Putting Canada on Track

This year, bioenergy projects in Canada are on fast-forward. Despite the absence of a national plan for the development of renewable energy production from biomass, Canada’s bioenergy industry – surveying developments across the globe – has a different perspective on what the future holds.

Fighting a strong Canadian dollar, a declining US housing market, skyrocketing oil prices, and high fibre and energy costs, the biomass industry has been exploring and implementing new bioenergy projects, either to bolster a conventional forestry or agricultural operation, or to start up a new, energy-based one. Canadian companies are also world leaders in second generation biofuel production and a C$500 million (US$491 million) NextGen Biofuels Fund, launched last year, is in place to kick-start pilot plants for new technologies across the country.

Furthermore, while multi-million dollar funding for next generation biofuels captures headlines, the bulk of Canada’s bioenergy activity is happening at the small-to-medium scale in biomass-rich communities across the country. The municipalities, entrepreneurs, sawmills, harvesters, fuel producers, power companies, and pulp and paper mills behind these projects are fighting for survival in regions where stories of mill shutdowns are all too common. The raw material is there, too. Right now there are 16 million tonnes of excess tree bark sitting in ‘heritage piles’ in Canada – potentially enough energy to provide the needs of close to one million Canadians for a year. Another 11 million tonnes of harvest waste is burned or left to rot each year. The massive pine beetle infestation in British Columbia has killed 450 million cubic metres of pine, six years’ worth of harvest at pre-infestation levels. Forecasters say that by 2013 some 80% of the province’s mature pine could be affected.

We need to see this as a great opportunity to reduce emissions by turning the massive amounts of forest residue, much of which is sitting at roadsides, into bioenergy. Using this fibre for energy enables us to use less fossil fuel, resulting in an immediate net reduction in carbon dioxide emissions. This forest fibre doesn’t compete with food production, making it an attractive and sustainable renewable resource. Some innovative companies and municipalities have already integrated bioenergy into their processes, either as an energy resource, or as bioenergy producers – and they are thriving.

CHP, pellets and district heating spur interest

As with the rest of the heavily forested parts of the country, a lot of new cogeneration projects are springing up in wooded regions of Canada’s Eastern Maritime provinces. Nova Scotia’s Minas Basin Pulp and Power, for example, recently announced a new cogeneration plant requiring 165,000 tonnes of green biomass annually. The collapse of Nova Scotia’s lumber industry and the resulting fall in sawmill residues, has also driven the New Page, Neenah and Abitibi-Bowater pulp mills to take up to 150,000 tonnes of round wood for biomass fuel production. New Brunswick’s Irving Paper is increasing consumption of biomass from harvesting debris across all its mills. All this action means the Maritimes are demanding new harvesting and production equipment. At least four industrial, horizontal grinders and chippers have been purchased in the past ten months and at least five more are expected in the next year.

Biomass heat and power projects in Quebec and Ontario are also on the rise. As REW goes to press, a new 10 MW CHP project was expected to be announced for a pulp and paper mill in Northern Ontario, and Hydro Quebec was set to issue a highly anticipated call for 100 MW of power using forest biomass.

Another hotbed of activity is the growth of the wood pellet industry. Quebec already boasts six pellet plants and more are expected to come on-line in the next year. In the Maritimes, Enligna, which recently took over the Mactara pellet plant, has announced a plan to expand production, requiring an extra 100,000–200,000 tonnes of biomass per year. Nova Scotia has three plants with at least three more in the works and two proposals for new pellet plants from major forestry companies. New Brunswick has three pellet plants, with another three more under construction, and close to a dozen plants being proposed. Prince Edward Island is also about to join the ranks, with plans under way for its first pellet plant.

Paul Smallman, a woodlot owner from Prince Edward Island provides another example of a major driver behind this surge in activity. Recently returned from Sweden’s World Bioenergy 2008, the biggest bioenergy conference in the world, Smallman was part of a 42-strong delegation organized by the Canadian Bioenergy Association (CANBIO). He commented: ‘The wood and forestry sector is going broke by relying on conventional markets. I want to set up a small pellet plant, and use large wood-burning furnaces to make renewable heat and power and sell it here to local people.’

While Smallman is relying on local markets, many Canadian companies interested in developing pellet plants are relying initially on a guaranteed EU market as a driver. However, in future, sales are expected to be increasingly directed by domestic users. One initiative to stimulate the domestic market is GoPellets, a combined project between CANBIO and the Wood Pellet Association of Canada, due to be announced in early October. The initiative aims to develop the Canadian market by lobbying for incentives and working with government to bring down barriers.

Heating with wood pellets offers substantial cost-savings – replacing a conventional boiler with a pellet or wood chip boiler in a large, centrally-heated facility like a hospital or university, is a logical step. For example, La Sarre Hospital in the Abitibi region of Québec has been using a biomass boiler for over 50 years and it estimates cost savings of C$12 million (US$11.8 million) in energy costs, compared to conventional fuels during that time.

Even in situations requiring an infrastructure overhaul, there is plenty of opportunity to introduce biomass heating. District heating can be installed quickly via a central heat source connected to a mini-grid that encompasses a small local area, such as a hospital, some houses and an industrial application. Common in Scandinavia, district heating is a bigger job in Canada because it requires new infrastructure. However, if a community is re-paving its streets or laying new pipes for water, it’s a perfect opportunity to lay the piping for district heating. CANBIO is encouraging communities to consider district heating as part of infrastructure renewals. Piping infrastructure already exists in many places, such as Queen’s University in Kingston, which heats university buildings and Kingston General Hospital from a central source.

One way companies are getting projects on-line faster is by partnering with advanced technology companies, either in Canada or in Europe, where the bioenergy market and industry has been thriving for the past two decades. Europeans see only opportunity when they look at Canada’s rich biomass supply – and interest in buying Canadian biomass or partnering with Canadians in joint ventures, consultancy or technology-supply is high. Recently, VisionPower, a bioenergy project developer from Austria, partnered with an Ontario-based consultancy, Suthey Holler Associates, to create VisionPower Canada and has started marketing its solutions across Canada.

Jamie Bakos, chief executive of Titan Clean Energy Projects in Saskatchewan, sees teaming up with either Canadian or Scandinavian business partners as the only way to ensure bioenergy takes off. ‘We need to look at bioenergy as a worldwide industry. We’re up against a long-entrenched fossil fuel industry and chemical giants, and if we think of ourselves as independent competitors, we’ll all lose. We need to think of the biomass industry as one big market and work together to make impacts,’ he says.

Advances in fuels technology

Second generation biofuels are another area where researchers, entrepreneurs, investors and government are partnering to reap success. Cellulosic ethanol is one of the hottest areas for development, driven by the US government’s objective of using 36 billion gallons of renewable and alternative fuels by 2022, most of which is expected to come from cellulosic ethanol. Development in Canada is also being driven by provincial renewable fuel targets.

Iogen is one of the country’s ethanol giants, and cellulosic ethanol pioneers. Canadian research on lignocellulosic fractionation started in the 1970s, but was abandoned due to high commercialization costs. The company turned instead to enzymatic hydrolysis, bringing the cost of enzyme production down to one tenth of what it had been. Now, with rising conventional fuel prices, lignocellulosic biofuel is on the verge of becoming a viable option. Performed via separate hydrolysis and fermentation stages, the enzymatic hydrolosis process is a key innovation, allowing high productivity and good conversion of cellulose to glucose. Iogen claims to get more than 340 litres of cellulose ethanol per tonne of fibre. The Ottawa-based company operates a 40-tonne per day pre-commercial demonstration plant making cellulose ethanol fuel from wheat, oat, barley and straw residues. Iogen has partnered with Shell and Goldman Sachs to draw up plans for a commercial-scale cellulosic ethanol biorefinery in Saskatchewan. Prospects appear good after an announcement this March that Iogen’s funding proposal made it to the due diligence phase for lucrative government support under the NextGen Biofuels Fund, administered by Sustainable Technology Development Canada.

Another lignocellulosic plant, by Montreal-based Enerkem, is also making good progress. Enerkem uses gasification and catalytic synthesis to produce cellulosic ethanol from a variety of clean feedstocks such as sorted municipal solid waste, construction and demolition wood, treated wood, and forest residues. A spin-off of the University of Sherbrooke, Enerkem has been operating a pilot plant since 2003 – running more than 3000 hours since then – producing syngas, methanol and cellulosic ethanol. Construction on its 5,000,000 litre commercial demonstration plant began last October. The Quebec plant will use old, wooden powerline poles and other waste materials as feedstock. The next step is the installation of gasification and gas conditioning equipment before adding catalytic synthesis equipment, which converts syngas to cellulosic ethanol.

These operating projects are set to be joined by other cellulosic ethanol demonstration plants, which are coming thick and fast. Ontario-based Woodland Biofuels is currently building a 76 million litre/year cellulosic ethanol demonstration plant in the Maritimes. Woodland claims its patented Catalyzed Pressure Reduction (CPR) technology, a pyrolytic process involving gasification and cleaning and conditioning of syngas, can take virtually any type of wood or agricultural feedstock and produce a clean fuel. It expects to start operations in late 2009 and hopes to sell turnkey, mid-sized plants to foresters, loggers, large farms, and wood recyclers, on the back of its success. The company makes the bold claim that its technology ‘produces twice as much ethanol from the same amount of feedstock as any other conversion technology.’ President Greg Nutall announced the signing of a letter of intent late last year ‘for a multi-plant, multi-year agreement with one of biggest ethanol producers in the world, located in the US.’

Vancouver’s Lignol Energy Corp is also on the move, building biorefineries to produce lignocellulosic ethanol and biochemicals from forest residues. Lignol acquired, and has since modified, a solvent-based pre-treatment technology that was originally developed by a subsidiary of General Electric. The pre-treatment technology was previously commercialized in a major pulp mill by Repap in the Maritimes with an investment of over €63 million, but high building costs saw the technology shelved until Lignol picked it up. The process is similar to Iogen’s, but uses different enzymes. The company says its new €9.5 million demonstration plant, running on wood chips and sawdust, in Burnaby, B.C., will be operational this summer. The company also has €19 million from the US energy department to build an €56 million cellulosic ethanol plant in Colorado.

Bio-oil is also coming to the fore. Dynamotive Energy, also based in Vancouver, uses fast pyrolysis to produce energy from waste wood. Its 200-tonne/day demonstration plant began operating last autumn in Guelph, Ontario. Comprising eight modules, it will process 66,000 dry tonnes of biomass per year and produce the energy equivalent of 130,000 barrels of oil at full throttle. It’s fed by waste wood from Toronto’s MegaCity Recycling. Anton Kuipers, Dynamotive’s vice president for business development, says wood residues are cheap and readily available, but also claims that the technology can liquefy hundreds of feedstocks, from wood and straw to plastics and road tyres. This fourth generation plant builds on lessons learned from pilot plants. Bio-oil from its second largest plant in West Lorne, Ontario, demonstrated that the fuel works in Dynamotive’s main market: combustion. Bio-oil can replace some heating oils in industrial applications and has also been co-fired with fossil fuels in smelters, gas turbines, lime kilns and power plants. Dynamotive’s ongoing research is focused on finding a path to upgrade its bio-oil to transport fuels. For now, interest in the Guelph project is high and Dynamotive has signed a letter of co-operation with Mitsubishi international on research, equipment supply and investment. Other exciting projects include trials of agro-biomass crops with Eastern European company Rika Biofuels and deals in Argentina and Australia that may lead to technology licensing.

Ottawa’s Advanced Biorefinery is also in on the fast pyrolysis business. It is selling small-scale portable biorefineries, which can pyrolyse forestry and agricultural wastes, producing bio-oil, fertilizer and char. The portable pyrolysis machines are aimed at solving one of Canada’s biggest challenges: transporting bulky raw material over long distances proves costly and leaves a larger carbon footprint. The company claims customers can expect to make back their original investment – usually €95,000 for small on-site operations and up to €1.3 million for large transportable operations – in under five years through energy and fertilizer savings. Besides its portable machine, Advanced Biorefinery also produces a small on-site facility that is suited to farms or areas with a stable supply of biomass in a local area. The company has two other projects in the research phase: developing a system to convert poultry litter to liquid fuel; and developing a transportable facility capable of converting 50 tonnes of forestry waste into bio-oil each day.

How to catapult Canada’s bioenergy development

This year has been the most exciting yet in terms of bioenergy development in Canada. But for Canadian bioenergy to catch up with its EU counterparts, a number of key barriers need to be addressed. One of the most visible problems facing small and medium-scale biomass heat and power projects is the requirement that any steam installation have a steam engineer on-site 24-hours per day. The high staffing cost simply destroys the economics of most projects under 17 MW in Canada. In Europe, different guidelines exist for smaller power plants and this has helped small and medium-scale biomass heating to thrive. Other barriers that exist for small and medium-scale projects are high capital equipment costs, where a government subsidy of around 25% is sorely needed to make a strong business case for potential investors. And such an incentive would certainly help the government achieve GHG emission targets. CANBIO is creating an alternative proposal to the 24-hour a day requirement, and is working with government to propose better solutions. The Ontario and Quebec government’s announcement of an emission cap-and-trade system is a step in the right direction, but only a strong, nationwide carbon-trading system can have a real impact on bioenergy development. Nonetheless, while there is much work to be done to develop favourable market conditions in Canada, bioenergy can provide one of the sustainable solutions to combat climate change and there are plenty of opportunities for international investors, technologies and buyers.

Douglas Bradley is president of the Canadian Bioenergy Association (CANBIO) a national, industry-driven, non-profit organization supporting promotion and use of bioenergy.
e-mail: douglas.bradley@rogers.com