FutureMetrics publishes strategy to cofire wood pellets with coal

By Katie Fletcher | June 10, 2015

In light of upcoming federal policy, like the U.S. EPA’s Clean Power Plan, William Strauss, founder and president of FutureMetrics, published a paper describing a strategy for a gradual transition to a less carbon-intensive power generation sector.

The white paper suggests a strategy using existing coal power plants to provide low-cost and lower carbon intensive power to the grid. Strauss states in the report that the strategy provides security for future demand to the producers of solid fuel for power plants—both coal and pellets—while also generating jobs and lowering GHG emissions.

“It is a strategy that unites the power generators, the coal producers, the pellet producers and the states working on compliance plans for the Clean Power Plan,” Strauss said.

The foundation of the strategy laid out in the paper is to blend wood pellets with coal for power generation to support a gradual increase in the proportion of renewable solid fuel toward a goal that would result in a 30 percent reduction in CO2 emissions by 2030.

“It’s proven in many locations, particularly in western Europe and the U.K., but also in South Korea through government policy and scientific backup of that,” Strauss said. “Substituting some proportion of the coal burned in power plants with solid fuel refined from wood—that is wood pellets—is a good thing for the atmosphere and, in combustion at least, pellets are carbon neutral.”

According to the paper, power stations that participate in the strategy would still be using about 68 percent coal in their boilers. “It’s weird to talk about maintaining coal assets when everyone knows coal is one of the worst CO2 polluters,” Strauss said. “That’s why the paper is calling it an off-ramp, the idea is this is a transition.”

 Although the proportion of coal used is reduced with the strategy, Strauss believes coal producers would favor this strategy over what is happening due to other competing energy sources. According to Strauss, coal producers are losing market share because utilities are converting to natural gas, building new gas turbine power stations. “In this paper, one of the things we question is ‘Does it make any sense for utilities to put all their eggs in one basket—the natural gas basket—and abandon coal all together?’” he said.  “If natural gas goes to $9.19 per MMBtu, then it’s a bad bet because coal would be better even with cofiring.”

On top of this, tighter emissions regulations are causing coal stations to face significant pollution control upgrades. “The combination of higher capital basis after pollution control upgrades and less competitive fuel price is driving the generation sector into natural gas,” Strauss states in the paper.

Even so, coal is a major part of the power sector. According to the paper, across the U.S. amongst generators of 250 MW or larger, coal represents 50.25 percent of all the megawatt-hours (MWh) generated and natural gas generates 22.06 percent.

Unlike natural gas, the cofiring strategy requires that nearly all of the existing coal supply infrastructure remain operating, or as Strauss describes in the paper, “the cofiring strategy gives the coal-dependent power sector a gentle, non-disruptive glide path toward a less carbon-intensive future.”

Strauss said, cofiring is almost a drop-in replacement, especially at low cofiring rates. According to FutureMetrics, wood pellets can be co-milled in the same pulverizers and the blended pellet/coal powder can be blown into the same burners, but a slightly higher volume of blended pulverized fuel has to be sent to the burners to produce the same power output. “Other than the fact that you can’t store pellets outside with the coal because they can’t get wet, there are very minor modifications,” Strauss said.

Strauss’ paper states that the generation company that cofires wood pellets with coal to achieve a 10 percent reduction in CO2 will increase its cost of production by less than 1 cent per kWh, significantly less than the current cost of wind or solar power for achieving the same reduction. The paper uses the example of a 400 MW boiler line cofiring at 89 percent coal and 11 percent pellets for a 10 percent CO2 reduction. The CO2 reduction calculation includes the supply chain CO2 for both the wood pellets and the coal, which is accumulated from mining or harvesting, transport, refining, etc. All of the CO2 released in the combustion of the pellets is absorbed contemporaneously under the sustainability criteria requiring that the carbon stocks of the working forests are not diminished, Strauss reports.

“It’s a low-cost, decarbonizaiton pathway, but it’s still about a penny per kWh more than just plain old coal, so unless the utility is going to get either approval from the ratepayer or get support from policy they are just going to burn coal,” Strauss said. “They’ll take the cheapest generation path forward if there is no incentive for them to change from business as usual.”

Strauss affirms there will still be the need for other solutions for carbon mitigation. “You couldn’t cofire in all plants, there’s not enough sustainable feedstock to produce that quantity of pellets,” Strauss said. “Right now the market is overseas. There are underutilized wood baskets further inland that are either underutilized because they’ve lost their traditional customers in the pulp and paper business or they never had those customers to begin with.”

In some locations, the traditional forest products users such as pulp mills, sawmills and OSB mills continue to use the wood that has been grown for generations to supply those industries, but Strauss said in many states those industries have significantly declined. Forests planted 20 to 40 years ago that were expected to be used in those industries will be stranded. “If there were cofiring in those states, those otherwise stranded assets would regain their value and the jobs that come with managing and harvesting and transporting would be renewed and sustained,” Strauss said.

The paper concludes that blending low carbon wood pellets with coal under a well-crafted policy can provide a non-disruptive pathway toward achieving the goals of the Clean Power Plan. According to Strauss, the strategy does not burden the generators nor the ratepayers with high costs, the carbon benefits can be accrued for a fraction of the total cost of wind or solar power and unlike wind and solar and natural gas, the fuel supply for cofiring power plants sustains and grows jobs in the coal and wood growing regions of the U.S. “What is needed is a pragmatic and rational solution to lowering CO2 emissions,” Strauss said. “This paper has presented just that. Over several decades, in a non-disruptive way, the grid can achieve the goals of the Clean Power Plan.”

The full white paper “A Rational and Pragmatic Off-Ramp to a Decarbonized Future” can be downloaded on FutureMetric’s website.