Heat produced from woody biomass accounts for a significant portion of renewable energy in the United States. Economic and federal policy factors driving institutional adoption of woody biomass heating systems have been identified and examined in previous studies, as have the effects of state policies in support of biomass heating. However, plans for a number of mid- to large-scale biomass facilities have been abandoned after being proposed in communities with many of the factors and policies considered favorable to the adoption of such systems. In many of these cases, opponents cited potential negative impacts on local air quality, despite being generally in favor of renewable energy. This study employed a zero inflated negative binomial (ZINB) statistical model to determine if state policies, air quality, and local attitudes toward renewable energy have a significant effect on the adoption and retention of distributed-scale biomass combustion systems used for institutional heating. State policy appears to have a negligible effect, while the influences of historic and current air pollution and local emissions appear insignificant. However, local attitudes in favor of renewable energy are associated with the adoption and retention of distributed-scale woody biomass heating systems. This is an indication of the importance of local support in determining the fate of future biomass energy projects.