Spotlight on Economics: Biocoal

Coal: It keeps your lights on at night and drives away the darkness, but if you get it at Christmas, it may mean that you were not nice.

Throughout modern history, coal has played a very mixed role. It is an undeniable source of condensed energy, processed by Mother Nature for millennia, just waiting to be used. At the same time, the black clouds of smog and industrial pollution, implicated in the current climate change crisis, serve as stark reminders that, perhaps, it may have been better to leave that coal alone.

Both fortunately and unfortunately, coal is very cheap. It is, literally, energy rocks lounging on (or in) the ground – just add fire. A ton of coal costs about $40, if you have the right connections. That’s only 2 cents per pound. How many other things can you buy for 2 cents per pound?

A pound of bananas costs 50 cents (or $1,000 per ton) on the world market. A ton of wheat will put you back at least $170 (8.5 cents per pound). If you go to Home Depot, a ton of topsoil will cost you $50. Coal is, in some ways, actually cheaper than dirt.

This kind of ease of use is challenging for us humans. It’s cheap, it’s easy and it works. Our natural inclination is to pick it up and put it to use. If it’s bad for us in the future, let’s deal with that in the future. Unfortunately, many indications imply that the future is now. Even if we have more time, investments are being made and policy is changing.

Perhaps the most noticeable recent change in policy regarding coal is the Clean Power Plan forwarded by the U.S. Environmental Protection Agency (EPA). In essence, this policy limits the viability of coal-based power throughout the United States. It will be very challenging for coal-based power to meet greenhouse gas emission reduction targets through plant production technologies. Therefore, some other drastic change may be needed.

The form of that drastic change may involve alternate coal plant inputs, including a coal additive, such as biocoal, or biochar. Biocoal is a man-made substance that has similar properties to coal, but is sourced from biomass, including from forestry and, perhaps more importantly, agriculture. This makes biocoal much more sustainable and renewable, compared to conventional coal.

Agricultural residues (e.g., wheat straw and corn stover) and dedicated energy crops (e.g., prairie cordgrass and switchgrass) could provide the bulk of the material needed to make biocoal. Specialized facilities to heat and alter the properties of biomass and create biocoal would also be needed.

Biocoal, and its associated industry, could create a number of advantages. Farmers would be presented with alternate crops to diversify their revenue, jobs could be created in rural communities and greenhouse gas emissions from coal plants could be reduced.

However, there are also a number of difficulties associated with biocoal production. The foremost is cost. Remember the biggest benefit of coal? It’s cheap – biocoal, likely not so much. The cost of biocoal could be more than twice or three times that of coal. This presents the tradeoff inherent in biocoal production. We trade off the net benefits of a low-cost, high greenhouse gas intensive product (coal) with a high-cost sustainable product (biocoal) to attempt to make coal-based energy viable in the current policy context.

Challenges still remain in the creation of a biocoal industry and many questions have yet to be answered. However, biocoal could present a viable pathway to sustainable coal-based power.

Stay tuned to find out.

Source: Aaron DeLaporte, North Dakota State University

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