Monday, February 1st, 2010 | 4:01 pm
Canwest News Service
VANCOUVER - The Canadian forest industry can come out of the recession stronger than ever by turning green, according to a new study by the Forest Products Association of Canada.
The study shows that traditional wood products, like lumber or pulp, are the best platform for a new bioenergy sector that can bring new capital, create new jobs and provide the benefits of clean energy.
But it will take a change in direction from industry and government to attract needed capital, states the report, called the Future Biopathways Project.
"The ability to produce energy, fuel and chemicals from wood fibre, along with forests' capacity to sequester carbon from the atmosphere, will change the nature of the game for Canada's forest products industry," states a summary of the report that was released Monday.
"As much as this is welcome news for forestry workers, it is also advantageous to communities and the national economy at large, since the forest products industry produces far more jobs and generates greater GDP than emerging bio-industries in isolation."
FPAC president Avrim Lazar said the association is seeking $3 billion from Ottawa in new and existing programs over the next five years to bring the transition about.
Canada's key trading partners are already retooling their economies to capture the fast-growing bioenergy market to attract financial investors, the report states.
The report also states that the existing industry needs to commit capital or form partnerships to take advantage of the opportunities ahead. The report notes that Canada ranks low in biomass energy investments, accounting for only two per cent of global investments over the last five years.
Further, capital markets need to rethink the forest industry as a provider of green energy and a producer of carbon credits.
The year-long project involved 65 Canadian experts in biotechnology, investment banking and carbon pricing. It also brought in expertise from existing wood products companies to make sure findings were practical, said project leader Don Roberts, senior research analyst at CIBC World Markets.
The report details the potential for the industry to adapt and integrate into the emerging bioenergy sector. Specifics vary from region to region, depending on federal and provincial programs, costs of fibre and market prices for products.
Roberts said in an interview that change is coming and the forest industry needs to seriously consider the growing number of options coming on stream.
"We've got a series of new technologies either out there or in the pipeline that we really ought to be taking a closer look at," Roberts said.
He said it could be as simple as a sawmill partnering with a producer of pyrolysis oil, an oil derived from wood waste and bark, that can be used as a fuel, a source of bio-chemicals or other products, including food additives.
Or it could be a pulp mill adding a bio-refinery to its existing product line.
Roberts said researchers looked not only at return on capital but also on employment numbers for a cubic metre of wood. What they found was that bioenergy plants developed on their own may create a strong return on capital but they do not produce many jobs.
But if the new technologies are combined with the existing wood products industry, the return on capital and job creation potential are both strongest.
"The traditional guys and the new guys are better off if they do it together. This isn't brain surgery, but we actually had to do the numbers to show it," Roberts said.
The report also points out that government regulations and programs are not being applied equally, creating some winner and losers. FPAC is calling on Ottawa and provincial governments to review their existing programs to ensure that all sectors in the emerging bioenergy field have equal access to programs and funds.
ghamilton@vancouversun.com
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