White House Calls for Boosting Combined Heat and Power: Biomass Can Help

On August 30, the White House issued an Executive Order to "encourage efforts to achieve a national goal of deploying 40 gigawatts of new, cost effective industrial CHP in the United States by the end of 2020." The Department of Energy released a report on Combined heat and power (CHP) at the same time. While low-priced fossil natural gas is the leading fuel of choice now for new CHP systems in most energy markets, locally-produced, renewable biomass can be a better choice in many parts of the country.

Combined heat and power systems offer a tremendous opportunity to improve the energy efficiency of American industry, reducing costs, strengthening competitiveness, and reducing emissions. By combining the production of heat and power, overall efficiencies of 80 percent or more can be achieved. However, the technology is relatively underutilized in the United States, representing only about eight percent of total U.S. power production, compared to 30 percent or more in countries such as Denmark, Finland, and the Netherlands.

The Executive Order " directs certain executive departments and agencies to convene national and regional stakeholders to identify, develop, and encourage the adoption of investment models and State best practice policies for industrial energy efficiency and CHP; provide technical assistance to States and manufacturers to encourage investment in industrial energy efficiency and CHP; provide public information on the benefits of investment in industrial energy efficiency and CHP; and use existing Federal authorities, programs, and policies to support investment in industrial energy efficiency and CHP. "

The Department of Energy reports that achieving this goal by 2020 would:

• Increase total CHP capacity in the U.S. by 50 percent in less than a decade
• Save energy users $10 billion a year compared to current energy use
• Save one quadrillion Btus (Quad) of energy — the equivalent of 1 percent of all energy use in the U.S.
• Reduce emissions by 150 million metric tons of CO2 annually — equivalent to the emissions from over 25 million cars
• Result in $40-$80 billion in new capital investment in manufacturing and other U.S. facilities over the next decade

The Executive Order calls for improving interagency collaboration to advance this goal. The Department of Energy (DOE), the Department of Agriculture (USDA), and the Environmental Protection Agency (EPA) all have active programs in this area.

The USDA Repowering Assistance Program , authorized under the 2008 Farm Bill, provides financial assistance to ethanol plants that use fossil fuels for heat and power to convert to using renewable biomass. The advantage of using biomass CHP over fossil fuel CHP is that in addition to achieving high efficiencies, the fuel is also renewable – a critical added benefit for helping to prevent extreme climate change. In April, the USDA announced a grant of $5 million to a company in Kansas to build an anaerobic digester that will provide heat and power to a nearby ethanol plant. The renewable biomass will be provided by waste from a nearby cattle feedlot. The system will displace about 90 percent of the fossil fuel used by the ethanol plant.

The EPA administers the Combined Heat and Power Partnership , " a voluntary program seeking to reduce the environmental impact of power generation by promoting the use of CHP. The Partnership works closely with energy users, the CHP industry, state and local governments, and other clean energy stakeholders to facilitate the development of new projects and to promote their environmental and economic benefits ." The EPA also sponsors the annual Energy Star CHP awards, many of which have been awarded to biomass CHP systems. Check out the list of awardees here .

Two bills are currently pending in Congress which could help advance CHP in the United States. Senators Bingaman (D-NM), Feinstein (D-CA), Snowe (R-ME), Merkley (D-OR), and Shaheen (D-NH) have introduced the Expanding Industrial Energy and Water Efficiency Incentives Act , S. 3352, which would expand the existing tax credit for CHP investment to larger systems and create a new investment tax credit for biomass thermal systems – the higher the efficiency, the higher the tax credit. And, Senator Bingaman’s Clean Energy Standard Act of 2012 , S. 2146, would also promote the development of CHP systems.

For additional background information on CHP and biomass CHP and for links to recent biomass CHP projects, see these previous EESI SBFF posts here and here .