Final Thoughts: A decarbonized future

The implementation of the strategy would support a gradual increase in the proportion of wood pellets toward a co-firing goal that would result in a 30 per cent reduction in CO2 emissions by the year 2030. The US Clean Power Plan is the policy that will motivate this strategy. Upon achieving that goal, those power stations that participate in the strategy would still be using at least 60 per cent coal in their power boilers. The wood pellets that make up the difference will be supplied by the US and Canada.  

This gradual off-ramp to a more decarbonized power sector provides certainty to the producers of coal and wood pellets for a known future demand. The strategy is rational and pragmatic and recognizes that the US power system, particularly in the Southeastern and Midwestern load centres, is heavily dependent on coal generation for base load. The grid cannot tolerate the sudden removal of the coal stations. The substitution of natural gas power stations for coal power stations seems pragmatic given low natural gas prices.  But over the next 15 years it is unlikely that natural gas prices will remain low. As LNG export grows, natural gas (NG) prices in North America will be set by global prices – not those prices based on the captive pipeline constrained just-in-time market that currently exists. Also as compressed natural gas (CNG) becomes more mainstream as a transportation fuel, demand for NG will significantly increase. Both of those trends will push NG cost per MWh above that of power generated from coal.

Furthermore, the same or better carbon benefits can be achieved by 2030 following a co-firing strategy.

Co-firing wood pellets with coal in pulverized coal power plants is common and ordinary in Europe, the UK, and even South Korea. Canada and the US dominate the world in the production of sustainable wood pellet fuel for power plants. Currently about two hundred 35,000 tonne equivalent shiploads per year leave Canadian and US ports heading to nations that recognize not only the carbon emissions mitigation benefits but also the simplicity and reliability of using refined wood pellet fuel in pulverized coal power boilers. The US and Canada have the capacity to significantly increase the production of renewable pellets for domestic use for co-firing and remain well within the boundaries of the fundamental sustainability requirements that support the carbon benefits that are derived from blending renewable pellets and coal.

A co-firing strategy has no shortage of winners. The environmental benefits are immediate and highly quantifiable. The power generation assets that are fueled with pulverized coal gain a significant new value as the only pathway that allows low cost renewable co-firing. At 10 per cent co-firing rates, the cost of generation increases by less than a penny per kilowatt-hour.  

The coal producers have a long-term market for their product with a certainty for demand over the coming decades.

The pellet producers have a new and gradually increasing market also with known demand. Many under-utilized industrial working forests are not in optimal locations for the existing pellet export market. Those locations, and new locations released from demand by the declining pulp and paper industry, can be responsibly developed to produce renewable refined solid fuel that is 100 per cent compatible with existing pulverized coal plant fuel systems.

All this with no reduction in grid reliability. Thermal power stations provide the foundation of the grid. For every MW of wind and solar capacity, there has to be a MW of thermal (or hydro where available) capacity to make sure the lights stay on when the wind is not blowing and the sun in not shining.

Co-firing wood pellets with coal in North American power plants is a rational and pragmatic strategy that provides a gradual off-ramp to a decarbonized future and provides significant new long-term markets to the industrial wood pellet producers in Canada and the US.