A Future for Pelletized Biofuels

Commentary, Energy, Frontier Centre

This autumn was another tough one for asthma sufferers in Winnipeg thanks to the destructive practice of stubble burning, where farmers burn off excess straw in the fields. As usual, the smoke wafted into the city and young children, my son included, ended up at the doctor, or worse, the hospital.

Wouldn’t it make more sense to avoid the quiet health damage by not burning this stuff in the field? One option is to convert the straw into something valuable like strawboard. Another, less difficult opportunity sits on Manitoba’s policy horizon. It is an environmentally friendly form of energy called pelletized biofuel. Simply, it is compressing natural prairie grasses into pellets to make a highly efficient, energy form that looks like rabbit food. It is stored in large bins and hoppers, easy to transport and produces the same amount of energy for the half the equivalent energy cost of natural gas.

Forget about the fading grain industry and the headaches of dealing with the Canadian Wheat Board, take pelletized grass and ship it south. The stuff is a perennial plant, does not require reseeding and expensive inputs, and can be harvested with regular equipment in the snow if necessary. Pelletized biofuel is a well established industry in northern Europe. We have some of the highest per household heating requirements and also sit on the border of a huge American market struggling with high gas prices and energy shortages.

Most impressively, this industry, due to its productivity, can develop with no government subsidies. Pelletized grass produces 19 units of energy for every unit of energy consumed in production. The slow motion boondoggle, ethanol, hardly breaks even, and manufacturing it may even consume more energy than the final product contains. Despite this, don’t be surprised to hear about some taxpayer-financed ethanol megaproject soon.

This and more is discussed in a recent “no holds barred” interview with Tom Adams, head of Toronto-based Energy Probe, a “green” energy think tank. Canada’s most original and clear thinker on energy matters, and the most expert critic of Ontario’s botched energy policy, Adams was quoted extensively in the media during the August electricity blackout. Recall the curious spectacle of the now lapsed Eves government begging the public to conserve power, when official policy was to keep prices artificially low and subsidize excess consumption with tax dollars.

A strong proponent of markets and price signals as tools to promote energy conservation, Adams criticizes energy megaprojects and fads. Inevitably, these draw costly public subsidies and heavy government interference in the energy marketplace. He also punctures emerging “green power” myths. Manitoba’s energy opportunities, in his view, are enormous but constrained by traditionally dirigiste thinking. Some of his thoughts:

  • The Conawapa dam project is not a slam dunk because of time, distance and cost. It will take ten years to get power to market. The vast transmission distance to eastern Ontario will produce substantial power losses that increase final consumer costs.
  • Energy conservation programs like Manitoba Hydro’s “Power Smart” are primarily public relations and are not effective in reducing power use.
  • Wind power has potential, but the unpredictable nature of its output compromises its marketability. Big subsidies to this industry in Germany and Denmark have created an expensive, artificial industry. German policy makers are now expressing alarm at the massive expense of wind subsidies.
  • The much vaunted hydrogen alternative is a dead-end idea, with no relevance to meeting our future energy requirements. Making hydrogen and using it in fuel cell engines means burning energy at the equivalent gasoline cost of $30 a litre. In mafia lingo, fahgeddaboutit.
  • Nuclear power can’t pass the market test when hidden subsides are removed. When Margaret Thatcher, a great fan of nuclear, deregulated Britain’s power market she expected this industry to thrive. Not so. Even with continuing government subsidies, the industry has been shutting itself down because it can’t pay the cost of maintaining, much less replacing, aging reactors.
  • Peak-load pricing, a common practice in Europe, can capture major efficiencies. Prices rise during times of high demand and fall with low demand. This shifts use, so that suppliers don’t have to build excess capacity. But this policy has been opposed by traditional utilities, since it interferes with their megaproject ambitions.
  • Grain-based ethanol, like hydrogen, is a fuel cycle without a future. It cannot provide road fuel without subsidies. The more you do, the worse off you are.
  • Pelletized biofuels raise none of these objections. Adams sees an enormous upside for Manitoba if our governments got smarter about energy policy. He recommends that we shun subsidies and megaprojects. We can stop wasting current electricity production and sell it into other markets at a big premium, by giving individual consumers and industries ownership to historical power quotas and allowing them to keep the proceeds from selling off conserved power. We can shift to peak-load pricing and refrain from subsidizing an artificial ethanol industry. We can move towards cleaner heat by encouraging pelletized biofuels, without government “help.”

    All to the immediate benefit of all, including the unintended victims of stubble burning.

    Read the latest policy study on pelletized biofuels from the Frontier Centre . . .