Peat fuel producer faces uphill battle to join province’s biomass program – by Ian Ross (Northern Ontario Business – September 8, 2009)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business

A Toronto-based manufacturer of peat fuel wants more transparency from the Ontario Power Generation (OPG) on its plan to replace coal with wood biomass fuel at its generating plants.

For years, Peter Telford has been trying to muscle his way into Ontario’s green fuel mix ever since the McGuinty government pledged to ween all of its power plants off coal by 2014.

His company, Peat Resources Ltd., was one of 80 respondents to OPG’s procurement call last winter to help supply and transport biomass to feed their generating station boilers to produce a cleaner form of electricity.

With 30,000 ha under permit in northwestern Ontario, Telford wants to harvest and produce peat pellets from bogs in Upsala where his proposed operation would create as many as 200 jobs.

While OPG has been telling those respondents this summer it is refining biomass fuel specifications and requirements, the engineering is underway to have the Atikokan Generating Station converted over to operate as the first biomass-burning plant by 2012.

It has left Telford wondering if his brand of sustainable green fuel fits in the government’s biomass program.

“We’re still keen to do this, but we’re having to wait for OPG and the government to complete their process,” said Telford. “What worries me is while we’re sitting here waiting, behind the scenes decisions are being made and the thing is marching ahead.”

Conceptual studies for the Atikokan plant conversion have been completed and the detailed engineering has started for combustion modifications to provide for the handling and storage of wood pellets.

Similar studies at other generating stations, including Thunder Bay, have either started or will begin within months.

“It’s unusual that they’re going through this process leading to a decision in the future .. but doing all sorts of expensive engineering on the plants to get them ready for the fuels they plan to use,” said Telford.

Telford has a 20-year supply of peat to feed the Atikokan and Thunder Bay plants with a million to a million-and-half tonnes of pellets annually.

He’s been lobbying for peat to be viewed as a cleaner-burning alternative to coal that will produces equivalent energy values. With his wet harvesting operation, he said it would have less environmental impact than harvesting wood.

But his efforts are falling on deaf ears.

OPG is only interested in biomass from forest slash and agricultural by-products, specifically grain screenings and milling spoils.

“We’re not considering peat as a possibility right now,” said OPG spokesman Bob Osborne.

“Right now we’re just strictly looking at wood pellets and agricultural products for our biomass program. Those (materials) are readily available and the approvals would be easier for wood at this time.”

Telford was prepared to supply a 500-tonne shipment of pellets for a combustion trial at Atikokan but a major fire at the facility last winter has postponed all testing until plant modifications are complete.

While OPG fine tunes their fuel specs, the province plans to issue a second public call for biomass in the next few months through a more formal request for proposals.

Whether Telford is the running to land a contract remains to be seen.

“We’ve heard nothing back from OPG or the government to say that we’re not (in the mix),” said Telford. “We’re going to continue to assume we are.”

Osborne couldn’t comment if Telford’s efforts will be successful.

“I wouldn’t give him any advice at this time, we’ll have to wait to see what exactly the specifications say.”

As former Ontario Geological Survey bureaucrat, who studied peat as a fossil fuel substitute, Telford has been frustrated in the past by delays from the Ministry of Environment in conducting an environmental assessment at Upsala.

He suspects there is a deep-seated aversion within the Ontario government in using peat for large energy projects.

It has caused him to focus on Newfoundland where he has 130,000 hectares of peat bog under permit and has set up a pilot plant to ship samples to potential customers.

“When Newfoundland welcomed us with open arms, it wasn’t a tough choice.”

Telford said he is close to signing an agreement with a Quebec company to supply pellets for burners and boilers for small energy installations like greenhouses and schools.

The company was also in talks with an energy producer in Maine. Under the Obama Administration, new regulations will require coal-burning power plants to convert a percentage of their generation to burning cleaner, renewable fuels. States like Massachusetts are backing that up with lucrative tax credits.

Telford believes the province’s fixation on generating power from wood waste isn’t sustainable short of cutting down huge swaths of forest.

He is not convinced there are enough tree tops, limbs and left over slash piles in the bush for companies to supply OPG plants for the long term. He suspects the cost to gather, transport and pelletize fibre will be “five times” the cost of coal.

“Economically it doesn’t make sense to push for wood pellets unless someone going to give them a huge subsidy.”

Telford commissioned his own supply chain and business study three years ago that indicated the cost of electricity generated by using peat would be 8 cents per kilowatt hour.

Despite spending “several million dollars” at Upsala to prove up the resource, Telford said if OPG isn’t interested in peat, he’ll pack up and walk away forever.

“So much of is being done behind closed doors and they’re not being straight with the public on the wood pellet story. I think if environmental groups knew the implication of the wood pellet situation they’d be more concerned about it.”