Or CLICK to download a pdf of this article
Home-grown wood pellets for NWT?
By Tony Kryzanowski
It’s an understatement, but it’s plenty cold in Canada’s Northwest Territories (NWT). Given the cost of providing heat using conventional fossil fuels, it should come as no surprise that the NWT has implemented an aggressive plan to install biomass heating systems to replace fossil fuel consumption in many communities. They are also working hard to develop a home-grown wood pellet manufacturing industry to support it.
The conversion from fossil fuels to greater use of biofuels like wood pellets and cord wood also meshes well with the NWT’s greenhouse gas reduction strategy.
The use of woody biomass to provide heat has grown from nine per cent of the NWT’s total space heating energy requirements in 2007—essentially from cordwood—to 14 percent in 2012, with the construction of several biomass heating systems using wood pellets that have replaced fossil fuel systems. The most recent example occurred in the town of Rae-Edzo (which recently changed its name to Behchoko), where a $1.3 million wood pellet-fuelled district heating system will provide heat to seven buildings, with payback estimated at five to 10 years. It offsets the burning of about 200,000 litres of diesel fuel per year. The community is 80 kilometres northwest of Yellowknife.
“The installation of biomass heating systems has grown faster than people could have expected, and a lot of that has been driven by work that the government has done to advance the biomass energy strategy that we adopted back in 2010,” says Tom Lakusta, Manager of Forest Resources in the Forest Management Division of the Department of Environment and Natural Resources of the NWT.
Implementation of that strategy was only the first step. The goal within the NWT’s recently updated Greenhouse Gas Strategy is to increase space heating from woody biomass to 30 per cent by 2015, which means that demand for wood pellets could increase to 30,000 tonnes per year in just two years.
Both the government and local residents recognize that growth in wood pellet use is a cheaper replacement for the use of expensive fossil fuels like diesel, heating oil, natural gas and propane that must be transported to the region from southern suppliers each year. But they also see that this represents a potential local business development opportunity. Currently, all of the wood pellets required by NWT biomass heating systems are supplied from Alberta and British Columbia.
There are plans being advanced by private investors from the NWT to develop a wood pellet manufacturing industry using the Territories’ own wood resource. These proposals are attracting a lot of interest within communities, businesses, local governments and First Nations because of the number of jobs a home-grown wood pellet industry could provide in communities with histories of chronic high unemployment.
The NWT’s forests cover 70 million hectares or about three-quarters of the continental area of the region, but only a small percentage is considered merchantable for either solid wood or biofuel products. It also exists in pockets of higher and lower concentrations, with the most abundant concentration of white spruce and aspen forest in the Liard Valley area in the southwest corner of the NWT.
“Excepting the Liard Valley, the NWT does not have a huge annual sustainable harvest level,” says Lakusta. “It’s in the hundreds of thousands of hectares, not in the millions, in areas where we have inventory.” Lakusta adds that the government has limited information about its forest resource; it only has management level vegetation inventories for about 10 per cent of its forest land because there hasn’t been a lot of interest in developing a forest industry in the region in the past. Also, conducting vegetation inventories is expensive.
The focus has been on areas near communities with known stands of merchantable wood, where there is existing infrastructure to access the wood, and where an interest in developing forestry businesses has been expressed. Lakusta says the process of gathering more vegetation inventory information is ongoing.
A considerable portion of the potential wood resource that could be used to manufacture wood pellets exists within First Nations communities. The NWT government and Hay River businessman Brad Mapes are working with several First Nations communities to establish Forest Management Agreements (FMAs) and to study the feasibility of using their wood resources to establish a wood pellet manufacturing industry. Fortunately, this is one of the areas where the government has already gathered a management level vegetation inventory, so it has a good idea of how much of that wood basket could be harvested sustainably to support a proposed wood pellet plant. There are also a variety of forest ownership scenarios among First Nations communities in the NWT where, in some cases, comprehensive lands claims agreements between the federal government and First Nations are in place and in other cases, where they are still being negotiated.
“There’s a recognition by my government that whether there are co-management agreements or not, that First Nations communities have a real call on this forest land and we don’t see ourselves as managing without their engagement,” says Lakusta.
Mapes wants to build a wood pellet manufacturing facility in the community of Enterprise and use the Mackenzie River as a transportation corridor to transport the wood pellets to communities located along the river, for use as fuel in biomass energy systems. When contacted by the Logging and Sawmilling Journal, Mapes said he is currently in negotiations with First Nations communities that are being included as partners in the business venture, and who would supply the wood fibre needed to support the wood pellet plant.
“The project is really quite possible and we have been working with Brad Mapes and his business ideas, thinking that his business could be an anchor business for follow up support,” says Lakusta. “We are looking very strongly in the direction of supporting communities so that they can work with Mr. Mapes and create businesses that are Aboriginal businesses that can link with this asset investor. It’s a win, win, win for everybody. One of the things that Mr. Mapes brings to the table is that he is a northerner himself and he understands the communities’ interests and needs.”
The government’s objective is to negotiate FMAs with community-based, Aboriginal business groups, who would then negotiate, long-term supply contracts with Mapes. There are two FMAs being worked on: one based in Fort Resolution and another in Fort Providence. Both communities are also investigating district heating systems fueled by wood pellets to potentially heat their homes.
“I would say that if we are going to be signing Forest Management Agreements, I think there is a very good likelihood that we will be signing them within the next six months,” says Lakusta.
Over the past five years, the NWT government has really been the catalyst behind growth in northern wood pellet consumption. It has been the anchor customer for wood pellets in the region by converting several government buildings to biomass heating systems. That has had a ripple effect. By providing a guaranteed demand for wood pellets to supply its facilities, this has encouraged more residents and businesses in communities where a biomass energy system has been installed to make the conversion to wood pellets themselves.
The NWT Public Works and Services Department has commissioned 11 biomass heating systems and three more are currently under construction. This has displaced more than 2.4 million litres of heating oil and has reduced greenhouse gas emissions by 6500 tonnes per year. This also represents about 16 per cent of the government’s total heating fuel consumption.
While it is a major supporter of developing a local wood pellet industry through private investment, the NWT government recognizes that there will be challenges to further develop both its biomass heating capacity and wood pellet manufacturing industry. Its main challenges are its large, sparsely populated area, the limited transportation infrastructure and the remoteness of many of its communities. In its action plan for advancing the use of biofuels over the next three years, the government states that the major challenges for meeting its goals are supply, distribution and storage needs for ice-road and barge-supply communities; technical capacity for operation, service and maintenance of biomass systems; and, the higher upfront capital cost of implementing biomass systems in the NWT. However, government leaders believe that it is worth the effort.
“Our government cares about creating sustainable, local economies, so if we can actually get more jobs in smaller communities because we are using wood—as opposed to diesel—to heat space, then we’re very much trying to promote that,” says Lakusta. “We’d like to be more self-sufficient than we are, but the real driver is price. If people can save money by switching over to wood pellets, then that’s what they are doing.”
This page and all contents ©1996-2015 Logging and Sawmilling Journal (L&S J) and TimberWest Journal.