Biomass: The Ontario Opportunity

Strong tax incentives, a highly trained workforce, ample forestry materials and government investment in research and development make Ontario a great location for biomass power development.
By Shirley Townsend | August 23, 2011

From tax credits to stable regulation, public sector support is widely accepted as critical to the economically successful integration of biomass as a source of renewable power. For biomass companies, finding locations where the public sector environment is friendly could be one of the most important factors in designing a sustainable business model. As such, North American companies should not limit themselves to the 50 states. In fact, Ontario, Canada, has emerged as a location with a unique blend of natural resources, regulation and investment programs that make it a business-friendly location with advantages specifically beneficial to biomass power generation. 

Strong tax incentives, a highly trained workforce, a surplus of forestry materials and direct government investment in research and development initiatives all contribute to the biomass-friendly culture of Ontario. By embracing the biomass industry, Ontario has cleared a path forward for both national and international companies to pilot in the new era of biomass power generation, and to do so profitably.

The Ontario Biomass Opportunity

Ontario could be considered a natural early adopter of the biomass opportunity. The province identified early on that its North American location, forestry industry community expertise and vast natural resources would make it an advantageous location for biomass power generation. 

With fuel prices fluctuating, concerns about North America’s dependence on fossil fuels are increasing. Countries, states and provinces are looking to create innovative energy solutions while strengthening economies. Increasingly, biomass is emerging as an important new source of renewable fuel, and Ontario offers an early blueprint. Leveraging significant investment in research and development and tax incentives, Ontario has begun converting coal plants to biomass generation facilities, including one already operating at Atikokan, in northern Ontario.

This early adoption of biomass is not surprising, given that Ontario’s forests cover an area larger than the size of forests in Belgium, France and Germany. With their vast size and excellent track record for sustainable forestry, Ontario’s forests provide a wealth of high-quality and diverse wood and bioenergy products from a reliable source of renewable and diverse forests. In fact, 80 percent of the total licensed land base has been independently certified to one of the following performance standards: Forest Stewardship Council, the Canadian Standards Association and the American Forest and Paper Association’s Sustainable Forestry Initiative.

Additionally, many Ontario communities offer a labor force that is educated in the processing of wood and related wood products and outputs. The value-added wood products field represents one such industry, and it makes up 60 percent of Ontario’s $18 billion ($18.3 billion) forest products industry. There are more than 2,000 companies producing everything from pallets to engineered products using composite technology. With the global downturn and worldwide restructuring of the forestry industry, however, many of Ontario’s forestry facilities have experienced decreased demand. But there is a silver lining for biomass energy production—the downturn has spurred a number of innovative uses for the unused wood, including increased energy production.

In fact, in addition to those resources already mentioned, bioenergy resources are plentiful in Ontario and include residual materials from forestry operations left on the forest floor, waste matter from agricultural production and byproducts of food-processing operations. As such, the Ontario Power Authority estimates that a total of 450 megawatts (MW) of energy could be produced by biomass projects in the province by 2027, five times the current and committed capacity.

Trading Coal for Biomass in Atikokan

To achieve this goal, Ontario is converting multiple existing coal power stations to use biomass to generate energy. The first power plant to undergo the conversion to biomass is the 211-MW Atikokan generating station, which has already achieved full load on 100 percent wood pellets. The fuel contract for Atikokan was put in place in 2010, and Ontario Power Generation (which is owned by the province and produces 66 percent of Ontario’s electricity) has published a fuel supply request for an initial 90,000 tons of wood pellets, a figure that is expected to increase over time.

There is good news at Atikokan both economically and environmentally. The annual fuel requirements for the plant are estimated to amount to less than 1 percent of the total allowable forest harvest in Ontario each year. Even given this low consumption of wood, the plant is expected to generate enough power to support 15,000 homes each year.

Support for R&D, Entrepreneurship

In addition to the direct power generation already taking place, research in the biomass field to pioneer future relevant technologies is also supported by the Ontario government. Ontario is home to the Centre for Research and Innovation in the Bio-Economy. CRIBE’s role is to aid the transformation of the forest products industry in northern Ontario by acting as a conduit for companies interested in investigating opportunities in the bioeconomy. CRIBE is able to partner financially with relevant industry organizations and private sector partners to bring emerging technologies to fruition. 

Biomass-Friendly Government Programs

The future has never been brighter for biomass and other renewable energy technologies in Ontario and in other jurisdictions ready to make the investment to move to such an efficient renewable energy source. Stephen Roberts, a strategic sector coordinator at the Ontario Ministry of Northern Development, Mining and Forestry points to the wide variety of market entry options for U.S. companies, and emphasizes that the Ontario government is supportive of U.S. investment and welcomes U.S. technology, experience and investment. “A smart operator could be very successful with a business model that draws on our surplus wood supply, our new bioenergy legislation, and our existing forestry and logistics infrastructure,” he says.

Through leveraging its natural resources, its early adoption of biomass as a renewable energy source, and its direct government support for research and development and entrepreneurship within the industry, the Ontario government has created an environment designed to support the success of biomass-related companies. In doing so, Ontario is demonstrating to the rest of the world how to use biomass to truly diversify sources of energy, and move into an era of clean, green power.

Author: Shirley Townsend
Senior Economic Officer, California
Ontario Ministry of Economic Development and Trade