among the top conclusions from a survey last winter billed as the largest of its kind for America’s liquid fuels industry. It’s part of the messaging that oil dealers will need to embrace if they’re going to explain to customers how dealers and the products they sell also are part of the clean-energy transition.

“The industry is at an inflection point,” said Rich Carrione, vice president of operations at Warm Thoughts Communications, a New Jersey-based strategic marketing firm that works with retail energy companies. It conducted the survey on behalf of the industry.

Even the majority of northern New England Republicans now believe climate change is a serious threat, it found.

“​We cannot expect to win by bashing climate change or by messaging against it,” Carrione told a large gathering of liquid fuel dealers at a conference last week.

Right now, he said, the “electrify everything” juggernaut is the largest threat to the industry, with its anti-fossil-fuel laws, mandates to electrify, and heat pump subsidies. Fuel dealers need to seize the opportunity now to present another vision of the future, Carrione said. Their businesses may depend on it.

His warning resonates in Maine, where thousands of jobs are tied to storing and delivering heating oil and propane and maintaining equipment. A 2018 Maine Energy Marketers Association study found the heating fuels industry employed roughly 5,000 workers in the state and contributed indirectly to another nearly 5,000 jobs.

And despite the move to alternatives, roughly six in 10 Maine homes continue to heat with oil, a shrinking share but still the largest in the country.

The liquid fuel industry’s planned transformation also offers another perspective for Mainers struggling to find the best path forward in their own homes and businesses, at a time when overall energy costs are hitting record highs.

FREEDOM VS. EFFICIENCY

Carrione came to Maine last week to speak at the Northern New England Energy Conference, a gathering of oil, propane and motor fuel dealers and their allied services. It was hosted by the Maine Energy Marketers Association, whose members include 125 oil and propane dealers that help warm 415,000 households in winter. The group also represents 1,300 convenience stores that sell a billion gallons of gasoline and diesel every year.

His presentation served as a counterpoint to the mantra of beneficial electrification, the idea that the economy can and must be converted to run predominantly on renewable electric power, generated chiefly by solar and wind energy.

Carrione addressed participants who also came to enjoy golf, networking and a trade show at Rockport’s Samoset Resort. The heating season finally over, there was time to enjoy a glorious near-summer day on the midcoast.

It’s a brief but needed respite. With fuel oil prices in Greater Portland averaging a record $5.25 a gallon and no relief expected by fall, dealers can assume that even the sight of a delivery truck pulling into a neighborhood can trigger anxiety attacks among some customers.

But electricity supply rates are up as well, and Mainers should be able to decide how to heat their homes, said Charlie Summers, president and chief executive of the Maine Energy Marketers Association. That’s a conclusion from a related survey done this spring for the trade group. It found that nine out of 10 residents want state policies that let them choose how to heat their homes and businesses, choices that may include heat pumps, but also other options.

That view is in line with a broader approach to home heating common in many Maine households, he said, whether it be wood stoves for backup or heat pumps for supplemental warmth.

“The consumer wants to make that choice,” Summers said.

State energy officials, however, have a different take on what drives choice.

It’s a desire to be less dependent on volatile oil prices that’s behind the decisions of home and business owners to choose heat pumps, according to Hannah Pingree, director of the Governor’s Office on Policy Innovation and the Future.

“Maine people and businesses are making their own informed choices to invest in more efficient and affordable heating sources,” Pingree said. “Over the past two years, more than 40,000 high-efficiency heat pumps have been installed around the state as more and more people choose to reduce their reliance on fossil fuels and reduce their energy costs.”

State energy experts also dispute claims by the liquid fuels industry that heat pumps are expensive to run and ineffective in extreme cold. The latest comparison data from Efficiency Maine, the state’s conservation agency, show that heat pumps are among the least expensive sources per unit of heat, much cheaper than oil or propane. It also says heat pump models eligible for state rebates are remarkably energy-efficient at zero degrees.

SWAYING PUBLIC OPINION

Carrione’s firm surveyed 1,200 registered voters in Maine, New Hampshire and Vermont. Thirty-six percent were unenrolled, 34 percent were Democrats and 25 percent were Republicans. Forty percent said they heat with oil, 23 percent with propane and 10 percent had heat pumps.

Across the spectrum, a majority opposed all-electric mandates or using taxpayer money to subsidize electrification. But they also had a decidedly unfavorable view of heating oil, although there was more support in Maine. The highest favorability rating was for heat pumps, followed by natural gas and biofuels.

Survey participants then were asked if they supported their state energy plans. Overall, 66 percent said they did.

But then they were presented with five messages meant to reveal downsides and raise doubts about those plans. The top two most-persuasive messages were that people could be forced to switch from oil, propane or natural gas to heat pumps, at a cost of $20,000 or more, and that low-income residents would be hurt most.

The other messages focused on higher electricity costs, contentions that heat pumps don’t work well in extreme cold, and that high electrification would burden the electric grid and risk blackouts.

These messages changed opinions about state electrification plans. Support dropped from 61 percent to 42 percent. Opposition rose from 26 percent to 45 percent.

A key takeaway, according to Carrione: “The right messaging in front of enough consumers can move opinion.”

Messaging is top of mind with the trade association known as NEFI, the National Energy & Fuels Institute. It represents roughly 1,100 oil heat, propane and motor vehicle fuel providers, including members of the Maine organization.

It would be an understatement to say the industry as it exists today is under pressure, particularly in New England and New York. Most Northeast states have enacted climate change policies that aim to phase out petroleum for heating and transportation. In their place, offshore and land-based wind turbines, solar farms and other renewable energy sources are expected to power heat pumps and plug-in vehicles.

Most recently, Democratic lawmakers in Maine and in Congress have called for probes into potential price gouging or market manipulation by energy companies, with the focus on gasoline prices. With gasoline averaging $5.09 a gallon in Maine as of Friday, a fill-up feels more like a stickup.

Strategies for confronting the challenges are articulated for members in Oil & Energy, the group’s online magazine.

A recent story titled “Talking to customers about price spikes” lays out the right and wrong ways for dealers to communicate with concerned clients. Right: Explain the global influences, acknowledge their pain and suggest payment and conservation options. Wrong: Don’t get political, don’t make price forecasts and don’t suggest expensive equipment upgrades.

A column this month ran under the subhead, “Fighting heating-electrification at the dealer level.” It offered “anti-electrification messaging” for dealers. Points to make include that your company supports the fight against climate change and is delivering bioheat to reduce carbon emissions; the “electrify-everything movement” will force homeowners with oil or gas heating equipment to convert to electric heat pumps at a whole-house cost of up to $40,000; heat pumps aren’t effective for whole-house heating in cold climates; and electric demand for millions of heat pumps and electric cars will increase the risk of blackouts.

Another article detailed a forecast showing half the homes in Maine and Vermont will have a heat pump by 2031, subsidized by state government.

To lobby Congress and help elect supportive candidates, NEFI has created the Greener Fuels Heating PAC. The vice chair is Mike Estes, president of Estes Oil and Propane in York.

BETTING ON BIOFUELS

But the industry recognizes it can’t survive just by bashing electrification.

NEFI members, including Maine’s group, have adopted a resolution to significantly reduce greenhouse gas emissions. They have pledged to cut emissions from heating oil by 40 percent by 2030 and deliver a net-zero carbon liquid heating fuel to consumers by 2050.

Many dealers have begun blending concentrations of soy-based biodiesel under the trademark Bioheat. It will be required by law in Rhode Island and Connecticut next year.

The industry also is optimistic about research in Maine to turn wood waste into liquid heating fuel, a product called ethyl levulinate or EL. Biofine Technology, a Boston startup working with the University of Maine, wants to build a biorefinery to produce what it says is a carbon-neutral substitute for home heating oil at a former paper mill in Lincoln.

Estes, the York oil dealer, is involved with that effort. He has seen his industry evolve – his dad started Estes Oil 60 years ago and he has a daughter running things now.

Estes hopes the plant can start producing an EL fuel by 2025 and ramp up to commercial scale by 2030. It would be locally produced energy made from a waste product and would create new jobs in Maine. In time, it also could be used as a motor fuel to completely replace petroleum, he said.

“The industry is banking on that becoming a reality,” Estes said in an interview at the energy summit.

His company already sells Bioheat in Maine and New Hampshire. It promotes a 20 percent blend, a product called B-20 that uses recycled vegetable oil from cooking and processing to create a cleaner-burning heating fuel.

“The industry has to change,” Estes said. “We’re in a transition and we need to stop talking about what we’re going to do, and do it.”

Echoing that theme, Carrione wrapped up his presentation by suggesting that the industry has “a compelling story” to tell, if it can communicate to customers about both the potential of renewable liquid fuels and shortcomings of an all-electric world.

“We have an opportunity to shift from playing defense to going on the offensive,” he said. “This is not a gloom-and-doom presentation. We have the opportunity to move the needle.”

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