Agri-pellets as alternative fuels for coal-fired power plants in Canada

1. Introduction

Coal-fired power plants are one of the major carbon dioxide (CO₂) emitters around the globe, and therefore, finding alternative clean and renewable sources for power generation will significantly contribute to emission reduction. However, a study of the replacement of coal by bio-pellets in the power plants needs to consider not only the pellet production cost but also the social (environmental) impacts of alternative fuels including different types of agri-pellets and coal. Coal is economically competitive but causes much environmental damages, therefore, its social costs exceed private costs. On the other hand, agri-pellets may not have a competitive edge over coal but would be environmentally advantageous. Therefore, given the rising concerns about the global impacts of environmental degradation, estimating both the private and social costs of alternative fuel sources is critical for informed policymaking.

Canada is among the world’s top per capita energy users, but energy sources and emissions vary greatly across its provinces. While hydro and nuclear are the main sources of electricity generation in some provinces, such as Manitoba, Ontario and Quebec, other provinces, such as Alberta and Saskatchewan rely on fossil fuels. Saskatchewan produces about half of its electricity from lignite coal, making it the second Greenhouse Gas (GHG) emitter in the country (Environment and Climate Change Canada, 2021). The continuous use of lignite coal to generate electricity in the province is the main challenge to Canada’s environmental policy and its international commitment, such as the Paris Accord, to reduce emissions. The recent carbon tax policy by the Federal Government of Canada [1] intends to incentivize moving away from the coal-fired power plants in different provinces. However, Saskatchewan decided not to sign up for the national program and instead introduced its own emission reduction policy. The provincial government argued that carbon tax would hurt the agriculture sector, which is one of the main sources of exports and income in the province. Nevertheless, the well-developed agricultural sector and abundant crops produced in Saskatchewan put the province in a good position to produce and use agri-pellets as a strong alternative to coal in generating electricity. Oat hulls and canola hulls are two of these crop residues that can be used to produce pellets. In 2019, the share of Saskatchewan in Canadian...