Ontario's most plentiful fuel - peat - may be the solution to using coal to generate electricity.

Peat Resources Ltd. of Toronto is trying to raise $120 million to build a production facility to supply fuel to two electricity generation plants in northwestern Ontario that currently burn coal.

The facility would convert wet peat from a 5,500-sq.-km area in northwestern Ontario into a replacement fuel for the generation plants at Atikokan and Thunder Bay.

The plant would produce one million tonnes of peat fuel pellets annually.

Photo courtesy of Peat Resources
Peat Resources president and CEO Leon La Prairie says two northwestern Ontario plants could be switched to burn peat.

The provincial government plans to close the province's six coal-fired power plants by 2007 to reduce air pollution and improve the health of Ontarians. The plants produce about 25 per cent of Ontario's electricity.

"Ontario has enough peat to last for centuries," says Leon La Prairie, Peat Resources' president and CEO. "It is equal to Alberta's oilsands."

La Prairie says Sidney Blair, who helped develop Alberta's oilsands, estimated Ontario's peat-fuel potential is comparable to the Athabasca area, which is the largest oil deposit in the world.

Peat has been used as a fuel for more than 2,000 years. Energy produced from peat supplies about 10 per cent of power needs in Ireland and seven per cent in Finland.

Burning peat as a fuel instead of coal is better for the environment because it produces only 10 per cent of the sulphur dioxide emissions that coal does and there is virtually no mercury, La Prairie says.

Several power-generating projects have been announced to replace the 9,700 megawatts produced by the coal-fired plants, including using natural gas, reactivating nuclear plants and renewable energy. So far, there are no plans to use peat.

Ontario's peat reserves, which are estimated to be about 10 per cent of the world's total, are harvested only for agriculture purposes. Ontario reserves are equivalent to about 14 billion tonnes of coal.

The peat-harvesting area in northwestern Ontario that Peat Resources has permits to mine is more than eight times the size of Metropolitan Toronto.

Peat Resources has been involved in the exploration and development of peat deposits since 1980. In the early 1980s, the potential peat resources in Ontario were estimated to cover more than 16 million hectares, more than the combined peat resources of Ireland and Finland.

Four years ago, the World Energy Council estimated Canada's peat resources at more than 40 per cent of the world's total. Ontario has about 20 per cent of Canada's total peat supplies.

Low coal and oil prices in the 1990s kept the project from being economically viable, La Prairie says.

"Ontario's peat resources can provide the energy equivalent of 14 billion tonnes of coal, enough to satisfy the province's need for centuries," he says.

Genevieve LaValle of the Dominion Bond Rating Service says Peat Resources' proposed plan seems viable. "I don't see why it wouldn't be an option for the government, provided the economics are there."

La Prairie says peat is the best economic option to replace coal at the 400-megawatt Thunder Bay and the 240-megawatt Atikokan power plants, and would cost about the same as the coal Ontario imports from the United States.

"The investment has already been made in the plants," La Prairie says. "The coal plants will require very little adaptation to burn peat pellets."

Peat was used successfully in an Ontario Hydro pilot project in 1991, generating 9,000 BTUs per pound. The yield is comparable to the electricity generated from a similar amount of lignite coal burned in the two northwestern Ontario plants.

La Prairie says the source of his company's peat is the "largest area the Ontario government has ever put out for this type of purpose."

The land-permit area contains four separate peat bogs.

Obtaining the peat involves excavating to an average depth of about three metres and removing the wet peat with a dredging wheel.

The peat is then shipped by pipeline or conveyor belt to the processing plant where the water is removed by pressing. The peat is then dried, made into pellets and delivered to the power plants where it is burned.

"The bog will then return to either fresh water for ducks or return to growing lumber for pulp and paper," La Prairie says.

Tom Adams, executive director of Energy Probe, says burning peat instead of coal is only viable, however, because of the current anti-coal sentiment in Ontario.

"Coal is out of favour in Ontario," he says. "Combine this with the increasing cost of conventional fuels and you have peat as a possible fuel source. Coal politics is driving this.

"It is also relevant only in the context of the northwestern Ontario plants," Adams says. "The biggest Ontario coal plant - Nanticoke - isn't designed to burn peat.”

The 3,900-megawatt Nanticoke plant is on the shores of Lake Erie, about 60 kilometres south of Hamilton.

The energy cost of peat compares favourably with the heaviest coal and coal imported from the eastern United States, but not with the lighter low-sulphur coal from the western U.S., which is what is used in Ontario's coal-burning electricity generation plants. "I am not certain the economics are there," Adams says.

Adams says he is also skeptical about the need for producing more electricity from the coal-burning plants in northwestern Ontario.

"There is hydro power in northwestern Ontario already. The real power problems are in eastern parts of Ontario, not the northwest. You don't send electric power from Thunder Bay to Toronto," he says.

"Without the anti-coal movement in Ontario, peat would stay on the ground," Adams says.

(Charles Wyatt can be reached at wyatt@businessedge.ca)