Canada Report on Bioenergy 2010

53 Pages·2010·1.6 MB·English

by  Douglas Bradley

Canada Report on Bioenergy 2010
Sept15,2010
Sponsors:
CanadianBioenergyAssociation
NaturalResourcesCanada-CanadianWoodFibreCentre
WoodPelletAssociationofCanada
DouglasBradley
President,ClimateChangeSolutions
PresidentandExecutiveDirector,CanadianBioenergyAssociation
NTL-IEABioenergyTask40-Biotrade
(withhelpfromKendalBradburn)
402 Third Avenue ∙Ottawa, Ontario ∙Canada K1S 2K7
phone ∙ 613.321.2303 email ∙[email protected]
web site ∙ www.climatechangesolutions.net
TableofContents
1. GeneralIntroduction
2. Policy
2.1. ClimateChange
2.2. RenewableFuels
2.3. RenewableHeatandPower
3. BiomassResources
3.1. WoodyBiomass
3.1.1. AnnualResidueProduction
3.1.2. HogFuelPiles
3.1.3. ForestHarvestWasteandUrbanWoodResidue
3.1.4. NewSourcesofWoodyBiomass
3.2. AgriculturalResidues
3.3. MunicipalSolidWaste
4. UsersofBiomass
4.1. HeatandPower
4.2. BiofuelsProduction
4.2.1. Ethanol
4.2.2. Biodiesel
4.3. PyrolysisOil
4.4. WoodPellets
4.5. TrendsinBiomassProductionandConsumption
4.6. MSW
5. BiomassPrices
6. ImportsandExports
6.1. EthanolandBiodiesel
6.2. PyrolysisOil
6.3. WoodPellets
7. BarriersandOpportunitiestoTrade
2
1. General Introduction
Canadaisacountryofover34millionpeople,primarilyEnglishspeaking,butwith
Frenchminoritylargeenoughtowarrantbeinganofficiallybilingualnation.Atover9
millionsq.km.,itisthesecondlargestcountryintheworldafterRussia.Itstretches
fromtheUSinthesouthtoabovetheArcticCircle,andfromthePacificOceantothe
AtlanticOcean.Canadaisblessedwithconsiderablenaturalresourcesincludingoiland
gas,coal,hydro,minerals,andforests.
CanadaresemblestheUSinitsmarket-orientedeconomicsystem,andaffluentliving
standards.Growthofthemanufacturing,mining,andservicesectorshastransformed
thenationfromalargelyruraleconomyintoanindustrial,urbaneconomy.Canada’s
GDPin2009was14thintheworldat~$1.29trillion(€1trillion).
Figure1.1illustratesthatCanadaisanationrichinfossilfuelresources.In2007,39%of
Canada’senergywasfromoil,36%fromnaturalgasand8%fromcoal.7.7%wasfrom
hydropower,and2.8%wasfromrenewablebiomassandwaste1.Biomassenergyfell
fromalmost5%in2006duetopulpmillcogenshutdownsandashortageofmillresidue
fromsawmills.Projectionsforthenext10-20yearsareforabiomassshareof6-9%2.
Figure1.1CanadianEnergyProductionbySource2007(IEA)
Canadahasalarge,well-developedforestsectorandhashistoricallybeenoneofthe
world’slargestexportersofwoodproducts.402millionha,41%ofCanada’slandarea,is
forestedofwhich27.6millionha,or6.9%,arenationalparks.77%offorestsareunder
provincialjurisdiction,16%arefederal,and7%areprivatelyowned.In2008,137million
m3ofindustrialroundwoodwasharvestedon678,700ha,or0.17%oftotalforestland3.
Harvestisonly61%of2005harvestduetofallingdemandforwoodproductsintheUS.
Nonetheless,Canadahasvastbiomasspotential.
1OECD/IEA2009
2PeterHall,NaturalResourcesCanada,CanadianForestService
3StateofCanada’sForests2009
3
Majorinitiativesareunderwaytoproducepowerfromrenewablesources.Incentives
resultedinamajorincreaseinwindpowercapacity2006-10,reaching3,472MWinJune
20104.Butgovernmentsarerealizingthatwindcapacitydoesnotmeanpower
production.Windsuppliespowerat30%efficiency,onlywhenwindblows.Biomasshas
anadvantageinproducingbothrenewableheatandpower,andondemand.Fig1.2
illustratesrenewableenergyproduction(notincludinglargehydro)in2008;53%from
biomass,31%fromsmallhydro,only11%fromwind,and4%frombiogas.
Fig1.2NewRenewableHeatandPowerProduction2008(TWh)
2. Policy
2.1. ClimateChangePolicy
In2008Canadiansemitted734.4milliontonnes(MT)GHGs,24%higherthan1990but
continuingadownwardtrendbegunin2004,showninFig2.15.Emissionsspiked32MT
in2007;8.3MTduetoincreasedpowergenerationfromcoalnecessitatedbynuclear
outages,and14.7MTfromoil&gasproductionandrefiningasaresultofincreased
demandbytheUS,ourmajortradingpartner.Adeclineinemissionsin2008ispartly
duetotheeconomicdownturn,butalsoincreasedhydropowerasaresultofhigher
waterlevels.GHGsareprojectedtodeclinein2009-10duetofederalGHGpolicies.
Figure2.1-CanadaGHGEmissionPerformance1990-2008
4CanWea
5EnvironmentCanada2007-http://www.ec.gc.ca/pdb/ghg/inventory_report/2005_report/som-
sum_eng.cfm#s1
4
InthepastCanadawasrankedbelowotherindustrializedcountriesonclimatechange
progress. However,ourpopulationgrewmorequicklythanothercountries,23%in
1990-2009,versus11%forFranceand10%fortheNetherlands,forexample. Figure2.2
illustratesthatGHGemissionsperpersonin2008werelessthan1.9%higherthan1990.
Figure2.2-GHGEmissionperPerson
TheCanadianGovernmentiscommittedtoreducinggreenhousegases.Since2006the
governmenthasdeployedarangeofinstrumentstocombatclimatechange;investingin
renewableenergy,incentivestodevelopgreentechnologies,andregulationstoreduce
emissions.In2010CanadainscribedintheCopenhagenAccordits2020targetof17%
GHGemissionreductionsfrom2005.CanadawillworkcloselywiththeUStoalign
policiestopreservecompetitivenessofCanadianfirms.ACleanEnergyDialoguewith
theUSwillfocusoncleanenergyresearchanddevelopment,deployingcleanenergy
technology,andbuildingamoreefficientgridbasedonrenewablegeneration.This
approachbetterreflectsCanada'stradeandpopulationsituationthantheKyotoAccord.
SeveralprogramshavebeenongoingsinceApril2007,andnewprogramsandpolicies
werefundedasofMay1,20106.Examplesinclude;
-EnergyEfficiency:AmendmentstotheEnergyEfficiencyActallowforenergyefficiency
standardsforproductsthataffectenergyconsumption,suchaswindows,doorsand
thermostats.ENERGYSTARlabelingleadsconsumerstothemostefficientequipment.
-ecoEnergyforTechnologyInitiative:$239millioninvested2007-12inresearch,
developmentanddemonstrationofcleanenergytechnologies,nowfullysubscribed.
-ecoEnergyforBuildingsandHouses:$60millionin2007-10toencourageconstruction
ofenergy-efficientbuildingsandhouses,resultingin4000peopletrainedinenergy
managementand400commercialbuildingsreceivingenergylabels.
-ecoENERGYRetrofitProgram:$805over5yearstoprovideenergyefficiency
improvementsinhomesandmedium-sizedorganizations,includingpropertygrantsof
upto$5000forenergyefficiencyimprovements.
6AClimateChangePlanforthePurposesoftheKyotoProtocol-EnvironmentCanada,May2010
5
Canadianprovincesarealsocommitted. InFeb2008,BCannouncedNorthAmerica’s
firstcarbontaxonallfossilfuels,startingat$10/tCO e(6.7€),or2.41¢/l(1.6€)atthe
2
pump,andincreasingat$5(3.3€)peryearforfouryears.Thetaxhit$20/tCO ein2010.
2
Whileinitiallywelcomedbyhouseholdsbecauseproceedswereusedasalow-income
credit,themagnitudeofthetaxin2010combinedwithanewHST(HarmonizedServices
Tax)madetaxeshitlowincomesharderthanhighincomes.BCalsosetatargetof33%
emissionreductionsfrom2007to2020. InOctof2007,Quebecinstitutedacarbontax
onenergycompaniesof0.8¢/lgasolineand0.9¢/ldiesel.In2009Quebeccommittedto
a20%reductioninGHGs1990to2020.QuebecadoptedthesamestandardasCalifornia
forGHGemissionsfromtransportationvehicles,settargetsforemissionsbyaluminum
companies,implementedanumberenergyefficiencyprogramsandhaseven
implementedinnovativeincentivestoconvertheavyandlightoiluseinbuildingheatto
biomass.QuebecjoinedBC,Ontario,Manitobaand7USStatesintheWesternClimate
Initiative,thatwillimplementacap-and-tradesystemtoreduceGHGs.Alberta,a
climatechangeleadersince1992,implementedacarbonemissiontradingsystemin
June2007thatrequiredcompanieswithlargeGHGemissionstoreduceemissionsby
12%fromJuly1toDec31of2007. Firmscouldachievetargetsbytradingverified
emissionreductions,buyingoffsets,orinvestinginatechnologyfund. Fewtradestook
place,andmosttargetswereachievedbypumpingmoneyintothetechnologyfundthat
hadnopositiveGHGimpact.Albertanowisfocusingonenergyefficiencyandcarbon
capturethatenhancesoilrecoverywhilestoringCO inundergroundaquifers.
2
2.2. RenewableFuelsPolicy
Policyincentivestopromotebiofueluse,suchasafederalexcisetaxexemptioninthe
1990’s,hadlittleimpactindevelopingabiofuelsindustry.In2006thegovernment
announcedanewbiofuelstrategytoincreaseethanolproduction,amandatelegally
requiringannualrenewablecontentof5%ethanolbyvolumeinallgasolineforground
transportationby2010,and2%indieselforgroundtransportationandheatingby2012.
Includingdieselintherenewablefuelstandards(RFS)isinresponsetoalobbybyoil
seedproducers. Canadaistheworld's3rd largestproducerofcanolaafterChinaand
theEU,at12.6MTin2008-09andCanadaisthelargestnetexporterofcanolaoil.
Addingnewdemandforcanolatoproduceofbio-dieselwillenhancefarmincomes.
InMarchof2007thefederalexcisetaxincentivewasdroppedandreplacedwith
producerincentives. ThisisshowninTable2.1,whereamaximum10¢/litre(6.8€ /l)
c
wasinitiallypaidforethanolingasolineand20¢/litre(13.5€ /l)forbiodiesel.
c
Table2.1
MaximumIncentiveRatesforRenewableFuels(currencyper/l)April1-March31
2008 2009 2010 2011 2012 2013 2014 2015 2016
InGasoline($Cdn) 0.10 0.10 0.10 0.08 0.07 0.06 0.05 0.04 0.04
InGasoline(€) 0.067 0.067 0.06 0.054 0.047 0.040 0.034 0.027 0.027
InDiesel($Cdn) 0.20 0.20 0.20 0.16 0.14 0.12 0.10 0.08 0.06
InDiesel(€) 0.13 0.13 0.13 0.11 0.09 0.08 0.07 0.05 0.04
6
TheseincentiveswereestablishedtoencouragebiofuelproductioninCanada,rather
thanimportingbiofuels.$1.5Cdnbillion(1€billion)infundingwasbudgetedtoestablish
avolumelimitof2billionlitresofrenewables(ethanol)ingasolineand500millionlitres
ofbiodiesel. Theincentiveiscalculatedtoensurea20%pre-taxreturnto
manufacturers,evenbeforeconsideringanyprovincialincentives.ByApril2010,21
contributionagreementsweresigned;$765MtoEthanoland$201MtoBiodiesel.
Federalpoliciesarebeingputinplacetogobeyondincreasingbiofuelproductionto
establishingasustainablebio-basedeconomy. Supportprogramsinclude:a$145
million(98€million)AgriculturalBio-productsInnovationProgram(ABIP)tomobilize
researchnetworkstodevelopeffectivetechnologiesforconversionofagricultural
biomass;anda$134million(90€million)Agri-OpportunitiesProgramover5yearsto
acceleratecommercializationofagriculturalproducts. SDTC(SustainableDevelopment
TechnologyCanada)in2007announceda$500million(336€million)NextGenBiofuels
Fundtopayupto40%ofprojectcoststoestablishfirst-of-a-kindlargedemonstration-
scalefacilitiesproducingnext-generationbiofuelsfrommanyfeedstockssuchaswheat
straw,cornstover,woodresidueandswitchgrass.TheNextGenFundisadeparture
fromthenormwheregovernmenttraditionallysupportedresearchonly,leavingan
investmentgapatthecommercialdemonstrationstage,showninFig2.3.ByMay2010,
theNextGenFundhadnotyetbeenfullysubscribed,partlybecauseitdoesnotfund
2ndofakindplants,adefiniteroadblocktoprogress.
Fig2.3GovernmentFundingofTechnology7
Manyprovinceshavemandatedrenewablefuelcontentinfuels,asshowninTable2.2,
andsomehaveannouncedinfrastructuregrants. Whilesomeprovincesnowhave
renewabletargets,eachisimplementingitsowncomplex,unharmonizedtax
exemptions. Inconsistenciesinthresholdlevels,timeframesandfeedstockshave
hinderedintra-provincialbiofueltrade. Forexample,ethanolproducedinAlbertais
exemptedfromAlberta’sgastax,butnotethanolproducedinneighbouringBCor
Saskatchewan.AlthoughQuebecannounceditsintentiontomandatea5%biofuel
7SDTCwebsite
7
content,leadingtotheconstructionofa200millionlitrecornethanolplantat
Verennes,inNovember2007Quebecannouncedthatnoothercornethanolplants
wouldbebuiltinQuebec,owingtofindingsaboutenvironmentalimpactsofintensive
corncultivationandmarketpriceimpactsofcorntoethanolseenintheUS. However,
theprovinceanticipatesbuildingnextgenerationethanolplantsfromcellulosicethanol
usingtechnologyfromQuebec-basedEnerkem.
Table2.2-ProvincialRenewableFuelIncentives(1¢=.68€ )
c
Mandate Incentive
BC 5%ethanol,5%biodiesel-Jan2010 14.5¢/lforethanol
0.09¢/lforbiodiesel,taxexemption,BCfuelonly
Alberta 5%ethanol.2%biodiesel-Apr,2011 9¢/ltaxexemption,producerincentive,Albfuelonly
Saskatchewan 7.5%ethanolinGas 10¢/lforethanol
20¢/lforbiodiesel,taxexemption.Saskfuelonly
Manitoba 8.5%, of Gas* 20¢/l producerincentive2008-09,Manonly
10%inethanol 15¢/l producercredit2010-12,Manonly
2%inBiodiesel-Nov1,2009 10¢/l 2013-15,Manonly
Ontario 5%ethanolingas2007 20¢/l producerincentive
10%ethanolingas2010
Quebec 5%ethanolingas-2012 producerincentive
NovaScotia 15¢/lforbiodieselproducedinN.S.
2.3. RenewableBiomassHeatandPowerPolicy
Whilegovernmentpoliciesandincentiveshavebeenverysupportiveofbiofuels,
supportedbyastrongindustrylobby,supportforbiomassheatandpowerhasbeen
leanandlesseffectivebycomparison. Federallyprogramstypicallyfocusonbasic
research,appliedR&D,demonstrationandpre-commercialization. Forexample,the
$550million(407€million)SDTechFund™supportslate-stagedevelopmentandpre-
commercialdemonstrationofproductsandprocessesthatcontributetocleanair,clean
waterandcleanland,thataddressclimatechangeandimprovetheproductivityandthe
globalcompetitivenessoftheCanadianindustry. However,thereislittlefederal
supportforanythingafterthepre-commercializationstage.
Agenerous,successfulecoENERGYRenewablePowerprogramprovided$1.48billionto
increaserenewablepowerthrougha1¢/kWh(.74€c/kWh)incentive.ByMarch2010,99
contributionagreementsweresignedtotaling$1.4billion.ByApril201052projects
wereinoperationwithcapacity2500MW.However,lessrenewableelectricitywas
actuallyproducedthanexpectedduetoalargemajorityofprojectsbeingwindpower.
TheprogramendsMarch2011.AnecoENERGYRenewableHeatInitiativeprovidedonly
$36million,afractionofthatcommittedtopower,andmostofthiswenttosolar
projects.ThisprogramalsoendsMarch2011,withapplicationdeadlineofOct2010.In
2009,thegovernmentannounceda$1billionpackagetoimproveenvironmental
performanceofpulpmillstocounterasimilarprogramintheUS.Itwillprovide
8
16¢/litreofblackliquorproducedin2009,arenewablefuelwhichpulpmillsuseto
powertheirboilers. Thesubsidymustbeusedtoincreaseenergyefficiency.The
governmenthasprovidedmanysuccessfulprograms,buttheyclearlyfavourenergy
efficiency,biofuelslikeethanolandbiodiesel,andrenewablepower,withalmostno
recognitiongiventoequallyvaluablebio-heat.
Withforestryindustriesindistress,andmillclosuresrampant,theprovincesnowsee
bioenergyasaviablesocio-economicalternativetotraditionalforestproducts.
BChasthelargestforestindustryinCanada. In2008BCbecamethefirstjurisdictionin
CanadatoreleaseaBioenergyStrategywhichincluded:$25million(17€million)to
establishabioenergynetwork,atargetofatleast10communityenergyprojectsby
2020,acommitmenttoestablishacomprehensivebiomassinventory,anda2-partcall
forpower. Thefirstcall-for-powerbyBCHydrowastargetedatprojectsthatwere
alreadywellalonginplanning,andproponentshadto“bid”apowerprice. 20proposals
werereceivedfrom13proponentstoprovide6,000GWhwithbidpricesof10.7-
30.0¢/KWh(7.9-22.2€c). Onlyfourprojectswerechosen,toprovide579GWh(60MW)
at9.7-10.7¢/KWh(7.2-7.9€c). ThesecondcallforpowerreleasedMay2010,targeted
toacquire1000GWh,yielded19proposalstoproduceupto650GWhcapacity. In2010
BCbecamethefirstprovincetoeliminatetheneedforASMEcertificationandallowEU-
certifiedbioenergyequipmentinBC.BChascommittedto;developlegislationtophase
inrequirementsformethanegascapture,streamlinethepermittingprocess,legislate
eliminationofbeehiveburners,promotewoodpelletproductionandfacilitatepellet
marketdevelopment,improveaccesstowoodfibrefeedstocksforgenerationofheat
andpower,anddevelopnewfineparticulatestandards.
InQuebec,thesecondlargestforestindustryinCanadaisreelingduetocutbacksin
annualallowablecutofwood,therisingCanadiandollar,andthefallingdemandfor
lumberbytheUS. Quebecissueda“GreenPaper”tobeginrestructuringtheforest
regimetoensureequitablemanagementandallocationoftimberresources. A2007call
for100MWofbiomasspowerbyHydroQuebecwasunsuccessfulduetotheinadequate
timeallowedtoprepareproposals;onlytwocogenprojectsatpulpandpapermills
weresubmitted. Therearenoincentivesforsmallpower.However,Quebecremains
committedandin2008launchedaprogramforwoodbioenergy,takinganinnovative
approachtowoodallocationuniqueinCanada;allowing17regionaleconomic
developmentBoards,CREs(Conseilrégionaledel’environnmente)toexaminebioenergy
proposalsandrecommend5-yearwoodallocationcontracts.Severalregionsaremoving
quicklytogarnerforestbiomassforsmallcommunityheatingsystems.In2008,Quebec
allocated $150million(€93million)overthreeyearstoconvertheavyoilheating
systemstowoodybiomass.In2009itannouncedaprogramaimedat4500institutional
buildingstoconvertfromlightoiltobiomass,payingeither(1)anamounttobringthe
paybackto4years,or(2)$40/tonneCO2e,or(3)50%ofprojectcosts,or(4)$500,000.
Theprovinceprojectsover1600GWhinconversionsfromoiltobiomasswilloccur.
9
OntariosetGHGreductiontargetsof6%below1990levelsby2014,15%belowby
2020.Muchofthesereductionswillbeachievedbyphasingoutcoalforelectricity
generation,mandatedby2014.Theprovincesettworenewabletargetsin2004: 5%of
generatingcapacityfromrenewablesourcesby2007(1350MW),10%by2010(2700
MW). Inanefforttomoveforwardmeaningfullywithrenewablepower,theOntario
PowerAuthorityannouncedtheStandardOfferProgramin2007,paying11¢/KWh
(7.4€ /KWh)forrenewablepowerover20yearsforprojectsunder10MW. ByJan2008,
c
262contractsforpowerwereexecuted;69forwindpower,158forsolarpower,15for
waterpower,andonly20forbiomass. Ofthebiomassprojects13werelandfillgas,3
werebiofuels,andonly4outof262werebiomassheatandpower,partlydueto
economics,butpartlyduetolackoftimegiventopreparebiomasssupply.TheGreen
EnergyActwaspassedin2009.RecognizingfromEuropeanexperiencethatfeed-in-
tariffswerethemosteffectiveincentiveforrenewableenergy,asecondprogramwas
initiatedin2009providing13.8¢/KWhforbiomassplantsunder10MWand13¢/KWh
forlargerfacilities.Windreceived13.5¢/KWhandsolar80.2¢/KWh.ByApril2010184
projectshadbeenapproved;77solar,48wind,andagainonly2biomass.
Despiteeffortstomoveforwardwithbioenergy,akeybarrierhasbeentheinabilityof
projectstoconfirmwoodsupplyfromtheCrown.Accordingly,Ontariobeganto
streamlinetheprocesstogainaccesstoanestimated22millionm3ofbiofibre8,
includingharvesttopsandbranches,unusedallowableharvest,andunmerchantable
timber. In2009acallforexpressionsofinterestdrew130applicationsfor143facilities
tousebiofibre,ofwhich84wereforthemanufactureofpellets. Theprovinceis
expectedtostartsigningwoodsupplyagreementslatein2010.InAug2010,the
provinceissuedtheOntarioPowerAuthorityadirectivetonegotiateapowerpurchase
agreementsforbiomasselectricityattheAtikokangeneratingstation,ahugestepto
enablingbiomasspowergeneration.
AmajorbarriertobioenergyhasbeenantiquatedlegacylegislationbytheMinistryof
theEnvironment;conflictingairqualitypermits,onerouspermittingprocess,andpoor
definitionsthatlumpwoodybiomasstogetherwithmunicipalwaste. Newlegislationin
theGreenEnergyActisaimedatstreamliningapprovalsforrenewableenergyprojects.
OneofthemajorshortfallsofCanadianpolicyisthefixationwithpowerratherthan
heat. Thisfocushasledtoasignificantincreaseinpowercapacitybuilding,largelywind
turbines,buttheresulthasbeenarealizationthatwindpowercapacitytranslatesto
productiononly30%ofthetime.Nowadditionalgascogenerationiscontemplatedto
meetpeakpowerneeds. Productionofrenewableenergythatincludespowerandheat
isoneofbioenergy’sgreatadvantages. TheCanadianBioenergyAssociation(CanBio)is
promotingequalincentivesforbothpowerANDheat,bothtoimprovetheeconomicsof
biomassenergyprojectsandtoenabletheconstantpowerrequiredbygrids.
8JoMaure,OntarioMinistryofNaturalResources,Sherbrookepresentation,June2009
10