The Canadian federal government’s Clean Energy Canada website defines biofuels as “any automotive, domestic, commercial and/or industrial fuel derived from recently living organisms or their metabolic by-products, rather than natural resources, such as petroleum, coal and nuclear fuel. Biofuels can be subdivided into three main categories: solid biofuel, such as peat, wood and wood wastes from industries; liquids biofuel, such as bio-alcohol (ethanol and methanol), biodiesel, and straight or waste vegetable oil; and, gaseous biofuel, which is a mixture of carbon dioxide and methane, also termed biogas.”

Canada’s vast peat reserves are currently the most important environmentally friendly energy source. Peat fuel has very low sulphur content and virtually no mercury. The Province of Ontario’s peat resources can provide the energy equivalent of 14 billion tonnes of coal, enough to satisfy the province’s needs for centuries. Using existing off-the-shelf equipment, a cost effective process has been designed to produce peat fuel with a thermal calorific value comparable to coal (9,600 BTU per pound). Combustion tests of coal/peat at Ontario Hydro’s Research Division show that peat has lower ash content and sulphur emissions than lignite which is the coal currently burned at Ontario’s generating stations.

Peat Resources Limited is a company devoted to establishing the viability of peat as an alternative fuel for existing power stations. IBK Capital has raised a total of $9.2 million of equity capital for Peat Resources. The proceeds from these offerings are being used to fund the company’s drilling, sampling and engineering of its peat resources in Ontario, and the construction of a pilot plant.

A report released on April 26, 2006 by the Ontario Ministry of Energy has given important recognition to the potential use of peat fuel at the Atikokan Generating Station in northwestern Ontario. The report, An Assessment of the Viability of Exploiting Bio-Energy Resources Accessible to the Atikokan Generating Station in Northwestern Ontario, describes the results of a study to evaluate alternative fuel options for replacing coal power generation at the Atikokan plant. This study, which looked at peat, wood products and municipal solid waste, examined the availability, economics and possible risk factors associated with these potential fuels.

Even though the report uses higher-end costs for harvesting ($11 per bone dry tonne), processing ($39 per bone dry tonne), and transportation ($15 to $45 per bone dry tonne, depending on the distance), the estimated cost of the peat fuel is still very competitive with lignite and significantly less than other bioenergy alternatives ($82 per MWh versus $89 per MWh or greater). Capital costs of converting the Atikokan plant for the use of peat fuel were minimal and this would apply to other coal-burning systems considering a peat fuel replacement or blend. Consequently, the report concludes that peat, priced at $95 per tonne, is the most abundant and viable of the alternative bio-energy fuels within economical transportation distance of the Atikokan plant.

Ontario’s Alternative Sources of Energy Costs

*Cost of heat produced was calculated using spot prices from November 21, 2007. Crude oil: $92/barrel; Natural Gas: $6.70/MMBtu; Coal: $85/ton; $1.01/US $1. Peat prices assume moisture content of 10%.

The Province of Newfoundland and Labrador has significant peat reserves and is working with Peat Resources to plan for a new peat fuel industry which could produce 5 million tonnes of peat fuel per year, generate annual revenues of $500 million and annual net free cash flow of $200 million. Total capital investment, estimated at $800 million, will be spent in four different communities thereby creating 1,000 new jobs. Most of this biomass fuel will be exported to the North-Eastern USA as a clean fuel blend for coal-burning utilities.