Lionel in 1947 came out with the SP type smoke pellet which I have used in the 2020 & 671 type bulb locos. The same precautions apply with regard to use & storage/moving - the material spills when hot & in liquid form, BUT it is non-toxic.
I have also used smoke fluid in these engines, placing a fiberglass wick/wadding from a 2025 type unit under the bulb to hold the fluid.