Canadian Wood Pellet Situation. Gordon Murray, Executive Director June 15, 2012

Transcription

1 Canadian Wood Pellet Situation Gordon Murray, Executive Director June 15, 2012

2 The first load of industrial pellets was shipped on the Mandarin Moon from Prince Rupert, Canada to Helsingborg, Sweden in 1998 Exports in 2011: Europe 1.2 million tonnes Japan 60,000 tonnes Sources Western Canada 90% Eastern Canada 10% Wood Pellet Association of Canada 2

3 Shipments in million tonnes UK 51% (power) Netherlands 24% (power) Belgium 16% (power) Denmark 2% (power) Italy 6% (heat) Sweden 2% (power) Mostly long-term bilateral contracts, FOB and CIF Wood Pellet Association of Canada 3

4 Existing Western Canada 1.9 million tonnes Eastern Canada 1.0 million tonnes Planned (Ontario) 1.9 million tonnes Timing: months Export logistics need work Wood Pellet Association of Canada 4

5 Small plants average 55,000 tonnes/year Belledune NB is only active terminal Long distance from Ontario to ports First to solve the logistics challenge will control supply Control rail cars Central terminal Port storage and loading Wood Pellet Association of Canada 5

6 Sawmill residues Logging residues Wood Pellet Association of Canada 6

7 Sawmill residues Logging residues Wood Pellet Association of Canada 7

8 From sustainably managed forests Salvaging harvest residuals (low grade logs, tops, branches) Logs unsuitable for lumber Costs will increase Wood Pellet Association of Canada 8

9 Possible 300% growth by 2020? Wood Pellet Association of Canada 9

10 Europe proven market and fastest growing South Korea and Japan Canadian industrial market coal power emissions regulations under review Wood Pellet Association of Canada 10

11 Wood Pellet Association of Canada 11

12 RPS for power generation: % Increase ~ ½% annually until % Biomass energy target for 2020: 4,211,000 toe Pellet equivalent: 10 million tonnes First transactions announced Wood Pellet Association of Canada 12

13 Fukushima caused chaos in power sector Nuclear energy is unpopular New feed-in tariff effective July 1, 2012 Applies to wind, solar, hydro, geothermal, biomass Renewable energy to increase from 6,500 MW to 30,000 MW. Presently only one buyer 60,000 tonnes per year Wood Pellet Association of Canada 13

14 Canada uses 60 million tonnes of coal annually New coal emission regulation gazetted Would take effect in 2015 Cap emissions at 375 tonnes CO 2 /GWh Similar to natural gas combined cycle Applies to new units and those aged 45+ Biomass deemed to have zero emissions Regulation is stalled Wood Pellet Association of Canada 14

15 CCPC 2010 study, biomass is a viable alternative for emissions reductions in existing coal plants Now a detailed approach needed to assess technical and economic viability Study biomass co-firing with coal at three power plants: Wabamun, AB; Shand, SK; and Trenton, NS Wood Pellet Association of Canada 15

16 Budget $200,000 Consultant: FPInnovations Source of pellet costs: WPAC Wood Pellet Association of Canada 16

17 Development of Canadian Industrial Emission Factors Related to the Combustion of Woody Biomass and Co-Combustion of Woody Biomass with Coal in Utility Boilers for Policy Development Wood Pellet Association of Canada 17

18 Objective - develop Canadian industrial emission factors for combustion of wood pellets and co-combustion of wood pellets and coal to support policy development Scope Emissions: GHGs, ash, heavy metals Feedstock: wood pellets and coal Three-year project Initially lab scale tests Ultimately utility scale tests at Canadian coal power plants Budget $800,000 Wood Pellet Association of Canada 18

19 Canadian Clean Power Coalition Environment Canada Manitoba Hydro Natural Resources Canada Nova Scotia Department of Energy Nova Scotia Environment Ontario Ministry of Environment Ontario Power Generation US Department of Energy Wood Pellet Association of Canada

20 The wood pellet industry exists for only two reasons: Bioenergy is carbon neutral Bioenergy is sustainable Regardless of facts, if society comes to disbelieve either of those statements, then our industry will be in grave jeopardy Wood Pellet Association of Canada 20

21 Cutting forests to burn for electricity is a bad idea. Bioenergy is causing forests to be destroyed. Governments are subsidizing deforestation. Biomass is not carbon neutral and is more damaging to the environment than coal. Biomass subsidies are driving up the cost of raw material for other industries. Wood Pellet Association of Canada 21

22 Counter misinformation with scientific fact Provide proof of sustainability Conduct business to highest ethical standards Positive information campaigns i.e. UK s Back Biomass Campaign (Drax, EON, USIPA and others) Wood Pellet Association of Canada 22

23 European Biomass Association European Pellet Council US Industrial Pellet Association Wood Pellet Association of Canada Danish Energy Association Utilities: Drax, EON, GDF Suez, RWE, Vattenfall Wood Pellet Association of Canada 23

24 Claims are being made that biomass combustion releases more CO 2 than coal Also claims that there is a long period between release of CO 2 from combustion and the sequestration of CO 2 during regrowth Project aims to gather scientific evidence to understand CO 2 flow over time Project is to be peer reviewed Wood Pellet Association of Canada 24

25 Are temporal carbon emissions relevant with respect to climate change? What kind of temporal carbon emissions are associated with real life wood fuel production?

26 Regions British Columbia US Southeast Europe Russia Brazil Scenarios Sawmill residues Harvesting residues Round wood from commercial forests Round wood from plantations Wood Pellet Association of Canada 26

27 Utilities: Dong Energy, Drax, EON, GDF Suez, RWE, Vattenfall Producers: WPAC, USIP, EPC Agenda: Standard spot contract nearly done Industrial specifications - done Sustainability criteria in progress Wood Pellet Association of Canada 27

28 IWPB SUSTAINABILITY PRINCIPLES Principle 1: GREENHOUSE GAS BALANCE (GHG) The greenhouse gas (GHG) savings along the entire life-cycle, taking into account the whole supply chain including production, processing, transport and end-use are at least 60% with respect to reference fossil fuels Principle 2: CARBON STOCK Production of woody biomass fuels does not take place at the expense of significant carbon reservoirs in vegetation and soil.. Principle 3: BIODIVERSITY Production of wood biomass fuels may not take place in areas with high biodiversity value, unless evidence is provided that the production of that raw material did not interfere with those nature protection purposes Principle 4: PROTECTION OF SOIL QUALITY Production and processing of woody biomass fuels should maintain or improve the soil quality. Principle 5: PROTECTION OF WATER QUALITY Production and processing of woody biomass fuels should not exhaust ground and surface water and should avoid or significantly limit negative impacts on water. Principle 6: PROTECTION OF AIR QUALITY Production and processing of woody biomass should avoid negative impact or significantly reduce impact on air quality. Principle 7: COMPETITION WITH LOCAL BIOMASS APPLICATIONS Production of woody biomass should not endanger food, water supply or communities where the use of this specific biomass is essential for subsistence. Principle 8: LOCAL SOCIO-ECONOMIC PERFORMANCE Production of woody biomass should respect property rights and contribute to local prosperity and to the welfare of the employees and the local population. Principle 9: CORPORATE RESPONSIBILITY Generic sustainability principles not directly related to woody biomass are covered by the Codes of Conduct or Policies of the members of IWPB covering all types of commodities and should be applied for production and processing of woody biomass. Wood Pellet Association of Canada 28

29 Adapt RWE/CU s Green Gold Label for use by all utilities Develop a new certification scheme from scratch Integrate into another existing scheme: e.g. ISCC Wood Pellet Association of Canada 29

30 Europe will continue to be a dominant market for Canada Domestic power market would expand capacity in central and eastern Canada Asian market remains uncertain Pellet prices will have to allow for: Higher fibre costs Long distances to port, i.e. Ontario Wood Pellet Association of Canada 30

31 Wood Pellet Association of Canada 31