A Wells Fargo Company A rail fleet to move your cargo. Prices and terms to move you. We deliver a fleet of railcars and financing options with service and strength you can count on: Customized finance and operating lease structures Reliable fleet management Personalized service Value Find out what we can do for your company. Call us today at 514-861-3101. © 2010 Wells Fargo Equipment Finance, Inc. All rights reserved. First Union Rail Corporation is associated with Wells Fargo & Com p any, a company that is not regulated in Canada as a nancial institution, a bank holding company or an insurance company. costs increase or a fossil tax levels the playing field, focusing biomass energy efforts in areas that have little access to natural gas will provide a cost-effective alternative to expensive bunker oil or propane. As biorefining and bioproduct technologies continue to advance, another challenge is in determining which applications will be most economical. In 2010, FPAC completed a groundbreaking modelling study called the Future Bio-pathways Project. It examined a mix of emerging biotechnologies and traditional forest product operations to determine which combinations of biomass-derived bioenergy, biofu-els, biochemicals, and other bioproducts maximize economic, social, and environmental returns. It turns out that integration is key. “It became obvious that, from an environmental perspective, it makes more sense to use the waste stream, rather than going to roundwood for bioenergy,” explains Lazar. “From an economic per-spective, when it (bioenergy, biofuels, biochemicals) is integrated into existing industry, like the pulp and paper and wood industry, the economics pretty well work without government’s intervention,” he adds. “But when it’s stand alone, for the most part, you need govern-ment subsidies for the economics to work.” Model updates continue as more data become available for newer technologies. With the addition of new bioproducts to traditional forestry has come a shift in thinking, says Lazar, from the concept of value added to the concept of value extraction. He notes that although value added is still important, the cost of labour to make value-add-ed products decreases Canada’s competitive advantage compared to countries like Indonesia and China. However, extracting products from every bit of each tree is another way to add value to the re-source. “Value extraction is trying to find as many products and as high value products as possible extracted closer to the natural resource,” he explains. “This is a bit of a step change in thinking about it, from getting some cheap energy to actually seeing a whole new product line from each tree harvested.” As the forest industry continues to restructure to maintain eco-nomic feasibility, this kind of integration with the bioeconomy is likely what will allow it to survive and prosper into the future. “I would say that, at the end of the day, any kind of traditional for-estry operation that is not actively looking at some kind of bioenergy angle—and I’m not saying it’s economic in all cases—but if you’ve not explored it in detail, then you’re perhaps missing some opportunities to improve your economics,” says Roberts. Finally, biomass faces a distinctive economic hurdle that other forms of renewable energy do not. “One of the negatives of bioen-ergy is that we’ve got this pretty high variable cost—the cost of de-livered biomass—and that is a problem, definitively,” states Roberts. He points out that technologies for all forms of renewable energy are improving and their capital costs are falling. That gives increas-ing advantage to renewables like solar and wind power, which have only capital costs and no variable costs. “So we’re going to see a deterioration in the cost of bioenergy relative to other forms of re-newable energy.” To counteract this effect, says Roberts, “you have to take advantage of the unique properties of bioenergy.” He lists two. First, bioenergy is dispatchable, which means it can be used when it’s needed, when it’s cloudy or dark and there’s no wind. “One of the implications is that maybe we should be looking at renewable energy complexes where we have wind and solar and we complement that with bio-energy,” he suggests. Second, like fossil fuels, biomass can be used to make products other than electricity, for example, chemicals and JANUARY/FEBRUARY 2011 12 Canadian BIOMASS
Canadian Biomass January/February 2011: Page 12
