Warren Mabee is assistant professor and director of the Queen's Institute for Energy and Environmental Policy, Queen's University
This summer, Ontario's Green Energy and Green Economy Act is undergoing its first regular scheduled review, and by the time of the election in October an amended schedule of feed-in-tariff prices will be announced. Should Mr. Hudak's Conservative party be elected, these changes may be moot, as he has promised to cancel the incentive entirely. It is safe to say that we will see change in the level of incentives offered, and perhaps in the technologies that are supported. How could the Act be improved to deliver greater benefit to the province?
Biomass - particularly taken from forests and agricultural operations - has not become a major component of Ontario's electricity mix, despite the presence of a feed-in-tariff (FIT) at $0.13/kWh. A large part of the reason for this is the fact that wind and sunlight is free; biomass is not. And yet, biomass is a dispatchable form of power that could nicely augment intermittent sources of renewable energy like solar and wind. Its use can provide significant local economic benefits, put money into rural economies and revitalize forest- and agriculture-based communities -- and keep capital investment in Ontario. Why haven't we utilized it more?
Ontario's proposed energy supply mix is expected to include a certain amount of biomass power -- but not too much. The proposal included in the Long Term Energy Plan puts biomass-to-electricity at about 1.3 per cent of the total provincial electricity demand, or about 2.6 TWh per year, by 2030. To put this into perspective, this translates into almost one million green tonnes of wood annually, based on average energy values. The sustainable level of forest harvest in this province is estimated to be about 31 million cubic metres or about 22 million green tonnes. Conversion to electricity is not a perfect art; thus, the actual wood requirement to generate 2.6 TWh is about 3.1 million green tonnes, or about 14 per cent of the annual sustainable harvest in Ontario.
Growth in biomass-to-electricity could be also be achieved by increasing incentives available (as unlikely as that might sound now). A recent report by Queen's University estimated that FIT rates for wood-to-electricity would have to rise to $0.273/kWh -- about twice the current rate -- in order to provide a 20-year internal rate of return of 27 per cent and a three-year payback period. Many would argue that a rise in incentives is wrong, given the fact that that the Ontario government is facing record deficits. Perhaps this would change if the potential long-term payoff of such an investment was better understood.
Green electricity from biomass should be looked at as a mid-term opportunity; the long-term goal should be biorefining, or the generation of a mix of higher-value products with lower-value commodities (like energy). Biorefining technology is being developed by a number of companies, including several Canadian champions. Right now, there are a bewildering array of potential products and pathways, and it's not clear what technology will emerge as the dominant platform. What's the right decision? The Forest Biopathways project spearheaded by the Forest Products Association of Canada represents a great improvement in our understanding of the economic returns attached to different biorefining pathways, but highlights the need for investment and action today.
Stronger incentives for bio-based electricity in the short term would give Canadian companies working in the biorefining space a product to sell right now at a fixed rate, while the technology matures and new, high-value bioproducts are developed. Investing in the technology now, and using the technology to meet our short-term electricity needs while supporting longer-term development, would keep Ontario at the forefront of the emerging biorefining sector.
Investing in bioenergy can be a positive thing for Ontario, and can ultimately meet the goals laid out in the Green Energy and Green Economy Act. In the short term, supporting new biorefining activities with an elevated feed-in tariff -- perhaps combined with other programs -- would give us dispatchable power to match intermittent wind and solar. In the long term, working biorefineries processing forest biomass, agricultural products and municipal waste streams would deliver higher value products while improving air and water quality. Much of the benefit of this investment remains in rural communities. This is a win-win-win, which needs to be explored and supported by Ontario as we consider ways to improve the Green Energy Act.