Seth Ginther is the biomass industry’s best example of the adage “no good deed goes unpunished.” After he thoroughly impressed a group of legal clients in the Southeast, they formed the U.S. Industrial Pellet Association, and named him executive director. That was four years ago, and today, Ginther is the voice of the fastest-growing U.S. biomass segment, charged with promoting the value proposition embodied in the production and use of industrial wood pellets.
When someone needs to speak with policymakers in European Parliament to help them understand the complex nuances of the North American forest products industry, Ginther goes. When large and small news outlets publish misleading articles or opinion pieces about the growing pellet export market and its impact on forests, Ginther responds. And when it becomes clear that making the case that repowering large coal assets with pellets is a viable approach to slowing climate change will be a mammoth task, Ginther digs in.
Those familiar with Ginther and his experience do not find this surprising. While attending the University of Richmond’s T.C. Williams School of Law, Ginther served as the editor-in-chief of the Richmond Journal of Law and Public Interest. Throughout a career peppered with experience serving as legal counsel to combined-heat-and-power, landfill gas, wood pellet and other renewable energy companies, Ginther has found himself hand-selected to take on a new challenge.
In 2003, Ginther took a leave of absence from his law practice to accept a position to represent all state boards that reported to the secretaries of both finance and commerce and trade. Soon after, he was asked to sit on Virginia Gov.-elect Terry McAuliffe’s Transition Council on Agriculture and Forestry Policy. Work has a way of finding its way to people who can get things done, and Ginther is no exception.
To his credit, Ginther seems to derive energy from both his schedule and the varied tasks he performs. He is quick to attribute this to the professionals he works with and for saying, “The most exciting aspect of my job is, without a doubt, the people that I get to work with on a regular basis. It starts with our members and extends to their customers, the regulators and politicians from diverse cultures that drive the policy behind this industry, those involved in the supply chain, and my counterparts at other trade associations we work with on a regular basis. Each one of these professionals is helping to blaze the trail that has enabled the industry to grow so quickly. I am constantly learning from them, and that is a real pleasure.”
As Ginther looks into the remainder of 2014, he expects he’ll have to maintain his regular presence in the European policy theater. “It will be a busy year for us,” he says. “European policy remains extremely important, and we will continue to be on the ground in the U.K., Brussels, the Netherlands and Denmark.”
Ginther’s steady presence in Europe is likely a reflection of his belief that despite the clarity of the benefits of using biomass as a coal replacement, those driving policy both here and abroad continue to hear from constituencies with different sentiments. Reflecting on the past year Ginther notes, “I think the biggest lesson learned from 2013 is that we cannot take for granted the fact that everybody understands what our industry does, and the positive impact that we are having. Accordingly, we need to constantly be out there educating policymakers and the general public on what we do.”
It would be hard to classify the near-term outlook for industrial pellet producers in North America as anything but bright. Export figures rise with each passing quarter, and pellet offtakers in the U.K. and mainland Europe haven’t even completed all of the planned retrofits and new construction that has created current demand. Still, Ginther knows that success often stokes the fires of contempt, and he and his organization’s ability to clearly articulate their value proposition is tantamount.
For now, Ginther continues to work and sharpen the industry’s message. Quoting another lawyer, he says, “Lincoln once said ‘give me six hours to chop down a tree, and I will use four sharpening the axe.’ Constant, measured preparation is the key to successful initiatives. If we are going to be active on an issue on behalf of the industry, we are going to make sure that we are prepared for any surprises, and correct course as needed in order to achieve our desired objective.”
Chris Wiberg had been working for a fuels lab for seven years when he attended a biomass conference in 2005, and something just clicked. “The U.S. domestic pellet industry was in growth mode, but struggled with the types of issues that plague an industry that does not have well defined standards,” he says. “As a technical guy, I made it my mission to provide technical expertise to help make that happen.”
But well before that watershed moment when his role within the industry crystallized, Wiberg was drawn to labs. “I was always very interested in the fancy machines that chemists get to use to quantify and qualify chemical and physical properties of things,” he says. “That interest has served me well, in that our lab now contains many of these types of instruments.”
Already a seasoned laboratory professional, Wiberg has fused his laboratory prowess and passion for the industry to drive development of standards and their uptake across the pellet industry. “This work eventually led to my involvement in helping to develop the current Pellet Fuel Institute standards, solid biofuel standards through ISO TC 238 and other industry standards.”
Wiberg’s contributions to standards development is widely known and appreciated throughout the industry, but he’s most intrigued by what working toward compliance with these standards can do for pellet producers. “I find the practical application of my technical knowledge as the most interesting part of what I do,” he says. “There is a lot that goes into running the various tests, but if you don’t know which tests best suit your purpose, if you don’t understand the data that is generated, or if you don’t know how to apply it to improve the quality of your process, then the cost of testing doesn’t bring much value. What I truly enjoy is applying our laboratory services to generate information that can then solve process problems, help design a new product, or just assure the continued performance of an existing process.”
As Wiberg and his colleagues developed their business, he was confident in the quality and value of the service offering they had developed. Still, he expresses surprise at the rapid growth within the sector and strong demand for Biomass Energy Lab’s services. “When we developed our business model, we were confident that it would well serve the needs of biomass fuel producers and users, and as such, there has been a large interest and need for our services and core competencies,” he shares. “I think our biggest surprise was the rate at which we had to grow to keep up with the influx of new work.”
Wiberg and Biomass Energy Lab have themselves well positioned to serve a North American pellet industry that’s likely to double, if all of the planned and under construction plants come on line as planned. While the capacity increases are eye-popping and unbelievable to some industry observers, Wiberg ceases to be amazed. “I have learned not to underestimate the potential this industry has,” he says. “It often takes time for biomass fuel production projects to put all of the pieces in place, but there are now many projects completing that process, giving assurance that many of the proposed projects we read about will make it to the finish line. Persistence has paid off in many cases, and I think we will continue to see that in the future.”
Wiberg is confident that an industry push toward quality certification will keep him busy. “There are many established fuel producers that will likely make this the year to qualify or certify their production to a quality management scheme such as PFI’s Standards program and the EN plus standard,” he adds. “We have seen significant growth in each of these programs in the past year, but expect their popularity will increase significantly in the next year or two.”
A few career iterations ago, Les Otten, co-founder of Maine Energy Systems, looked across a table and informed the president of Rossignol he was prepared to make a bold investment for the ski properties he owned and operated at the time. “He called up his plant in either Austria or Italy and told the manager that he wanted to make 10,000 pairs of shaped skis and the guy told him he was nuts,” Otten says, “and that it was just a fad.” Otten was vindicated in just short four years, as these new, parabolic skis had entirely replaced its straight ski predecessors.
For Otten, success in business has a broader definition. “I’ve always looked at business as not only having to be viable, but also being able to make a game-altering contribution to the industry I was working in,” he says.
Otten’s contributions to the ski industry didn’t start or stop with shaped skis. He began working in the industry when he was 21 years old, and just two years later, he was named ski operation manager at Sunday River ski resort in Newry, Maine. In 1980, he bought the resort, and after nine years of building a loyal customer base, he was recognized by Inc. Magazine as Entrepreneur of the Year in the turnaround category.
Otten continued to build his resort business, growing it into the multiproperty American Skiing Company, which, as would become Otten’s trademark approach, focused heavily on marketing and infrastructure development.
From 2002 to 2007, Otten served as vice chairman and minority partner of the Boston Red Sox, which won its first World Series since 1918 in 2004, while Otten was a part of the organization. There, he spearheaded an effort to reimagine and revitalize the team’s historic venue. “When I looked at the Boston Red Sox, it became very obvious to me that in order for them to be a great value and saleable franchise, they needed to keep Fenway Park,” he says. “Everybody wanted to tear it down and build a new one. I looked at Fenway Park as a cathedral similar to the Parthenon or some of the great Roman structures. In the lexicon of baseball, Fenway Park was an icon of a bygone era, and instead of tearing it down, I wanted to refurbish it.”
After winning two World Series rings with the club, Otten parted ways with the organization and began looking for his next challenge. “I wanted to go on to the next thing, and I didn’t know what it was going to be,” he explains. “I started to look around at different industries, at anything that needed a fresh look, so I started to look at energy.”
Otten makes no bones about opinions on the long-term viability of fossil-based fuels saying, “All the coal and oil that is on the planet was made in a 300- to 400-million-year period of time. And in the blink of an eye, in the timeline of the planet, we were essentially going to use all of it. It dawned on me seven or eight years ago that this was wholly illogical and that there must be an economy that can be built in response to this, one that made capitalistic and global sense for the use of biomass.”
At that point, the earliest sketches of Maine Energy Systems begin to emerge, which would focus on biomass thermal, a low technology risk and simple solution for moving the Northeast away from the entrenched heating oil solution that dominated the marketplace. “We looked at it and realized this is a segment of the [energy] industry that doesn’t need new invention, it needs marketing,” he says. “It needs awareness. It needs government support, but it doesn’t need research.”
Otten is nothing if not practical. Early in the development of Maine Energy Systems, he recognized that he and his team would have to devise a thermal biomass solution that didn’t require a significant increase in homeowner attention when compared to heating oil and propane. “If this is going to be successful in the U.S., there are going to be the hobbyists that are willing to work for their heat, but the majority of folks are not going to want to work for their heat ,they are just going to want to turn on the thermostat,” he says.
While Otten’s team worked to devise a solution that would be attractive to consumers, or at the very least, wouldn’t turn them away, he turned his attention back to the business and began working to build credibility with the lending and investment communities. “I remember speaking with some senior lenders at JP Morgan Chase discussing our industry and they said ‘we’d be happy to start lending your industry money, as soon as you can show us that you’ve got a thousand customers that have borrowed money, that have paid back the loans, that the fuel has been delivered, that the trucks exist, and that you are mainstream essentially.”
The challenges for biomass thermal continued to emerge, as mortgage companies and the federal banks that guaranteed those loans, Freddie Mac and Fannie Mae, expressed concern that homes with pellet boilers would struggle to deliver full marketplace value. Struggles like these are a significant departure from the early stage work that entrepreneurs likely favor, but arguably more vital to Maine Energy System’s long term success and Otten embraced it. “Now we can show lenders that these homes and their mortgages can be sold even when their primary heating systems are not oil and gas,” Otten says.
Otten and his team moved Maine Energy Systems through the proof-of-concept stage and are now working to wrestle market share from an entrenched incumbent. On this challenge, Otten has some incredulity to share. “The propane industry brags about its 92 percent efficiency, as compared to the 87 percent efficiency of a pellet boiler,” he says. “Those five points don’t amount to a hill of beans if you are paying 140 percent more for the fuel. How does that compute? The propane industry gets to tell American people what they want, ‘We’re more efficient,’ but meanwhile the fuel is 140 percent more expensive. Who is being fairly served? It’s advertising. They have a louder voice. They aren’t doing anything illegal, but they sure are misleading people,” he says.
Therefore, Otten once again is turning to advertising to clearly articulate his message of overall reduced operational costs for pellet boilers with a regional television effort. “We are taking the argument to the consumer, and we’re just nailing it. Right now there is a $5,000 rebate and we’re using the commercial to inform people about that, but we’re also trying to say that wood pellets that are locally grown, deliver as easy as oil, and all you do is turn on thermostat and its 50 percent of the cost of oil and 40 percent of the cost of propane.”
With the varied sequence of foreseen and unforeseen obstacles that Otten has grown to expect, he is quick to draw attention to the quality and longevity of his team. “I’ve had the same administrative assistant for 30 years, and my chief financial officer has been with me for 30 years. We have a really strong team, and there are about 20 of us that are concentrated on this. These guys allow me to stay at 20,000 feet so that I can identify the barriers to innovation. It is our team that allows us to identify the barriers and then we can get a little bit ahead of them.”
With the pieces in place, Otten plans on continuing the push to unseat the incumbent in northeastern home heating. Or, at the very least, rattle its cage. The stakes are high. In the Northeast, 11 million homes are heated by No. 2 heating oil, and a price fluctuation of just $1 per gallon costs residents $11 billion in increased expenses. The market opportunity is not lost on Otten, but he is more apt to focus on the economic activity generated by moving toward a heating solution that relies on local fuel sources. “When money leaves the economy that costs jobs— a lot of jobs,” Otten says. “We’ve had a number of discussions about the jobs that leave with every dollar of increase in the state of Maine, and it’s around 80,000 jobs that are either lost or not created as a result of this.”
Concluding, Otten uses a Bible story to better frame up the challenge he believes he and his team are up against. “What our industry needs to do is look in our industry’s own back yard. We need to figure out how to get more appliances in customers’ homes, and get those people to communicate with their friends and representatives in the House and the Senate at state and federal level so that our voice is heard. We are David to the heating oil’s Goliath. Our industry needs to figure out what David’s trick was, and catapult itself into the consciousness of the Northeastern part of the U.S.”
Author: Tim Portz
Executive Editor, Biomass Magazine