Regulatory delays slow efforts to stop burning coal at Duluth steam plant

While the push to wean Duluth’s steam plant off coal continues, the fossil fuel will continue to remain part of the facility’s diet for the foreseeable future, largely because of regulatory delays its operators have encountered as they seek to burn a new biofuel made from wood waste.

“We hoped to be burning renewable fuel oil this year, but that’s not going to happen. And it’s questionable whether or not it will happen in 2020,” said Terry Nanti, general manager of Duluth Energy Systems, a division of Ever-Green Energy, which now runs the district energy system.

Renewable fuel oil is produced from gasified forest residuals, explained Michael Burns, vice president of operations for Ever-Green Energy.

“They put it into a reactor, and they cook off the volatiles. So it makes kind of a wood tar, which then they liquify,” he said.

Burns said this wood-based fuel is expected to qualify as a renewable fuel under the Environmental Protection Agency’s standards, but that designation has been slow in coming.

Ever-Green remains under contract with Ottawa, Ontario-based Ensyn Fuels to buy the fuel when it gets a green light to do so. For its part, Ensyn has agreed to bear the cost of converting boilers at the Duluth steam plant to operate using the fuel, as part of a long-term agreement.

Duluth Energy Systems is poised to become Ensyn’s first Minnesota customer, and the company has expressed strong interest in locating a production facility in the northern part of the state, too, as the market for its product begins to grow, especially given the quantity of forest products produced in the region.

“But they haven’t been able to get moving forward on that yet, because it’s gotten held up at the EPA,” Burns said. “So, the EPA interpretation of what types of biomass are eligible to be put into a reactor and turned into this renewable fuel oil has caused them to not be able to deliver under the same approach that they had before into the U.S., and so we put our project on pause.”

Nevertheless, Ever-Green remains eager to work with Ensyn.

“We certainly want that contract to move forward as soon as they are able to get through these hurdles that they’re going through at the EPA, because that will be our least expensive fuel, the way that contract is written,” Burns said. In fact, the biofuel is expected to cost 10 percent less than the amount of fossil fuel it displaces.

“So we’re being patient, but we are working on other plan B's, if you will, to help us reduce our reliance on coal moving forward,” he said.

Nanti said Duluth Energy Systems already has made considerable progress toward that end, even without Ensyn’s help.

“In 2014, we were virtually a 100% coal operation, burning 52,000 tons of coal per year. We’re going to finish this year using somewhere around 11,000 tons of coal,” he said. That’s nearly a 79% reduction in the amount of coal the plant consumes.

Nanti said much of that progress has come from shifting the plant over to natural gas, a fuel that now provides 81% of its energy needs. While natural gas also is a fossil fuel, it burns more cleanly than coal and with fewer greenhouse gas emissions.

However, Nanti said “Currently, coal use is unavoidable. We don’t have the ability not to burn coal. It’s necessary for redundancy, particularly during winter operations.”

He explained that only two of the plant’s four boiler units have been retrofitted to burn natural gas.

“Once we exceed the capability of two boilers on natural gas, we have to burn coal. That happens during periods of extreme cold,” such as the city saw in January and February, Nanti said.

The fact that coal remains part of the fuel mix is not all bad for customers in one respect, because Nanti noted that coal typically is a lower-cost fuel than natural gas during the winter months. Duluth Energy Systems is a district energy provider that serves much of the city's downtown, as well as Canal Park.

If the EPA signs off on the renewable fuel oil, however Burns said it would likely fill about half of the steam plant’s energy needs and has the potential to completely displace coal.

"That's our bridge to a coal-free future," he said.

Noah Schuchman, chief administrative officer for the city of Duluth, praised Ever-Green for its efforts, saying: "The mayor and I both spent a good portion of this year pushing them very hard to reduce the amount of coal that we are using, and they have worked hard to do that and to look for alternate options."

“But much as we don’t — and they don’t — like enjoy having to continue to use coal, that is what we need to continue to do for the time being,” he said.