Isra-Mart srl : Europe's carbon policies bolster a b.c. bioenergy industry

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When Regina and Peter Pretterhofer built their new home in the city of Graz, Austria, they decided to give up fossil fuels and adopt a nationwide trend toward alternative energy to keep them warm during the snowy Austrian winters.

Instead of a gas furnace, their home has a three-metre-bythree metre room in the cellar that is filled to the top with four to six tonnes of wood pellets every two years, which are automatically fed into an Austrian-designed pellet-burning furnace in the next room. It heats their water and warms their 2,300-square-foot home. The pellet furnace is augmented by solar panels on days when the sun shines, and is made efficient by triple-glazed windows and insulation derived from local wood byproducts.

By North American standards, the Pretterhofer's green home would be on the environmental fringe, but in Austria they are doing nothing unusual, Peter Pretterhofer explained in a telephone interview. New homes in Graz are being built to similar, or even tighter, environmental standards.

The home-building revolution in Austria is part of Europe's broader commitment to reduce greenhouse gases 20 per cent by 2020 and rely on renewable energy for 20 per cent of its needs. It's a Kyoto commitment that has turned Europe into a global leader in alternative energy technologies and, in the process, has created a new bioenergy industry in British Columbia: Wood pellets made from sawmill waste.

B.C.'s pellet industry has grown in the last decade from mom-and-pop businesses making pellets sold by the bagful to wood stove owners, to the point where 11 plants operated by seven companies produced 1.2 million tonnes of wood pellets in 2010, contributing $185 million to the provincial economy, according to the B.C. ministry of forests, lands and natural resources. This year, with higher operating rates and new capacity coming onstream, the industry expects to produce two million tonnes.

Europe's energy policies created the market but B.C.'s huge volume of biowaste, especially after the mountain pine beetle epidemic, made it economical for pellets from the B.C. Interior to be trucked to either Prince Rupert or Vancouver, loaded aboard a ship and delivered 16,000 kilometres away to Amsterdam. The cost, and the greenhouse gas footprint, is equivalent to pellets produced in Europe.

"The key for us is full ships," said Leroy Reitsma, chief operating officer at the province's first and largest pellet company, Pinnacle Renewable Energy Group. "We have been able to grow to a size where we are now loading full vessels for transport and it's by having those full vessels that we can be competitive."

Pinnacle has six pellet plants in the B.C. Interior -five of them owned outright and one that is a joint venture with forest giant Canfor -accounting for most of the province's pellet shipments to Europe, where they are used almost exclusively as a substitute for coal in generating power. The pellets are mixed with coal, usually at a 50/50 ratio, and used to power the boilers that create steam to drive the generators.

And pellet-makers in B.C. believe their success in Europe is just the beginning. Asia, specifically Japan and Korea, are eyeing wood pellets as a replacement for not only coal but for nuclear energy.

Tourism Minister Pat Bell, whose portfolio includes international marketing initiatives, said in an interview that there's "huge upside potential," for the pellet industry in both Europe and Asia.

"Japan and Korea are just starting to review their options around renewable fuels," he said.

The biggest issue the industry faces, he said, is not market potential but capacity limitations of B.C. ports.

"We are close to exporting two million tonnes a year now and that's a substantial amount of product going into ships," Bell said. "It's not something you can mix on coal chutes. It has to go in independently. It is also very dependent on moisture. You can't load in the rain unless you have all the conveyors covered. The pellets swell and generate heat as well. So you have to be cautious about that."

In B.C. there's no industrial market for pellets. Reitsma said Canada lags behind Europe and Asia in terms of policies to encourage the use of alternative energy.

"I think there is a lack of definitive targets that need to be achieved. If there were policies in place that said 'You must generate X amount of power from renewable sources,' you would see an evolution of the business along those lines.

"It boils down to the values of society."

In contrast, he said, the cost of meeting Kyoto objectives in Holland has been costed out at eight euros per person a month, an amount of money Dutch citizens say they are willing to pay to reduce carbon emissions.

Wood pellets are manufactured from sawmill waste or from debris left after logging. The amount of forest waste has been growing in regions where pine forests have been killed by the mountain pine beetle epidemic.

To prevent beetle-killed wood from decaying and releasing its carbon back into the atmosphere, pellet companies pay salvage rates to access it after logging companies leave it in roadside piles.

Once at the plant, the wood is dried and pulverized, then compressed into a dense cylinder 6 mm in diameter and 20 mm long. One tonne of wood waste can be condensed into half a tonne of pellets after drying. The pellets are pulverized again before being injected into furnaces where they burn with the intensity of a dust explosion.

Gordon Murray, executive director of the Wood Pellet Association of Canada, said wood pellets are more costly to produce than coal but only if society places no value on coal's carbon footprint and other environmental costs.

"If you look at dollars per megawatt, then coal is cheaper. But if you put an environmental cost on it, then pellets start to look pretty attractive. That's the whole concept behind bioenergy."