FutureMetrics: Wood pellets offer low-cost CO2 reduction

FutureMetrics recently published a white paper, titled “The Lowest Cost Solution for Maximum Decarbonization of the Power Sector While Maintaining Grid Reliability,” that compares two scenarios for powering carbon emissions in the power generation sector.

The first scenario assumes coal plants are retired and replaced with new combined cycle natural gas generation stations. The second assumes that existing pulverized coal plants are modified to use wood pellets rather than coal. Within the paper, author William Strauss notes his analysis shows converting coal plants to wood pellets is the solution that provides significantly higher carbon dioxide reduction at a lower net monetary cost per avoided ton.

In the paper, Strauss explains the need for both baseload and on-demand peaking power generation. While wind and solar provide a zero-emission power generation solution, the paper notes they provide variable output—and sometimes zero output. To keep the power grid stable, sources of generation are needed that can be depended on at any time. According to Strauss, that reliable power has traditionally been sourced from coal, natural gas, nuclear and hydro sources.

In most places, utility-scale hydro has already been fully exploited he said, noting that even in areas where there is additional hydro potential, it takes many years to implement. Nuclear power, while low-carbon, is very costly and takes years to deploy. There are also issues regarding spent fuel and how plants are shielded from potential attacks. Alternatively, natural gas’s low price and low carbon emissions when compared to coal make it a relatively easy-to-deploy way to lower carbon emissions while providing baseload or peaking power.

Strauss argues, however, that building new natural gas plants is not the least costly way to mitigate carbon emissions while providing dispatchable generation. Rather, he indicates the capital costs associated with modifying existing coal plants for use with wood pellets is significantly lower than the capital cost for new natural gas combined cycle plants. In fact, he said the cost of converting a coal plant to wood pellets averages only about 40 percent of the capital costs of building a new natural gas-fired facility. In addition, the construction timeline is less than two years. Operating costs, however, are higher as pellet fuel is currently more costly than natural gas.

While operating costs might be higher, Strauss stresses the carbon reduction benefits associated with the use of pellets are much higher. While carbon dioxide emissions from a natural gas combined cycle plant are approximately 46 percent lower than coal, he noted carbon dioxide emissions from a modern pulverized coal plant converted to use wood pellets achieves a reduction of approximately 90 percent.

Within the report, Strauss also discusses policy needs necessary to support the least costly methods to decarbonizing the on-demand generation mix. 

A full copy of the report can be downloaded from FutureMetrics website. http://www.futuremetrics.com