Burning red tape: Ontario eases boiler permitting

Is the supply chain ready?
Marcin Lewandowski
February 21, 2018
Written by Marcin Lewandowski
Feb. 21, 2018 - The Ontario Ministry of Environment and Climate Change (MOECC) recently developed and implemented a new air quality guideline for the control of air emissions from small wood fired combustors with a heat input capacity of less than 3 MW – Guideline A-14. These changes, which took effect last year, make the permitting process for small wood fired combustors significantly cheaper and more efficient. A regulator process that once took more than a year can now be completed in two days, saving projects hundreds of thousands of dollars.

In the first eight months of the new policy there have been more boiler requests in Ontario than in the previous six years. This begs the question, however, is the Ontario wood chip supply chain ready to meet the new demand?

Policy background
In Ontario, the Environmental Protection Act prohibits the discharge of air emissions from any source unless permitted under Section 9(1) with an Environmental Compliance Approval (ECA). The exceptions to this requirement are listed under Section 9(3) for sources that do not require a permit and Section 9(4) for prescribed activities.

The prescribed activities are regulated within the Environmental Activity and Sector Registry (EASR) for facilities with air emissions that are not considered high risk and/or complex. Whether applying for an ECA or registering under the Air Emissions EASR, a facility must develop an air emission impact assessment to ensure that each air contaminant emitted from the facility is below the point of impingement limit. This report is referred to as an Emission Summary and Dispersion Modelling (ESDM) report. Ontario Regulation 419/05 regulates local air quality and is the primary governing regulation for air quality in Ontario.

As of Jan. 3, 2017 Ontario finalized Guideline A-14, the Guideline for the Control of Air Emissions from Small Wood Fired Combustors (input capacity of less than 3 MW). Facilities with small wood fired combustors that do not meet the eligibility requirements for the Air Emissions EASR are required to submit an application for an ECA based on the requirements in Guideline A-14. Facilities with small wood fired combustors that meet the eligibility requirements of the Air Emissions EASR are required to register to the EASR rather than submitting an application for an ECA.

Note that facilities with wood fired combustors that have a maximum thermal output of 50 kW or less, or a masonry fireplace constructed on-site are exempt from the permitting requirements.

Rationale
Guideline A-14 substitutes original guidelines from 1990, called Wood Combustion Guidelines. The original guidelines did not distinguish between wood boiler sizes. Effectively, schools or hospitals interested in wood-based heat had to go through the same process as large operations like pulp mills to acquire necessary permits. This, of course, cost a lot of time and money. Additionally, the old guidelines did not provide a determined pathway to wood boiler development, making the entire process unclear and risky. Consequently, projects would be started and later cancelled due to unforeseen regulatory burdens.

Regulatory burdens, and especially testing procedures, were the main motivation for MOECC to develop the new guidelines. For that reason, MOECC staff followed wood boiler standards already developed in Europe. European regulators work closely with equipment manufacturers; such collaboration in the bio-heat space has not existed in Canada until now. The collaboration is necessary to ensure that regulators follow newest developments in the industry, and do not become outdated, stifling progress of the entire sector. This time MOECC followed the European model, and consulted with numerous stakeholders, including manufacturers of high-tech wood boilers.

Andreas Wintzer of wood boiler manufacturer Viessmann, indicated that in the old days, due to regulatory hurdles, it could take up to 1.5 years to build and start operating a wood boiler unit. Now, once all paperwork is in, it takes two days. In the past, wood boiler emissions were tested based on the same process waste incinerators are tested. The current emission test takes an hour and a half. On top of saved time and lowered risk, all these time savings result in a 10-15 per cent decrease in wood boiler installation costs. According to Colin Kelly of Confederation College in Thunder Bay, Ont., it costs $150,000 to $450,000 less to develop a 1 MW wood boiler project now, with an additional $10,000 to $20,000 annually in operational cost savings.

All these new changes make wood¬¬ boiler installation much more attractive to developers in Ontario. According to Wintzer, in the past six years there were 80 to 100 small-to-medium wood boilers installed in Canada, but only four in Ontario. Since Guideline A-14 has been in place there were more wood boiler requests in Ontario than in the previous six years. The market's response is tangible, and the growth in wood boiler installations will continue once information spreads across the market.

Kelly often receives visits to the Confederation College from interested guests. Working under the old guidelines, he had succeeded in developing a 1 MW wood heating system (two 500 kW Frolig boilers), heating a 480,000 square-foot building. Now he gives regular tours to guests from around the country interested in the wood heating technology. Kelly said that there was a noticeable spike in interest since Guideline A-14 was implemented, especially from First Nations.

It is the rural and remote communities in Northern Ontario that are the prime markets for wood-based heat. Most of these communities are not located on the natural gas network, and currently rely on diesel as a source of fuel. Diesel is often flown-in, resulting in highly elevated prices. Meanwhile, these communities are surrounded by underutilized forests – a potential source of fuel (and jobs).

Wood fuel supply chains
Small-to-medium wood boilers can burn either wood chips or wood pellets. Despite the fact that wood chips are significantly cheaper than wood pellets, 80 per cent of wood boilers installed in Canada burn wood pellets. This is because supply chains for wood chips are not developed yet, making it difficult for wood boiler operators to procure high-quality fuel.

In Ontario, the wood pellet industry has been developing for several years to serve the international export market and has recently begun to supply an emerging domestic market. Therefore, there is a high availability of wood pellets in the province, despite the fact that sometimes it may be hard to acquire constant supply of wood pellets in bulk. In contrast, wood chips have historically represented a primarily unregulated fuel supply stream in Ontario and most producers are not accustomed to working with fuel quality standards.

Pat Liew of Ecostrat, a wood fuel supplier, brings attention to the challenge of undeveloped wood chip supply chains in Ontario. Most notably, Liew identifies the issue of boiler design often not matching wood fuel specifications available on the local market. For example, wood chip quality can vary in each load – fuel sizing or moisture content may vary slightly depending on chipper quality, season, fuel source, etc. The less developed a supply chain, the higher likelihood of wood chip quality variation. Therefore, wood boiler design should accommodate for this variability.

MOECC has recognized that it will take time for Ontario wood fuel supply chains to develop to a point where they can serve required fuel spec all across the province. For this reason, Guideline A-14 does not require wood fuel buyers to follow the ISO-17225-4 standards until 2027. This gives the Ontario wood fuel supply chain 10 years to develop.

That said, due to high emission standards, Guideline A-14 requires developers to use high-tech boilers. All of the wood boilers that meet MOECC’s standards are manufactured in Europe, and therefore were deigned based on wood fuel specs available in European countries, where supply chains are much more mature. Consequently, Canadian buyers have to first understand the tolerance of these European boilers to the fuel available locally.

Perhaps that is why MOECC requires that each small-to-medium wood combustion project conduct a wood fuel study. Each study should answer questions around wood fuel spec available locally, variations in quality over seasons, who the major suppliers are and risks associated with supply disruption.

Wood fuel price is also a significant factor to consider. A typical wood chip supply chain would have an anchor buyer, such as a pulp and paper mill, that would dictate wood chip spec and price to the rest of the market. According to Liew, it is important to understand the type of wood chip most commonly produced, as any variation from the typical spec would likely increase the price of fuel. Wood pellet supply chains are different in a sense that wood pellets are already produced to a specific standard, so the price is dictated by how high that standard is. Consequently, there is much less risk associated with wood pellet procurement – but that comes at a price, as wood pellets are more expensive than wood chips (on a BTU/lb basis). Therefore, a comprehensive cost-benefit analysis of wood fuel options should be conducted by each project before the decision about fuel type is made for any given boiler technology, and before making potentially costly equipment decisions.

Marcin Lewandowski leads the Bioenergy Advisory Group at Ecostrat Inc., conducting analysis of availability and price of biomass across North America.

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