ICM: Can you tell me what the mandate is for, what the time frame is and what fuels it includes?
CH: It includes No.2 heating oil and starts July 1, 2022 at a 5% (B5) blend with a renewable fuel, B10 in July of 2025, B15 in July of 2030, B20 in July of 2034 and B50 in July of 2035.
ICM: It is at 20% in 2034 and then in one more year it increases to 50%? That is an aggressive jump.
CH: It is. We achieved CEMA’s goals in having a slow ramp-up to provide the industry time to prepare, even though that is indeed a big jump at the end. Frankly, we have to be at B50 in time to comply with the law for CO2 reductions. It gives fuel wholesalers, equipment manufacturers, technicians and operations people time to be fully versed in handling that blend level. Now everybody can circle the date on the calendar. Obviously, the fuels must be ASTM compliant.
ICM: The Connecticut Comprehensive Energy Strategies over the years has been very unfavorable towards liquid heating fuels. How did you get this mandate?
CH: It is remarkable in Connecticut to have a bill introduced and in the first year have it passed into law. David Arconti, Chairman of the House Energy Committee, was a sponsor of the bill in reaction to regulators’ aggressive posture to get rid of liquid fuels. He told us the legislature was not going to be able to hold the electrification dam back anymore unless we can measurably demonstrate that we can lower CO2 emissions in heating oil fired appliances. That was really the genesis of the bill and our Executive Committee allowed me to negotiate language that would work best for our members.
We started a relationship with Arconti before he was elected six years ago. We brought him in to educate him about natural gas conversion. We had no idea that he would get elected at that time. We were just prepping a candidate on our issues, and it paid immense dividends in terms of now having a key player in the policy space for energy who believes in what we do.
From there we partnered with American Green Fuels in New Haven, CT, the National Biodiesel Board (NBB), who, along with the National Oilheat Research Alliance (NORA), was extremely helpful in providing us data to support our claims that biodiesel and other liquid renewable fuels, such as renewable diesel, could play a role in significantly reducing greenhouse gas emissions and allow our members to comply with Connecticut laws that require GHG reductions.
ICM: Did you have opposition from environmentalist groups, the electrification faction or other groups?
CH: Yes, it seemed like we got opposition from everyone. It started with the Dept. of Energy & Environmental Protection (DEEP), who authored the comprehensive energy strategies that endorsed natural gas conversion and now electrification. They speak on behalf of the Governor, so their opposition carried the weight of the governor behind it, which made it a very steep sell. The commissioner of DEEP today was the Deputy Commissioner under the natural gas conversion plan. This gave us a little bit of leverage when we spoke with legislators. We were able to say, “This was the same person who told you, seven years ago, that natural gas was cleaner, cheaper and more reliable. Now she is telling you the same thing about electricity, and your constituents, who were told to switch to natural gas, are now being told that’s no longer any good either and they have to switch the electricity.”
It’s an agency full of scientists, engineers and PhDs and there’s a lot of value in what they say, but because they were wrong before, we were able to at least say, “can you listen to us?” Coupled with NORA and NBB support, we were able to stand toe-to-toe with their scientists, engineers and commissioner.
Further, at the public hearing, groups like the Sierra Club and other environmental organizations came directly at us, appealing especially to the majority Democrat party, saying that this was all a way to perpetuate the use of fossil fuels. Our chief response was that there’s going to be a segment of the population who will never be able to afford to convert to any other fuel, whether its electricity or another. However, we can start lowering CO2 emissions for everybody without waiting for a theoretical future of zero emissions through electrification that, when you do the math, just doesn’t seem very credible.
ICM: So, science tipped the scales?
CH: Yes, we were not going to win by finding enough sympathy in the legislature for not hurting small, family-owned businesses. Frankly, most elected officials just don’t care anymore. If we did not have science on our side, we would have seen a full electrification bill this year.
ICM: Many people in this industry are dead-set against mandates. What about the liquid fuel marketer community in Connecticut? Did you have opposition there?
CH: Internally, it was a process. I credit National Energy Fuels Institute (NEFI) with the Providence Resolution for bringing attention to the need for the industry to be able to publicly state that we need to aggressively move to low carbon liquid fuels. The second thing was the shift in the equipment manufacturer community to start sending signals out to their customers that they were working on a B50 burner or a B100 burner. I think that sent shock waves throughout a segment of our industry that would never have otherwise gotten on board with this. I think the third factor was Project Carbon Freedom where the fuel wholesale community united to say, “We need to change this fuel if we want to have a future, we are going to help you with marketing and communications. Then whole other segments of the industry—retail company owners, terminal operators—said, “Okay, this can happen.”
All these things didn’t exist a couple of years ago, but when the bill was raised last January, then they came together. If not for all of that, we would have been looking at an extinction-level event. If you walked up to every single CEMA member and asked if they supported this, you would not have heard unanimous support, so there is still work for us to do. Our Board of Directors made those hard decisions about allowing me to negotiate mandates after months and months of debate and consideration. We found ourselves in a position where we had no other option if we wanted to continue a deliverable liquid fuel business.
ICM: Do you have concerns about product supply as you ramp up?
CH: I believe that New York, Rhode Island and Connecticut all have blending requirements in place because their time frames are stretched out and the demand for the product is going to be at different times. The people who have to produce, transport and store the product will have ample time to meet a B50 blending requirement.
ICM: What happens if biodiesel prices rise?
CH: That allows me to tell one of our strongest stories. I don’t know the answer, but what I do absolutely know—and there is no avoiding it—is that electric heat will absolutely, categorically cost more in the future. Tens, if not hundreds, of billions of dollars will be needed to construct enough wind and grid scale solar, upgrade every power line, every transformer and every residential electrical service. On top of that, we’d have to convert to another technology in the home—the heat pump—making the cost overwhelming. Even if your assumption is that bio-heating will be more expensive in the future, it will not be anywhere near the cost of electricity and the cost to convert to electric heat pumps. ICM