November 2019

The Case for Charting a New Course


September 16, 2019 might go down as a watershed day in Oilheat history, as a resolution passed unanimously at the New England Fuel Institute (NEFI) HEAT conference committing our industry to dramatically reducing our Green House Gas (GHG) impact. This could be pivotal in confronting an existential threat to the industry’s future.

The goal is to reduce GHG emissions by 15% in 2023. This could be accomplished by universal adoption of a 20% blend of biodiesel or renewable diesel in heating oil. By 2030, we would reduce GHG by 40%, using a 50% blend, and by 2050, the goal is to be at a Net Zero level. Obviously, accomplishing this would require big, important breakthroughs. However, it doesn’t feel like we have much of a choice, especially if we want to have much of a future.

Under assault
Many in our industry are only tangentially aware that in statehouse after statehouse, well-intentioned legislators are working to put you out of business. They are embracing accelerated electrification as the cornerstone of their effort to push back the growing threat of global warming. In the current politically charged atmosphere, there seems to be even less room for the rational exploration of options. If we’re not careful, the march to electrify will become the Bataan Death March for Oilheat.

Many legislators seem oblivious to the real costs and obstacles that stand in the way of achieving their objectives. They aren’t overly worried that for the foreseeable future, electricity will be produced by burning coal and other fossil fuels. They significantly underestimate the real costs of conversion. They disregard the reality that homeowners use heat pump incentive money as an easy way to add air conditioning, without actually eliminating their boiler or furnace. They haven’t learned the lessons from the inefficiencies of the efficiency initiatives initiated after 2008. Therefore, their estimates of how quickly they can reduce carbon emissions following this playbook are greatly overblown.

At the same time, by betting the farm on the electrical grid, which has proven to be vulnerable to outages even at current demand levels, and purposely undermining the rest of the energy supply infrastructure, they leave us subject to catastrophic disruptions.

It doesn’t matter
But guess what? As true as all that might be, it doesn’t matter. In the current climate, the people with the votes don’t buy it, at least not yet. Many see themselves as a new John Kennedy who famously said, We don’t know how to get to the moon; but damn it, we’ll set that goal; and figure it out as we go along. Some say that’s vision, others say the path to hell is paved with good intentions. In any event, your business is currently seen as having no place in the world they are trying to save.

It doesn’t matter if you agree or disagree that global warming is the central issue of our future. They do, and they have the votes to kick you off the island, whether with onerous carbon taxes, regulatory restrictions, bribes to incent customers to convert to heat pumps—you name it.

However, that’s where it gets interesting. I happen to be one of those who believe that global warming, whether man-made or not, is a real threat to our children’s future, and that we can’t fiddle around while the planet burns. My concern is that by pursuing electrification as a panacea, our state governments are doing just that. Without attention to how this is really going to play out, they can take us down a road that wastes time and money we don’t have. I also believe our industry can offer a better, faster, cheaper pathway to solve the problem.

Figuring out our strategy
This brings us back to the NEFI summit and bigger industry strategy. I think there are two key questions:
a) What should our strategy be to influence the policy pathway in a smarter direction?
b) How do we galvanize the resources and energy to push our way into the future energy mix despite the visceral, simplistic, anti-oil reaction of many of those currently shaping policy?

If we stand stridently against electrification, choosing only to point out the flies in its ointment, we are likely to lose all standing to be part of any solution. Years ago, I pushed back against industry-funded efforts to bash natural gas in order to deter conversions. It played well for us, but didn’t do anything to make heating oil a positive option to customers who were not part of the core believers. That opinion was later born out by research we conducted in six states with National Oilheat Research Alliance (NORA) funding.

Likewise, while our concerns about the electrification panacea are legitimate, the fact is that the horse is out of the barn. Legislative critical mass supporting it exists. It’s like standing in front of a car driving 50 miles an hour, holding a shield in front of you.

What’s more, many of your customers will convert on their own if they do not see your fuel as part of the solution. The research clearly shows this, especially among younger homeowners who will increasingly buy your current customers’ homes as they age. The single greatest drive for conversion is the perception the customer can save money; but it is activated by the perception that oil is dirty and bad for the environment, regardless of what the state legislatures say and do.

So, I stand firmly in the camp of those who argue that our message should be:

We support your aspirations. We want to reduce the overall carbon footprint, too. However, there are operational issues with the course you are pursuing. We want to help you achieve your goals faster, and at less cost, by being part of your solution.

That solution is to accelerate the percentage of bio-diesel we deliver to customers in a way that is much more aggressive than we did before. When you combine large percentages of bio with our existing ultra-low sulfur fuel, you reduce your carbon footprint better and faster and cheaper than any other option. And, not for nothing, it is a pathway that natural gas can’t offer.

This will not be easy, and I appreciate the large technological, operational and promotional hurdles it faces. But the alternative—simply hoping there will be a change in the political winds—feels like a losing strategy. I plan to be part of the industry’s solution, and hope you will be too. ICM

Rich Goldberg, President,Warm Thoughts Communications, Inc, is a 30-year advocate for our industry. You can reach him at [email protected], 201-330-9276 ext 222.

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