Yukonomist: Canola to your furnace’s rescue?

Yukonomist Keith Halliday

Like the Faro mine, your environmentally-challenged oil furnace will be surprised to discover that it may have a future.

While the potential revival of lead-zinc mining at Faro is thanks to a new partnership between the Ross River Dena Council’s development corporation and private mining interests, your furnace may be saved by the lowly canola plant.

Petrochemical engineers have been working hard to figure out how to turn canola oil into a low-carbon replacement for diesel and its chemical cousin, home-heating oil.

Why? You may not have known it, but your furnace is a major issue. Yukoners imported 234 million litres of crude-oil related products in 2018 and a good chunk of that was home-heating oil. The Yukon government’s climate-change plan says that a fifth of our carbon emissions come from heating including oil and propane.

Canada has promised to reduce carbon emissions by 40 to 45 per cent by 2030, less than a decade away, and to achieve Net Zero emissions by 2050. The Yukon will find such targets very hard to achieve if we keep heating our homes with fossil fuels.

Many new condos and homes are built with electric heat. But most Yukoners live in older homes, many of which still use oil.

You could re-insulate your home or replace your oil furnace with propane. Both could cut your monthly energy bills and reduce your carbon emissions a bit. But you are still burning fossil fuel.

You could switch to wood heat. The carbon emissions are low, but wood isn’t as cheap as it used to be and you may recall the 2018 government study about the worrying impact of wood smoke on Whitehorse air quality.

The most obvious option is to switch to some form of electrical heat. Even with Yukon Energy burning liquefied natural gas to make some of its electricity, your emissions would go down significantly.

You could use baseboard heaters or install a heat pump, for example. But electric heat isn’t cheap, either. In addition to spending thousands on new heating equipment, you may need to upgrade the electrical service to your home. This is a major investment for a Yukon family. Plus, it puts you at the mercy of future Yukon electricity prices.

Enter the lowly canola plant.

If we pay any attention to canola at all, it is usually as a cooking oil. But as most of us ignored the plant, two things happened. First, Canada became the world’s largest canola producer. Second, those petrochemical engineers succeeded in figuring out how to transform canola oil into something you could burn in your furnace.

Canola-derived renewable fuel works as follows. The canola plants suck climate-altering carbon dioxide out of the atmosphere when they grow. Then, after being processed into fuel, the fuel is burned and the carbon dioxide is re-released. The net effect, even after emissions in farming, production and transport, is a fuel that some experts think could emit 40 to 80 per cent less carbon dioxide than the fossil fuels it replaces.

This summer, two big new canola-fuel production facilities in Saskatchewan and Alberta were proposed. One of these, Covenant Energy, says that its proposed Hydrogenation-Derived Renewable Diesel plant will produce around 300 million litres annually of renewable diesel, renewable Arctic-grade diesel and sustainable aviation fuel. It hopes to go into production in 2024.

This raises the intriguing possibility that you could dramatically cut your heating emissions in the next few years without having to invest in a new heating system. This is important for Yukoners who have oil furnaces with a decade or more life ahead of them. It’s a big ask for them to junk those assets early. But if they could feed low-carbon fuel into them, that would help cut our emissions now rather than in the 2030s or 2040s.

The Yukon government’s climate-change plan includes measures to require diesel fuel and gasoline for transport to be blended with renewable fuels in a mix similar to that in leading provinces by 2025. Something similar could be done with home-heating fuel.

In fact, it might make sense for us to go farther and faster than the provinces since heating is so important in the Yukon, both in economic and climate terms.

One of the big challenges is cost. We don’t know what Covenant and its competitors will sell their renewable fuels for, but some analysts expect such fuels to be two- to three-times more expensive than conventional fuels. So you avoid a big investment in a new furnace, but you would pay significantly more per month.

Even with the carbon tax planned to hit approximately 45 cents per litre of traditional home heating fuel by 2030, heating with canola-derived fuel would be more expensive per month than remaining with home-heating oil.

Despite the cost, all of this raises some intriguing possibilities. Could a Yukon fuel entrepreneur partner with Covenant or one of the other renewable fuel producers? How many eco-conscious Yukoners would pay extra to cut their heating emissions until they figure out a long-term replacement for their oil furnace? Could there be a triple play between renewable home-heating fuel, road diesel and sustainable aviation fuel here? Could the Yukon government use its climate-change budget to encourage renewable heating oil in a way that cuts Yukon emissions at a lower cost per tonne than existing programs?

It may turn out that renewable heating fuel never ends up being competitive with electric heat or wood. On the other hand, it may be a pragmatic way to cut emissions while thousands of Yukoners still have an oil-fired beast in the basement.

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He is a Ma Murray award-winner for best columnist.