Soaring Energy Prices Are Thinning Profit Margins in Transport Sector and Increasing Costs

{ISSUE} Soaring energy prices are thinning profit margins in the transport sector and increasing operational costs in many manufacturing industries {SHIFT} Turning wood waste into bio-fuel helps industry find a cost-effective and environmentally sustainable energy source to complement traditional fuel A new public-private partnership is set to drive revenue for the forest products industry in Northern Ontario. Montreal-based pulp and paper company Domtar is partnering with Battelle, an independent research and development specialist in Columbus, Ohio, to test a new technology that rapidly converts wood waste into crude bio-oil and gas. The newly formed provincial Centre for Research and Innovation in the Bio-Economy (CRIBE) is playing its part by providing up to $6-million in funding for the project. The chosen test site is Domtar’s mill operations in Dryden, Ontario. Known as fast pyrolysis, the technology applies heat without the use of oxygen to convert the biomass – in this case rejected wood chips. While pyrolysis is not an entirely new process, Battelle changed the playing field significantly by designing smaller reactors that chemically and molecularly modify the oil produced to generate greater market value, explains Charles Lucius, vice president of Energy, Environment and Material Sciences at Battelle. With this design innovation, operations can easily collocate the systems on their existing sites to produce bio-oil for commercial use in transportation fuel, plastics and chemical production, he says. “This has been specifically developed for small scale, distributed implementation. We’re not trying to mirror the petroleum industry here. Rather, we are looking at the economic advantages of collocating smaller systems with nearby biomass sources. Because it is small, it can easily be deployed in combination with other activities, so you don’t have to drag materials great distances for processing. ” The partnership is definitely a timely one for Northern Ontario operations, notes Lorne Morrow, CEO of CRIBE in Thunder Bay. “If you look in this region, 80 per cent of the mills are down. We want to make sure the remaining ones are still here. ” For those mills still in operation, it is essential they bring in new revenue streams, he adds. “This makes sense because they have the room and the power, so it’s a natural fit to add a secondary wood flow to their primary one. In this way, they can add value to a resource that is typically burned as hog fuel. In addition, the Battelle technology is not a hugely capital intensive process and more energy efficient than more traditional [biofuel] approaches. We could see these distributed across a variety of operations. ” The balance of this year will be spent on verifying the validity of the system design on a limited scale. Part two will expand production to a full-scale plant operation. If all goes according to plan, the project will serve as a benchmark for a much broader range of biomass-related processes and markets. “It’s not something that can be applied just paper mills, ” Mr. Morrow says. “We can see these distributed across any operation with a natural wood supply, or other types of fiber for that matter. ” As Mr. Lucius notes, “It’s opening doors to what could be a significant commercial success story. ” Source: financialpost