Pellet fuel is simply compressed biomass. A machine called a densifier takes biomass and squashes it into extraordinarily dense fuel pellets the size of a large marble. Today, by and large, the biomass used for pellet fuel comes from sawmills, which in the process of turning trees to lumber, generate vast piles of sawdust and wood waste that can either be left to gradually compost, or be densified and sold profitably as pellets. Our hypothetical pellet stove owner simply feeds those pellets into their stove where they merrily burn away. The interesting part is that our stove owner can do so with a clear conscience, as pellets are considered carbon neutral.
Carbon neutral isn't something that one naturally associates with the burning of anything, but before you think "green wash," consider the nature of the carbon being released. In the case of fossil fuels, burning releases carbon that otherwise would have remained sequestered in the ground longer than the duration of our species. Fuel made from naturally occurring biomass, on the other hand, continues to be part of the "biomass cycle" - that is to say, the carbon from the tree whose sawdust makes up a pellet was already in the environment, and whether through decomposition on the forest floor or burning in a pellet stove, was going to be released. Burning releases that carbon more quickly, but adds no carbon to the environment that wouldn't have found its way there eventually anyway. See Wood Pellets – a fuel for the 21st Century, in Green Building magazine for more details.
That's a compelling green story for wood stove owners, but is also one for investors looking to make sustainability profitable. Ken's company aimed to scale the pellet stove model way up, and position pellet fuel as a replacement for coal in coal fired heating and power plants. Converting a coal plant to pellet fuel consists of modifying the hopper that feeds fuel into the furnace to accommodate more granular fuel, and stepping up the "clinking" schedule. Clinking refers to the process of removing accumulated glass from the inside of furnaces; minute quantities of silica in coal over time accumulate and form a layer of glass that shrinks the volume of the furnace. Biomass has more silica in it, requiring more frequent clinking. The same problem bedevils those who want to make paper out of wheat. Silica notwithstanding, with two relatively inexpensive modifications, BioCube could turn coal-fired plants into carbon neutral, green oases.
So, why then, hasn't this happened? Because to date, the supply side of the equation has been erratic in pricing and volume. Recall that the biomass for pellets generally comes from sawmills, and now consider that sawmills are notably vulnerable to economic fluctuation. If there's a housing boom and demand is up, the lumber flies out of the yards, and there's sawdust aplenty. When demand drops off though, mills scale back production, layoff staff, and shut down the densifiers—and the supply of pellets quickly dries up. Which is where Ken comes in. What if, Ken suggested, he could offer a biomass supply that's plentiful and predictable, and priced such that the pellets would competitive with coal? Enter BioCube.
BioCube's business model addressed the supply side of the pellet fuel equation with two innovations. First, BioCube tapped Manitoba's agricultural industry. Agricultural waste—what's left over on a field after harvest—is generally thought of as something to be gotten rid of by burning or tilling. BioCube turns that on its head, changing that waste from an expensive disposal operation into a resource that can be sold. BioCube gets a predictable and reliable supply of biomass, and farmers can earn more and diversify their revenue streams.
BioCube's second supply innovation was to knock on the door of landfill operators. Landfill operators, believe it or not, have it in their best interests to minimize the amount of material that enters a landfill. If a given landfill site is expected to reach capacity in 20 years, for example, then reducing the amount of material entering that landfill by even a few percentage points per year, can extend its life significantly. For a landfill operator, that means longer amortization periods for the costs of constructing the landfill, and a longer profitable lifetime for a given site. BioCube worked with BFI, the operator of Winnipeg's primary landfill sites, to build a business plan to divert "biomass waste" from landfills into BioCube's supply stream. BioCube would be further able to diversify their biomass supplies, and BFI would be able to extend the useful (profitable) lifetimes of their facilities.
So—to summarize. BioCube planned to offer carbon-neutral fuel for coal-fired heat and electric plants that simultaneously diverted material from landfills, put money in the pockets of farmers, and replaced carbon emitting fossil fuel sources in power and heat plants, with a carbon-neutral alternative. I wish I could say that this was in the process of coming to fruition, but you may have been able to infer from my use of the past tense in this post, that it is not. After a successful demonstration project, BioCube folded up shop because of a lack of funding—ultimately, the business case wasn't clear enough, and the competitive environment was too uncertain. Without investor or government funding to scale up and build a commercial scale densification plant, everything wound down. It is an anticlimactic end to what could be a very powerful tool for landfills, farmers, and coal-plant operators. I'm hoping that Ken keeps this business plan on his shelf and is able to put it back in play in a more favorable economic environment.
Read more great WorldChanging Canada business stories on biomass: