Forestry industry must diversify, capitalize on demand for green energy: study
MONTREAL — Canada’s battered forestry industry can be rescued by blending traditional production of wood with new eco-friendly uses such as biochemicals and bioenergy, says a new study released Monday.
The forest industry needs to extract the maximum value “from every tree harvested,” said Avrim Lazar, president of the Forest Products Association of Canada.
The study, based on interviews with 65 experts as well as industry leaders and government, predicts a bright future for the forest industry despite the economic downturn and collapses in the demand for lumber and paper.
An estimated 50,000 forest jobs have been lost in Canada over the past few years and the association says there needs to be changes in order to sustain the industry’s remaining 270,000 jobs.
“ What we need is a shift in business model, a new business model that still produces lumber, pulp and paper but also extracts maximum value from every tree harvested,” Lazar said.
“The message for government is that we have to re-examine our policies and programs to make this possible. It’s not government’s job to support the status quo, to inhibit change. It’s government’s job to accelerate this transformation.”
The association is calling on Ottawa to offer economic stimulus to facilitate the change through research, tax measures and other funding. The price tag is $1.5 billion over five years, half of which can come from spending reallocation.
The payback will be a big increase in clean energy for Canada, sustainable jobs in the forest industry, and revitalized investment, Lazar said.
The new green model would be able to produce the power of nine nuclear reactors, enough to meet the energy needs of 2.5 million homes, or one out of every five homes across Canada.
While demand for paper will continue to wane, Lazar said most of the industry sees good future demand for lumber, pulp, bioenergy and other new wood products.
The challenge facing the industry is to capitalize on the demand for new products to restore growth, he said.
One way of doing that is to diversify markets and reduce forestry’s dependence on the United States, he said.
“ The forest industry’s gone through a very hard time,” Lazar said.
“ We’ve done a study that points in a direction which gives us maximum chances for the future.”
The head of Canada’s largest forestry union said the industry association has developed the right formula for the ailing industry.
But Dave Coles of the Communications, Energy and Paperworkers Union is concerned the Harper government won’t deliver necessary funding.
“I am afraid that it will fall on deaf ears. We are still getting no indication from the federal government that they view the forest industry except as a sunset,” he said in an interview.
Coles said moving to an integrated forest industry is needed, rather than just chip and burn which won’t create jobs.
Pierre Lapointe, president and CEO of FP Innovations, said years of research and development have produced technologies that convert wood fibre into highvalue products such as bio-fuels to heat homes or power vehicles as well as bio-chemicals to make cosmetics, solvents, food additives and renewable plastics.
Among the proposals to encourage private sector investment is leveraging the tax system by creating a capital investment tax credit similar to the United States approach.
“ This new integrated model will cause investors to take a fresh and more optimistic look at the economic potential of Canada’s forest products industry,” said Don Roberts, managing director of CIBC World Markets and the study leader.