It was only five years ago when Arthur Marin, Executive Director of the Northeast States for Coordinated Air Use Management (NESCAUM) addressed the Oilheat Manufacturers Association about the States in the Northeast contemplating policies that would demand drastically reduced carbon emissions from the heating sector. In the years since, many policies have been put in place that require homes to be on a path to significant atmospheric carbon emission reductions.
First among the strategies to eliminate carbon is the removal of on-site combustion for heating and replace it with electric heat pumps. The thinking behind this is that heat pumps can eliminate carbon emissions quickly and completely once the grid is free of carbon-producing electric generation. Much debate has ensued on the efficacy of heat pumps in extremely cold weather, the concerns about the huge increased demand on the grid and the feasibility and speed achieving carbon-free electric generation, as well as the economic consequences of doing so.
The National Oilheat Research Alliance (NORA) decided to let good science show whether heat pumps or low-carbon liquid biodiesel is a better and faster reducer of carbon emissions. Thus was born the Green House Gas Calculator, a transparent multi-variable calculator to examine the conversion of existing oil-heated homes to electric heat pumps versus upgrading the liquid-fueled heating appliance while increasing the amount of biodiesel/renewable liquid fuel used by that appliance.
The calculator uses an Excel-based spreadsheet that allows the user to make key input changes to examine the results of different actions and approaches to reduce greenhouse gases. It also shows how macro activities in the background, such as the decarbonization of the electrical grid, impact the results. Additional factors may be added, either in conjunction with NORA or independently. Like most models, this was developed over time with input from many stakeholders. Good modeling practice has been the basis for this opensource Excel Calculator. To ensure the accuracy, the model was reviewed by EarthShift Global CEO & Founder Lise Laurin. Version 7.1 was deemed to “fairly and accurately present the impact of changes in variables.”
Connecticut use-case
To explain the GHG Calculator and its functions, along with the impact of different variables, this article will use a variety of inputs focused on a Connecticut use-case.
Figure 1 provides the result for the Connecticut use-case and shows the effects of converting all current oil-heated homes to no-carbon liquid solutions by 2050. This model uses normal 5% liquid fuel appliance upgrades per year versus all-electric (heat pump plus resistance backup) conversions at a rate of 1% per year. This graphic shows how the high use of biodiesel blending, along with normal appliance upgrades, reduce carbon emission considerably faster and at a much lower cost than does converting to electric heat pumps.
Connecticut has a biodiesel use mandate in place and its effect on carbon emissions can be seen by the lighter green color in Figure 1. In fact, the mandated levels produce carbon reductions more than three times greater than will heat pumps (orange). Additionally, if an ever-higher biodiesel blend scenario is implemented (darker green), the GHG savings are almost five times as great by 2050.
Of equal importance, the reduction using biodiesel comes at a much smaller cost. Using 2030 as a snapshot, the GHG reduction cost with heat pumps is more than three times greater than with the biodiesel.
Calculator inputs
To ensure accuracy and flexibility, the GHG Calculator allows for more than 30 different inputs (Table 1). Among these are: location, global warming atmospheric lifetime, biodiesel feedstock, heating appliance efficiency, heat pump performance, heating load, biodiesel uptake scenarios, grid decarbonization rates and liquid fuel appliance and heat pump installation rates. The calculator allows additional inputs that include costs for both fuels and installation and conversion costs.
Using the GREET Model, the calculator assigns carbon emissions weight from both the liquid fuels and electricity. GREET stands for Greenhouse Gases, Regulated Emissions & Energy use in Technologies; it is a full life-cycle model sponsored by the Argonne National Laboratory at the U.S. Dept. of Energy’s Office of Energy Efficiency & Renewable Energy.
What does it all mean?
The final result for the Connecticut use-case scenario (Figure 1) in which converting all current oil-heated homes to no-carbon liquid solutions by 2050—and assumes normal 5% liquid fuel appliance upgrades per year versus all-electric (heat pump plus resistance backup) conversions at a rate of 1% per year—shows that high bio-blending along with normal liquid fuel appliance upgrades are more beneficial both in cost and rate of decarbonization to liquid-fueled homeowners and citizens in Connecticut.
Furthermore, looking at 2030, the cost to homeowner per ton of CO2e removed is $560 for heat pumps and $162 for high biodiesel blends. This means that in 2030, the cost to homeowners to remove the same amount of cumulative GHG is approximately 3.5 times higher with electrification of oil-heated homes. It should be noted that this analysis of costs did not assess or incorporate upstream costs associated with a major transformation of the electric distribution system, which will likely impact pricing of electricity.
In addition to Connecticut, the calculator has already been applied to Maine, Massachusetts, Rhode Island, New York and New Jersey with similar results and only variations based upon size of market, weather, prices and each State plan for biodiesel uptake.
The NORA GHG Calculator is the first proven, analytical look at the benefits of carbon reduction using biodiesel in home heating in comparison to electric heat pumps. In addition to the economic and environmental benefits, the liquid fuel heating industry is already positioned, and if fact has begun the transition. It is of added value that very few changes are needed to the delivery, storage and use of biodiesel blends, even at very high levels. Technical issues have been given the highest priority by the NORA, Clean Fuels Alliance America and others. Heating appliance manufacturers are currently gearing up for full biodiesel use and liquid fuel retailers and wholesalers have made the commitment to continue to elevate the biodiesel blending as fast as possible.
Reducing and eventually virtually eliminating carbon from homes is the right thing to do and the liquid heating fuels industry is on the right track to do it.
NORA has assembled this data at NORAweb.org/ghg where one can find more detailed explanations, reports and graphics for each State. ICM
It has been 19 years since the initial communication was sent to our industry’s technical leaders to consider blending low-carbon biodiesel into heating oil, which at that time was beginning its transition from high- to low- and then ultra-low sulfur heating oil—clearly a milestone unto itself.
On June 23, 2003, a memorandum was drafted and sent to Brookhaven National Laboratory and other technical collaborators defining the possibilities associated with heating oil gradually transitioning to a more favorable option, today known as Bioheat® fuel. Much has been accomplished since and, as all the planets have aligned for our industry to transition from carbon-based heating oil to low- and no-carbon fuel, the most challenging aspect of this journey has begun.
The challenge is how to encourage those who are not yet convinced this transition is necessary and that, given time, the need to reduce carbon and greenhouse-gas (GHG) emissions will abate—and it will again be business as usual. I’m no gambler but I am confident this will not happen. Just ask any oilheat industry leader and local or State policy representative, no matter the region.
The Only Obstruction Left
After years spent obtaining critical technical approvals and recording product and market development successes, the only obstruction left to address is our inability to create a powerful enough guiding coalition—one that requests your immediate participation. An industry renaissance often begins with just one or two people or companies leading the way. In cases of successful transformation efforts, the leadership coalition grows and grows over time. However, when a critical mass is not achieved early on, nothing much worthwhile happens.
Many progressive fuel dealers, however, are already on board with the evolution of oilheat. A behind-the-napkin calculation reveals that more than 500 million gallons of B20 Bioheat® Plus fuel—a blend of 20% low-carbon biodiesel and 80% ultra-low sulfur heating oil—has already been introduced throughout the New England and Mid-Atlantic regions. This does not include other biodiesel activities that focus on discretionary blending, but only those that legally utilize the registered trademark on websites, trucks, vans and apparel promoting Bioheat® fuel as the best energy source for home heating. Their promotion of the product publicizes the fact that we are moving in the right direction to clean up this industry, whose image has long been stigmatized as dirty and carbon intense.
There are many steps in transforming one’s company and industry. First, there must be a legitimate sense of urgency to change. By examining market and competitive realities, we suggest that we decarbonize, and quickly. Next, a coalition must be formed to create a vision for how to address the urgent situation. Then, sufficient communication of that vision must be relayed to the marketplace. This has been done, but in doing so there has been a duplication of messaging through various coalitions, which has led to confusion and reduced overall effectiveness. This is evidenced by the lack of financial support required to formulate and execute a broad-based, seamless communication plan to bring the exciting news to customers.
Disruptive & Intrusive?
Empowering heating oil’s expansive fuel-dealer network to act on industry leadership’s vision has been challenging for many reasons, some which include the lack of realizing the seriousness of legislative drivers, continued perceptions that Bioheat® fuel is not ready for prime time, misunderstandings over cold-weather operability and supply constraints. However, the foremost likely reason for the majority of those who are not yet supportive of the transition to Bioheat® fuel centers on change simply being too disruptive and intrusive to their current routine.
It’s difficult to determine where attention should be focused in order to create short-term wins. Planning for visible improvements in getting industry messaging to the customer is an awesome undertaking, and one that takes an inordinate amount of funding—of which our industry is simply deficient at this time.
Every day, the electrification story is told in a favorable light. The messenger paints a wonderful picture of life without oil, life with extension cords and unlimited power without the need to await delivery of heating oil, which sits inside that tank stealing valuable real estate in the basement—space that could be repurposed for a home office or room for the kids to play with their friends as moms and dads enjoy their coffee while being kept comfortable throughout the four seasons. I use the reference about the storage tank because, to many, it is viewed as an eyesore—a hazardous, prehistoric relic.
Alternatively, you can begin now to transition that antiquated mindset to help people realize that Bioheat® fuel is stored, renewable energy in one of its densest forms, meaning, quite literally, that once it is purchased and delivered to customers’ homes, this clean, power-packed energy phenomenon is stored on-site in their fuel tank. It is tangible liquid renewable fuel that does not require a power plant to generate and distribute energy to their home or business.
Instead, their renewable heating-fuel supply is right there and ready to reliably supply fulfilling warmth on the coldest nights and, for some, hot water whenever they need it. Sure, everyone needs a little power to run their oilheat system, but what a benefit it is to the customer for them to know that their renewable home comfort is safely stored in a physical fuel tank on their property, ready and available whenever they need it and independent of external generation.
The next time a customer expresses concern about that storage tank, redirect them by sharing the following: “Did you know that one 275-gallon tank of Bioheat® fuel contains 10,670 kilowatt hours of energy? That’s equivalent to the energy contained within 109 fully charged Ford F-150 electric pickup trucks. However, unlike the nearly 10 hours it would take to recharge one electric pickup, a Bioheat® fuel storage tank can be completely refilled in less than six minutes.” This calculation showcases only the tip of the iceberg when it comes to conceptualizing the security that stored energy like Bioheat® fuel provides.
My point is that it’s time to start having these discussions with customers to explain the countless benefits associated with this low-carbon fuel, which the industry has voluntarily introduced into the markets in order to protect the oilheat sector and those it serves.
The intent of this article is to motivate reasonable fuel dealers to take charge of their own space and build their own company vision. The rewards of doing so are running a sustainable business and securing the chance to stand out from what will always be a fragmented industry of suppliers unwilling to commit to this much-needed change. Companies that ultimately achieve success have created a core purpose and values that remain fixed, while their strategies and practices endlessly evolve to meet the needs of a changing marketplace.
The vision has been established. The heavy lifting needed to provide a fuel that can and will successfully compete against the predictable expansion of electrification is done. Winter is coming, as the now-famous saying goes, and historically high prices are likely to follow—along with frustration and fear of consumer disdain for their next delivery.
Now is the best time to have that conversation with customers and suppliers and begin to take ownership of the collective efforts needed to prepare fuel businesses for the next decade.
Now is the time to let customers know dealers cannot control the price of their home comfort. However, what can be controlled are the quality and performance of the products they sell, which will help customers reduce their energy spending by relying on this 21st Century heating fuel that delivers uncompromised system efficiencies and performance—something certainly worth feeling good about.
For more information, visit mybioheat.com. Take a tour. Build your story on the site’s messaging. Link to it. Share it with your customers and get them involved, educated and knowledgeable about your 21st Century product: Bioheat® fuel. ICM
Full of degree days and turbulence, what a winter this has been here in our world—the Oilheat Nation. Every day, across the supply chain, fuel dealers arrive at work to create and capture customer satisfaction.
They are quickly realizing, however, that today they must sell more than just the physical commodity to achieve that goal. Failing to do so jettisons a company into the “what’s-the-price” abyss, where price pressure and margin compression become the norm as their competitors find ways to match the low deal of the day. A more sustainable and differentiated approach starts with knowing customers, understanding the clientele’s ultimate objectives and determining how to generate additional profit for a business by creating solutions and adding new value that align with customer expectations.
Instead of leading with price, progressive fuel dealers invest time in creating solutions that deliver quantifiable, economic impacts for their customers’ bottom lines—as well their own. These companies avoid the commodity trap by creating better methods to deliver enhanced customer value. In our world, this means bundling an improved distillate fuel with a series of extras that, in the end, help differentiate forward-thinking fuel dealers from ordinary commodity-driven operations.
It would be challenging to find an industry more mature than heating oil. This field has been around for nearly a century as heavier, distilled fractions of liquid crude oil replaced coal, and soon Bioheat® fuel will replace oil. As in many other industries, however, market leaders have distanced themselves from the competition by recognizing and capitalizing on the fact that they offer far more than just heating oil and diesel fuel.
This growing group of high-value wholesalers and fuel dealers choose to sell extensive solutions that deliver additional value to their customers—value beyond a low strike price. These solutions come in many forms and are often a combination of services, technology, enhanced fuels, analytics and support—altogether which encompass a quality product that delivers value for customers and ratable sales for fuel marketers.
For wholesalers and dealers, these practical and complementary services can contribute real, quantifiable value to their core product offering. It also allows them to provide flexibility by mixing and matching various service offerings to meet the needs of each individual customer, market by market.
Creating value alone, however, is not enough if the customer will not pay for it. To succeed in differentiating a company and its superior products, time must be invested in order to both understand the value of these enhanced programs and become accustomed to sharing this story with customers.
Branding is a part of this process, but it doesn’t work for everyone. Simply selling a “commodity” requires nothing more than being the lowest price available at any given time. One can win as quickly as one can lose by that choice when leading with price, and price alone, with no additional value provided. Service contracts, budget plans, early-pay discounts and a few free gallons of oil were common offerings that dealers felt would set them apart. Then, as predictable as death and taxes, the company next door offered the same. Time out. Now what? Does the price need to be lowered still?
Much has been written about fuel quality, renewable fuels, real-time pricing, supply, demand and the life expectancy of our beloved industry. However, very little has been penned on how to wrap additional services around an upgraded diesel fuel and heating oil to enable more market share to be captured while improving company bottom lines and customer satisfaction with enhanced products and services and differentiating from the competition.
A great place to begin that transition to increased market share is product branding. Some might argue that branding doesn’t work anymore. Tell that to Nike, Apple, Microsoft, Charmin, Kleenex, BMW, and countless other nationally and internationally acclaimed brands. No sound debate can be made against a company’s smart business decision to distinguish itself and its products from a congested market.
The role brands can and should play in accomplishing these goals is changing quickly as technology, media, political winds and other influences affect how customers perceive their needs and how best to satisfy them. This change will become more pronounced as time goes on.
When you began reading this article, perhaps you were looking to turn your carbon into proverbial diamonds for a profit or maybe you were hoping to determine whether you were a fuel dealer who simply buys and sells, or one that adds value.
Everyone wants to know where they fit. The purpose of short editorials like this is to rethink “normal.” We welcome the opportunity to share with you our story, which is one that started with an objective to deliver maximum value to our customers. ICM
