Abstract

“Struggling to make it work”- the Canadian Experience

Doug Bradley

Domtar Inc.

1600 Scott St.

Ottawa, Ontario, Canada

Canada’s forest area, 418,000 sq. km, is larger than many countries. We are the world’s largest exporter of forest products, have been called the world’s breadbasket, and yet with seemingly endless biomass we do not have a solid basis for a biomass industry. Why?

We do have our success stories. In 1990-98 the forest industry increased it’s utilization of wood residue from 9.4 to 12.3 million BDT, or 65% of total residues, cutting its annual surplus in half. Some went to alternative wood products such as OSB, much was used as alternative fuel at sawmill and pulp mill sites to reduce costs. Examples include;

- a 21 MW cogen project at St. Félicien Quebec which draws 290,000 GMT pa of bark from regional sawmills, sends steam to an adjoining sawmill and sells electricity to Hydro Quebec

- a district heating and 20 MW cogen at Grande Prairie Alberta, which will provide process heat to the Canfor mill, and heat and power to Grand Prairie

While the philosophy of biomass utilization is sound, investment depends totally on the anticipated rate of return of a project. There are pockets of surplus forest biomass available, but increasingly the pockets are smaller and further apart increasing the haul costs of the fuel. Also there are alternative higher value alternatives, such as OSB and MDF board that take remaining white wood. Generally good economics depend on a steam host, yet as pulp mills close down their wood rooms bark availability is found at the sawmills, which need little steam and power. Fundamental to a good biomass project is certainty of supply. Recent moves by the US lumber lobby have resulted in a 19.3% export duty, resulting in the shutting down of considerable sawmill capacity in Canada and sharp reduction in surplus biomass production. Recent changes in harvest rules require delimbing at the stump, which improve nutrients left there but make it more costly to access fibre from the forest floor. The price of alternative fossil fuels tend to be lower in Canada than Europe as we have considerable supply, and while our taxes on such fuels are high we do not have a carbon tax such as found in other jurisdictions. Low fossil fuel costs limit the benefits of the biomass alternative. Similarly the price of power tends to be lower in Canada, limiting returns on the revenue side.

Despite many economic drawbacks many projects proceed. Many more would do so with improved incentives.