Energy options for heavy industries under Canada’s carbon pricing policy
May 10, 2018 - Canada’s heavy industries are notorious for being the biggest emitters of carbon in Canada. With a price of carbon being tagged onto emissions, these heavy industries are finding ways to reduce emissions. Despite the government narrative about fossil fuel use reduction, there is no perfect substitute to fossil fuel for heavy industries like steel, cement, mining and insulation manufacturing.
The steel industry requires coal or petroleum coke (pet coke) as a carbon source for steel manufacturing. The stone wool insulation manufacturing requires the heat intensity of coal to melt rock. Cement manufacturers require the same heat intensity of coal or natural gas to provide enough energy for their process.
Despite trials in adopting alternative fuels, such as tires, shingles, wood and plastics, as substitutes in these industries, wider adoption has not taken place. So, what are the major challenges of these alternatives to fossil fuels?
Wood waste has the most mature and established supply chain to serve the market. Wood waste can vary from recycled wood to sawmill/forest waste. Wood waste is priced competitively in the market and have been widely used by pulp mills, industrial greenhouses and power plants. The challenge with wood waste is its energy density and storability. Wood has half the energy content compared to coal and it deteriorates fast if not used quickly. Wood, unlike coal, also absorbs water easily if stored outside, lowering its quality effective energy content.
Asphalt shingles have higher energy content compared to wood waste. Asphalt shingles have approximately 8500 BTU/LB. It is significantly higher than wood but still slight lower than coal. The challenge with asphalt shingles is that they are currently being used in the road paving industry, lowering their availability on the market. Additionally, asphalt shingles need extensive pre-processing before they can be used as fuel. Therefore, currently the asphalt shingle supply chain is not able to meet the heavy industry’s fuel needs.
Waste rail ties show a lot of promise. They have very high energy content. Rail ties availability is high and price is low because the material poses liability to rail companies. However, rail ties have to be extensively processed before being used as fuel.
Rail ties have coarse metal spikes and contain sand and stone, causing potential problems in pre-processing and, sometimes, utilization. Additionally, burning rail ties as fuel can be heavily regulated as rail ties contain creosote.
Tires also show lots of promise in terms of heat content. Tires are currently used in cement kilns in the United States. In Canada, the bulk of used tires are recycled into other rubber materials. Therefore, any facility looking to use tires as fuel would have to compete for the limited supply. Additionally, tire burning can be a public relations nightmare. The public’s perception is typically negative towards burning waste. This can pose a challenge to get approval from the government to use tires as fuels.
Torrefied wood, also known as bio-coal, is a perfect coal replacement. It is similar in heat content as coal and can provide the carbon needed for steel manufacturing. Torrefied wood is also hydrophobic and doesn’t have the rotting issues other wood fuels have. The challenge with torrefied wood is price and availability. There are a few successful companies in Canada, U.S. and Europe that can provide torrefied wood, but price is high and production capacity is limited. Currently, torrefied wood is too expensive for industries that don’t manufacture high value goods, such as cement and insulation manufacturing.
As of yet there is no perfect substitute to coal today. The price, availability and heat value of coal are not rivaled by any other alternative fuel.
However, the alternative fuels mentioned can be used as a coal supplement. For the industry to fully embrace alternative fuel, expensive retrofit needs to be performed to existing infrastructure. This is where the revenue generated from the carbon tax or cap and trade policy can help. Revenue could help heavy industries bridge the gap of quarterly profits and long-term viability with the carbon pricing policy.
There is another challenge. The public’s perception of using alternative fuel is equivalent to burning garbage. Industries can better educate the public that alternative fuels are carefully processed, cleaned and diverted from landfill to be use as coal replacement. The government can play an important role as well, especially in easing the permitting process. The goal of carbon pricing policy set out by the government is to reduce carbon emission. Making it easier for industries to use alternative fuels has potential to help with these reductions.
What could potentially happen if Canada doesn’t help the industry to adopt alternative fuels? We could see the energy intensive industries move south of the border. We could also see the importation of energy intensive materials into Canada with Canada only providing the finishing touches locally. Both of these trends could result in tariffs being imposed on the heavy industry products. The end result will be a higher price of cement, steel, and insulation to the Canadian consumer.
Pat Liew is a business development manager for Ecostrat, Inc., based in Toronto.
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