Natural Resources Committee on June 22nd, 2006

[Jim Farrell]

Without trying to simplify it too much, I suggest the answer falls into two general categories: one is capacity, the other is access to resources.

Capacity is everything from skills and training, information, and ultimately influence, in terms of how decisions and policies are made. The second is access to resources. If you look at the first nations' land base across the country, even within the forest, it's relatively small. As my colleague has mentioned, there are a number of creative and innovative management schemes to have first nations communities more engaged in the decision-making process and the jobs associated with that, but at the same time I think it's fair to say there's a lot more to be done.

[The Chair, Conservative, Lee Richardson]

Thank you.

[Lloyd St. Amand, Liberal, Brant, ON]

If there is remaining time, I'll defer to Mr. Tonks.

[The Chair, Conservative, Lee Richardson]

We'll have to get him in the next round. We will now get to the next round.

Monsieur Lussier.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Upon reading the J. D. Irving, Limited report, I was surprised to see that on page 3, where the various activities of the company are outlined, there was no mention made of oil. I would also like to say that I was very impressed by your results in the area of GHG or greenhouse gas reductions. If I understood correctly, you have reduced these GHGs by 20 percent, while your production has grown by 50 percent.

You are therefore involved in the oil and forestry sectors. Have you ever considered getting involved in biodiesel. And are you involved with methanol?

[Christopher MacDonald]

I can answer that question.

Just so everybody understands, you're absolutely correct. We have an affiliated company, Irving Oil Limited, and I can honestly say they operate completely separately and distinctly from our operation. That's why we're not talking about them tonight. They have the largest refinery in Canada, but we're the forest products group and, in fairness, we rarely speak to them on various issues. That may sound strange.

One thing some of our companies are looking at, irrespective of Irving Oil, is biodiesel. We have companies that do waste management, a company by the name of Barrington Industrial Services Limited, that works in both New Brunswick and Nova Scotia. They have a couple of projects on the go right now. One of them is looking heavily at biodiesel and hydrocarbon sludge. I understand Cavendish Farms, which is the french fry operation run out of P.E.I., is also looking seriously at doing something with the oil and possibly looking at biodiesel.

So yes, we're looking at that, looking at biomass, endophyt seedling research. An interesting project to deal with the endophyt seedling project is that we're injecting trees in a research project to see if we can make them resistant to spruce budworm. It's a project we've worked on with ACOA and that goes to some of the other points of research and development. We spend over $2 million a year on research and development; biodiesel fits into that, and we are looking at a number of things.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Thank you.

Ms. Granskou talked earlier about a very important decision the government will have to make in 2006 with regard to the Kyoto Protocol and carbon sinks.

I would like to hear your views in this area, since it is mentioned in your document. Is your aim to lobby the government in order for carbon sinks to be included in Canada's policy with regard to the Kyoto Protocol?

[Mark Bettle]

You raise a very interesting point. Some studies we've heard about suggest Canadian forests are a net source of carbon dioxide rather than a sink, because of trees dying and being cut. That flies in the face of the recent report by the national round table, which shows sequestration of 100 million tonnes per year.

But without debating what's right and what's wrong and where Canada's forests are going to stand in the future--because there's a lot of uncertainty there--my suggestion would be that we don't throw the baby out with the bathwater. If we're looking at a made-in-Canada plan, it should promote, incentivize, and motivate the right type of behaviour that's going to increase the amount of carbon dioxide that's sequestered, irrespective of where we're going to stand ten, twenty, or fifty years from now.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Ms. Granskou, on page 3 of your document, mention is made of lengthy conflicts over environmental issues that cost several million dollars to taxpayers and investors. Are you aware of Mr. Desjardin's Quebec film entitled L'Erreur boréale? I would like you to be aware that this film will be shown in Cuba during the month of July and that Mr. Desjardins is promoting his film on the international stage.

Are you part of the coalition of people who are trying to re-establish the balance or to respond to Mr. Desjardin's film by defending the forest industry? Are you part of that coalition that is reacting to the film?

[Mary Granskou]

Thank you for that question.

We have met with Mr. Desjardins. We are not part of his coalition.

We have our own initiative across interests. For instance, in Quebec we're focused across our interests with the province on whether there are barriers to sustainability practices that can be removed to incentivize our goals. We're also engaged with one of the first nations in particular, the Mistissini Cree, who are establishing a major boreal protected area, working in partnership with the province and other interests. We are certainly aware of that. We have our own track of engagement, if that answers your question.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Are you opposed to the film? Are you collaborating with Mr. Chevrette, former Quebec minister?

[Mary Granskou]

There are others in the Canadian Boreal Initiative who are more engaged in the work in Quebec. I personally have not seen the film, so I really can't comment on it, I'm afraid. I try not to freelance where I'm not knowledgeable.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

A little earlier, you mentioned that in 2006 Canada will have a major decision to make with regard to the Kyoto Protocol. Could you talk a little bit more about this?

[Mary Granskou]

That's very correct. Canada actually was an advocate to include forests on a voluntary basis under the Kyoto Protocol. It's very true that this year, in 2006, all parties to the protocol need to decide whether they include or whether they do not.

The Canadian Forest Service and NRCan are actually wrapping up the analysis of whether our forests are a net source or a net sink, and then policy options will go to ministers for consideration in the fall plan, if that all stays on track. From our perspective, there are several concerns.

One is that the whole forest question is really seen as somewhat of a side issue, yet it warrants its own examination.

Second, whether forests and forest ecosystems are a net source or a net sink, we feel that practices and conservation need to be incentivized under our approach to climate change. We feel it's somewhat of a moot point, because cars emit, and of course they're included; energy sources emit, and of course they're included. We feel that it actually needs to be included.

There's an interesting point on that, if I might digress for a moment. As one moves further north, the trees are very important, but actually the majority of the carbon sequestration is actually in the wetlands and the peatlands. It's very interesting to look at this from the total ecosystem perspective.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Allen is next.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

Certainly in New Brunswick it is always an interesting debate as to whether the reforestation, while impressive, is a mixed forest. You can talk to anybody as to whether it is mixed. I'm sure that has concerns on the boreal side as well.

You comment about incentives and incenting superior forest management and performance. What specifically are the types of rewards and incentives that a company like Irving is talking about for this reforestation initiative?

[Mark Bettle]

Over the last few months we've been having extensive conversations with people within natural resources, within the environment group, and within other sectors as well. We've been talking about a made-in-Canada climate change plan that could include targets for emission reductions and also the recognition of carbon sinks, of which forests would be one. Within the context of that overall plan and within a trading system that allows you to move reductions from the forest sector against your emissions, that would provide value to the reductions from the forest sector.

If you look at our company, for instance, we're an integrated forest products company. We have pulp and paper mills in our front yard and trees in our back yard. Within an overall climate change program, if we're required to reduce emissions from our pulp and paper operations--which we see as a very realistic assumption--then we'd like to use the reductions from our woodlands against the emissions from our pulp and paper operations. These reductions are every bit as valid and every bit as recognizable and verifiable as the emissions. There's that value; it is very real and tangible.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

So it's kind of like an internal cap and trading system within Canada.

[Mark Bettle]

I've described it as an internal method. Ideally, with a viable and robust trading system, we would be allowed to trade those credits to other companies that need them.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Secondly, it has been in the news that a couple of our sawmills, not necessarily Irving mills, have shut down for a couple of weeks over the last little while. With that in mind, we are facing tremendous energy costs. I see there are 1,700 megawatts of capacity in biomass in the country now. How aggressive is Irving in going in that direction in New Brunswick?

[Christopher MacDonald]

To explain, we've been talking to the provincial government--of course, you know that forestry is a provincial responsibility. A week ago we were up talking to a number of the provincial people. I think Marta explained very well the challenges the industry faces as a whole. There is no question; it is the perfect storm.

We are looking at biomass. We're asking for some assistance from that perspective, because it's a substantial investment. In order to make the investment, you need to know that the wood supply is there at the end of the day, which is another issue.

We're looking at a number of things. The provincial government is working with us to look at red tape reduction--anything to save costs. We're in a crisis situation here; there's no question about that. I'm not trying to say that from a fear-mongering point of view. There is no question; there are mills in New Brunswick going down almost every day now.

We're looking at things such as biomass, whether it's going to produce ethanol at the end of the day or whether it's going to go in and be used as an energy source; and cogeneration. You're going to do everything you possibly can to survive going forward, knowing where the cost of energy is going, where it's at in New Brunswick and where it's going to go. So we're looking at all those things.

[The Chair, Conservative, Lee Richardson]

Thank you very much for the round.

We have time for one quick question. Mr. Tonks, would you like to wrap it up?

[Alan Tonks, Liberal, York South—Weston, ON]

Mr. Chairman, I was going to pursue the same line of questioning as Mr. Allen and Mr. Lussier have pursued with respect to sequestration, a made-in-Canada cap and trade regime that would provide the incentives for the forestry industry to reinvest in new technologies, and so on. It seems to me that is the kind of accelerator you are looking for. The multipliers are adding value to the industry and repositioning it at a time when it really needs that kind of boost.

I think Ms. Morgan, or someone, said there is a policy paper being developed. I can only say that I'm sure the committee would like to participate in the acceleration of that report, in view of the relevance.

The only question I have that hasn't been answered is, are there implications with respect the bonusing provisions under the free trade agreement that would implicate on a cap and trade regime in the industry? Perhaps Mr. Farrell can respond.

I ask you that because I think it would provide incentives, without question, but could it be argued that if there isn't a cap and trade in the American regime, it would be seen as problematic from a policy development perspective?

That's all.

[Jim Farrell]

Thank you, Mr. Tonks.

Do you mean under NAFTA more generally?

[Alan Tonks, Liberal, York South—Weston, ON]

Yes, more generally under NAFTA.