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Transforming Wood Heat in America

Executive Summary

As traditional fossil fuel prices continue to rise and concerns about environmental impacts and dependency on foreign oil deepen, governments are increasingly turning to renewable energy and energy efficiency measures. However, many states and local governments have overlooked a technology that not only addresses these concerns but is also affordable to almost every income level: modern wood heat technology.

This toolkit is designed for policy makers to navigate the issues surrounding residential wood heat incentive programs and to review the incentive options. Wood heat incentive programs can be designed with a wide variety of goals including: renewable energy production, energy efficiency, air quality improvements and low-income energy assistance. Modern wood heat often helps achieve all four of these policy goals. This toolkit will advise on which program types and appliances best meet these diverse goals.

The Alliance for Green Heat interviewed over 150 stakeholders for this project including air quality experts, foresters, incentive program officers, industry leaders, manufacturers, EPA regulators and many others. In addition, a Task Force on Wood Heat Incentives representing these stakeholder groups provided extensive input and feedback.

Scale & Capacity of Wood Heat

Wood is used by 2.8 million American homes as a primary heat source and an additional 8.8 million homes as a secondary source. It also provides 80% of all residential renewable energy while solar produces 15%, and geothermal 5% (EIA). Since 2000, the use of wood for heat has risen in 37 states. Based on a 3 year average, approximately 250,000 new wood and pellet stoves are installed each year in America; though there are millions of second hand and non-EPA stoves currently installed. A wood or pellet stove, purchased and installed for $2,000 to $4,000, can replace enough fossil fuels to displace 2-4 tons of carbon a year, the same as a typical residential 3-4 kw solar PV system which can cost 10 times as much.

Emissions Issues

Emissions from wood stoves have been their greatest drawback and older stoves still pose challenges for many airsheds. Of the approximately 12 million stoves in operation today, 60 – 75% of them are not EPA certified. The most problematic class of appliances is the unregulated outdoor wood boilers that are not required to meet EPA or European standards. These appliances can emit excessive smoke and can pose a significant health threat to homeowners and neighbors. Because of the smoke issues, wood boilers and non-EPA stoves are frequently the target of wood stove changeout campaigns. The stoves that are considered for broader renewable energy or energy efficiency incentives are EPA certified or qualified or those that meet European emission standards. New EPA certified wood stoves, particularly those that produce under 3 or 4 grams of particulate matter per hour are 7-15 times cleaner than older models, 40%-50% more efficient and typically use 30-40% less wood. Pellet stoves, particularly those that produce under 1 or 2 grams of particulates per hour, are clean enough to be aggressively deployed even in densely populated urban and suburban areas as they commonly are in Europe.

Sustainability of Fuel

A commonly expressed concern about wood heat is the impact on the forests, especially if growth of wood appliances is expected. However, wood harvesting for residential use is unique. First, about two thirds of homeowners harvest or gather their own firewood, often from down or dead wood, resulting in a very small ecological impact. Firewood harvesting also generally has a light impact due to its scale and decentralized nature. Second, both pellet and cordwood supply often comes from waste wood sources: A large percentage of purchased cord wood comes from tree trimming services in urban and suburban areas and pellets for domestic heating have often been created from sawdust residue, unlike the oft exported utility grade pellets. Additionally cordwood harvesting in the US in the last several decades has not been linked by any study or report as being a significant threat to sustainability of forests. The height of cordwood harvesting was in 1985 when over 50 million cords were harvested: today’s harvest is less than half that number.

Importance of Wood Heat in Rural Low-income Communities

Wood is the renewable fuel of choice for rural Americans, particularly for low and middle-income families. Purchasing firewood in rural areas is likely to keep those energy dollars in the immediate community and provide local jobs. Wood heat can act as an energy lifeline for financially stressed households since it can be harvested for free. Low-income homes that heat with wood often require less government heating assistance or can provide for themselves when government assistance is reduced or runs out. Moreover, wood heat mitigates the "heat or eat" dilemma for hundreds of thousands of poor, rural families whose budget constraints might require them to choose between fuel and food if they have to purchase expensive fossil fuels.


Federal - The only significant federal incentive was a tax credit for energy efficiency equipment in 2009 and 2010 that provided 30% of total cost up to $1,500 for a primary residence. In 2011 the incentive was lowered to 10% capped at $300. Unlike these small energy efficiency credits, the renewable energy provisions that apply to solar, wind and geothermal provide for 30% with no cap, and the credit is not limited to a primary residence. Since modern wood heat is a cost effective way to move the country towards less dependence on fossil fuel and is affordable to low and middle-income families, it makes little sense for it to be left out of federal renewable energy tax policy.

State - Some state renewable energy programs are beginning to include biomass appliances. Three of the most prominent state-wide programs are the Oregon and Montana tax credit for stoves and the New Hampshire rebate for pellet boilers. Alabama provides a tax deduction to switch from electric or gas heat. Five states have low interest loan programs that include wood burning appliances. Several states have long-standing incentive programs to change out older stoves, and replace them with new EPA certified ones including Idaho and parts of California and Washington State. Both Vermont and Michigan had statewide rebates for changeouts that have expired. While these programs are primarily designed for air quality goals, they also are a very cost-effective ways to more efficiently encourage renewable energy production and reduce fossil fuel use.


The cleanest and most efficient modern wood heat appliances can reduce residential fossil fuel usage much more cheaply than solar or geothermal systems. Based on extensive interviews with incentive program managers and policy makers, there is no consistent reason why modern wood systems have not been included in renewable energy programs. Many interviewees were not aware why the legislature did not include wood heat; some responded that wood was not eligible because of emission concerns but were not familiar with emission levels allowed by EPA or what the cleanest systems today are capable of. Most interviewees were not familiar with the extent of incentives provided to wood heat in Europe.

Key Recommendations

Renewable Energy Incentives: Federal and state renewable energy programs should work to include the cleanest, most efficient wood/pellet stoves and boilers. Compared to other renewable energies, wood heat requires much smaller incentives and can help many more families, particularly lower income families, to quickly reduce fossil fuel heat. Renewable energy/ energy efficiency programs should include pellet appliances in both urban and suburban programs, but may want to restrict incentives for wood appliances to rural areas or areas with no wood smoke particulate air quality issues. To date, renewable energy incentives have mainly gone to very wealthy families.
New Source Performance Standards for Wood Burning Appliances: The EPA is currently undertaking New Source Performance Standards (NSPS) for wood heating appliances. Stricter emission and efficiency standards are needed for all major wood burning appliances. Mandatory emission limits are now being developed for pellet appliances, indoor and outdoor wood boilers and other appliance classes which is an important step for incentive programs. Additionally, all new installations, including installation of second hand stoves, should be required to be EPA certified, as they are in Washington and Oregon.

Research & Development: The Department of Energy (DOE) should be urged to support research and development of next generation thermal biomass systems. The DOE provides extensive support and funding for less efficient uses of biomass: biofuels and biomass for electricity while there is tremendous untapped potential in developing clean and efficient biomass heating systems at the residential and institutional level. Europe is outpacing the U.S. in this area, particularly in the development of automated pellet boilers that come with thermal storage and can be inter-connected with other renewable energy systems.

Changeout Old Appliances: Programs to changeout existing outdated wood appliances with modern efficient equipment are crucial to efforts to modernize America’s aging fleet of wood heating stoves and boilers that cause air quality issues. Changeouts help low-income families to afford cleaner, more efficient stoves that would otherwise be out of financial reach. The EPA should focus more funds toward this, and local jurisdictions should ensure that heavily polluting equipment is not re-installed in an area that has conducted a changeout program- as is too often the case. Changeouts should first focus on lower income families that use their stove or boiler as a primary or substantial secondary heat source. Additionally, changeout programs should invest in education and outreach, as clean burning education is vital to ensuring the new stoves are utilized as cleanly as possible.

Energy Star: An Energy Star program for wood and pellet stoves would steer consumers toward the cleanest and most efficient appliances. Higher efficiency wood and pellet equipment are more effective at quickly and cleanly reducing fossil fuel heat and consumers would benefit from a recognizable and trusted way to make purchasing decisions.
Low-Income Heating Assistance: State energy assistance directors should consider providing full subsidies to qualified families to replace an existing uncertified stove with a new efficient wood burning device if the family uses wood as a heat source. The State of Montana has shown this to be a cost effective measure for LIHEAP programs. Additionally, benefits should not be primarily based on per unit price of fuel, which favors the highest priced fossil fuels. Under this system, families are more likely to choose a benefit for fossil fuels, instead of a locally produced renewable fuel like wood. This disincentive towards wood use keeps energy dollars flowing out of the state, and often out of the country. 

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