Natural Resources Committee on April 20th, 2010

[The Chair, Conservative, Leon Benoit]

Good morning, everyone. It's great to be back continuing our study of the status of the ecoENERGY program—or programs, I should say, because there are several of them. Today we are dealing with the biofuels. There was a lot of interest by members of this committee in biofuels.

We have two panels today. We have in the first panel, from the Canadian Renewable Fuels Association, Jeff Passmore, the past chair. The current chair, who was going to attend today, I understand isn't feeling well and couldn't be here. We have as well, from the Coopérative forestière Haut Plan Vert, Valérie Patoine, who is a forest engineer, and Lise Dubé, who is an agronomist; and from the Forest Products Association of Canada, Catherine Cobden, who is the vice-president of economics and regulatory affairs.

It's great to have you all here. The clerk has talked to you about the length of the presentations. We normally take the presentations in the order in which they appear on the agenda.

If you're ready, Mr. Passmore, to make your presentation to the committee, we will start with you. So go ahead, please, and then we'll move to questions and comments by the members of the committee.

[Jeff Passmore, Past President, Canadian Renewable Fuels Association]

Thank you very much, Mr. Chair and members of the committee, and our apologies. Gord Quaiattini, the president of the Canadian Renewable Fuels Association, came down with the flu last night, so I'm here, and happy to be here.

Thanks very much for inviting the Canadian Renewable Fuels Association to be part of this hearing. We welcome the chance to be here and tell the story of the Canadian biofuels sector, which includes, of course, ethanol, biodiesel, cellulosic ethanol, and large, advanced biofuels.

The story is one of new jobs, economic growth, energy diversity, environmental benefits, and rural opportunity, and it's a story that continues to be written each and every day. With the recent announcement of the regulations that put the renewable fuels standard into effect, there could hardly be a better time to share with you the remarkable contribution our industry has made and to help chart the still greater opportunities that lie ahead.

All this is possible thanks to a successful partnership between the government and the industry. Parliament has led and ethanol and biodiesel in Canada have delivered.

I want to acknowledge the strong support our industry has received from the federal government and from this Parliament. That began more than a decade ago with the ethanol expansion program and continues to this day with smart new policies that create the conditions for commercial success. I would encourage you to regard the renewable fuels standard, coupled with the ecoENERGY program, as levers that help open market access and deliver private sector financing for the commercialization of new plants. These tools have worked and they continue to work.

Today, there are 14 ethanol plants and eight biodiesel plants in operation across Canada. A further two ethanol plants and three additional biodiesel facilities are currently under construction. Collectively, these refineries represent a total annual production capacity of 1.95 billion litres—just under two billion litres of renewable fuels—and provide employment to thousands of Canadians, most of them in rural communities.

Indeed, if there were a single phrase that best describes Canada's renewable fuel sector, it would be “delivering results”. These are results that have generated a positive return on investment, have helped advance the priorities of this government and this Parliament, and have directly benefit Canada and Canadians.

Allow me to begin by talking about jobs and growth, particularly in the context of a still recovering world economy, probably one of the most vital priorities of all. The biofuels industry has already become a valued engine of economic opportunity, particularly for rural Canada, where our plants are usually built to ensure proximity to feedstocks.

The benefits could not be more clear: the creation of new employment from facility construction through to operations, indirect employment and economic spinoff benefits, a broadened tax base for local and regional governments, and higher incomes and earnings for farmers.

In March of this year, Ottawa-based Doyletech Corporation did an independent survey, the first of its kind, dedicated to measuring the economic impact of Canada's biofuel sector. It detailed the following: 12,616 new direct and indirect jobs have been created since 2006 to support the construction of new production facilities, and each year, as many as 1,400 new jobs are created to support ongoing operations. In economic activity from plant construction, $2.8 billion has been generated, and approximately $700 million in economic activity is generated annually from ongoing operations of these same facilities. Nearly all of this is in rural Canada.

With regard to tax revenues, combining both construction and operating phases, the biofuels sector helps to widen the tax base and pay for valuable services at local, provincial, and federal levels. This has represented more than $82 million for municipal governments, more than $500 million for provincial governments, and nearly $700 million in tax revenue at the federal level.

These aren't projections or estimates. These are real facilities built with bricks and mortar, creating real jobs, generating real economic activity, and drawing in real tax revenues.

We now turn to the environmental benefits. As you know, the transportation sector accounts for a little more than 25% of Canada's overall GHG emissions. As a consequence, there are few more effective ways to shrink our carbon footprint than to reduce our reliance on fossil fuels. That's precisely what renewable fuels do.

Here are a few key facts. The federal renewable fuel standard alone will cut carbon emissions by 4.2 megatons, the equivalent of removing a million cars from our nation's highways each and every year. The IEA reported in late 2009 that by 2015, grain-based ethanol will have increased its GHG reductions compared to those for gasoline by 55%.

Ethanol helps to reduce tailpipe and toxic emissions as well.

Finally, according to Natural Resources Canada, ethanol production uses as much as 40% less energy than does the equivalent fossil fuel production, a figure that goes to 90% when we talk about cellulosic technologies.

Notwithstanding these facts, we know that some continue to question the net environmental benefits of renewable fuels. Skepticism, in some cases advanced by interests that see our industry as a threat to theirs, has been in large supply. So I'd like to try to set the record straight.

Just last November, the most comprehensive and thorough report yet examined the environmental benefits of Canadian renewable fuels. Conducted by Cheminfo Services Inc., the study came to some definitive conclusions. It found that Canadian-produced ethanol, and I'm speaking here of first-generation ethanol using corn and wheat as feedstocks, reduced GHG emissions at a rate of 63% compared to traditional fossil fuels. For Canadian biodiesel, using animal fats and waste grease as feedstocks, the results were even more impressive. Greenhouse gas emissions fell by a rate of 99% compared to gasoline. These are the facts. They're contemporary, they're clear, and they are the consequence of independent expert analysis. To those who suggest otherwise, I would ask that they table their studies that assess actual Canadian facilities of their plants and submit their methodology to independent assessment. When it falls to making policy decisions, they should be based on the same intellectual rigour as renewable fuels.

In summary, whether we're talking about jobs, economic growth, GHG reductions, energy balance, or creating new opportunities in rural Canada, the conclusion is indisputable. The partnership between government and industry is delivering results and achieving tangible benefits.

In conclusion, allow me to make one final point. I've been talking deliberately and have placed the emphasis on the story to date on the results we have created and are delivering now. But there is an even more compelling story to be told: the story of where we are headed and of the commercialization of so-called advanced biofuels. While sometimes struggling to keep pace with massive investments the U.S. federal government is undertaking, Canada is nevertheless ideally positioned to seize the role of leadership. Provided we maintain our focus and extend our partnership, Canada can compete and win in this increasingly important international sector. New renewable fuels that build on first-generation know-how to create even greater gains in environmental technology and economic terms are being developed as we speak. Demonstration plants are up and running, using waste wood in Quebec and British Columbia, discarded corn cobs, and other agricultural residue in Ontario. The technology works. The opportunity is proven.

[The Chair, Conservative, Leon Benoit]

Mr. Passmore, I'll ask you to go just a little bit slower because the interpreters are having a difficult time keeping up.

[Jeff Passmore]

I beg your pardon.

[The Chair, Conservative, Leon Benoit]

Thank you.

Just continue, but a little bit slower.

[Jeff Passmore]

The technology works. The opportunity is proven. The challenge is ours to take on. We already know what this means to our alternative energy, transportation, and agriculture sectors, but I would like to pause for a minute and speak also about the forestry sector and the tens of thousands who rely upon it for their livelihoods. Listen to the Forest Products Association of Canada. Advanced biofuels represent a new lease on life for this industry, and that equals new hopes for communities across Quebec, northern Ontario, much of New Brunswick, and much of the west. We can unlock the green fuel potential of waste wood and by-products. We can create new fuel and more jobs from what is currently discarded as forest residue. This is not only sustainable financially, but environmentally as well.

So let's build upon the partnership we have built together, government and industry. In the process, we can ensure Canada's international standing, not only as an energy superpower, but as a green energy superpower.

Thank you again, as parliamentarians, for your leadership and vision.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Passmore, for your presentation.

We will continue in the order that the groups appear on the agenda, so we go now to Coopérative Forestière Haut Plan Vert and Valérie Patoine and Lise Dubé. So whatever order you have it planned, go ahead, please.

[Lise Dubé, Agronomist, Club de gestion des sols du Témiscouata et Ferticonseil, Coopérative Forestière Haut Plan Vert]

Thank you. Mr. Chairman, ladies and gentlemen. Good morning.

I am Lise Dubé, agronomist, and this is Valérie Patoine, forest engineer. First, we want to thank you for inviting us to present our ecoenergy development project to you.

Three Témiscouata organizations, the Coopérative forestière Haut Plan Vert, the Club de gestion des sols du Témiscouata and its agent, Ferti-Conseil, and the Club d'encadrement technique en acériculture, have been working together for three years to develop an agricultural biomass energy production project. The cooperative here is the project lead.

Agricultural biomass is defined as combustible pellets manufactured from agricultural perennial plants, switch grass. A local energy system is characterized by production cultivated and consumed locally.

In the regions, we have the support of agricultural producers, maple producers, forest workers, a number of decayed municipalities and a few provincial departments. Through the development of abandoned farm lands, we want to revitalize our rural areas through the production of energy that the community can use to meet its needs.

Agriculture is declining in rural regions such as Témiscouata. There is a significant observed decay in the rural municipalities and a decline in land areas under cultivation. The abandonment of stock production and the lack of profitability of small grain and hay production over small areas have led owners to abandon those fields or to request that they be reforested. On a provincial scale, MAPAQ estimates that there is an approximate total of 100,000 to 150,000 hectares of fallow or marginal land that could become available for energy plant production. In Témiscouata, an estimated 10,000 hectares of cultivated land was lost between 1997 and 2004 in four municipalities within a 20 km radius of each other.

The Lower St. Lawrence is the second largest producer of maple syrup in Quebec, with some eight million taps and 20 million pounds of maple syrup annually. Témiscouata alone has five million taps, nearly 7% of total Canadian production. It takes an average of 0.6 gallons of heating oil to produce one gallon of syrup. In the Lower St. Lawrence, we use nearly four million litres of oil for maple syrup production alone every year. In Témiscouata, that's 2.5 million litres of heating oil.

Together, energy crops on fallow land and maple producers' energy needs can become a force for regional and local development. The first impact is revitalization of the rural community by creating a new economic activity. The cultivation of switch grass on fallow lands would enable us to produce an energy pellet that would be used by maple producers locally to evaporate their maple sap.

In addition, a number of studies confirm that the energy balance and greenhouse gas balances are positive in the production and utilization of perennial plants as energy pettets. An innovative, renewable green energy system is born.

In our region, we have been experimenting over the past three years with the cultivation of switch grass over an area of 10 hectares. The results have encouraged us to continue on a larger scale. Planting 2,000 hectares with switch grass would make it possible to supply all maple producers in Témiscouata.

[Valérie Patoine, Forest engineer, Coopérative Forestière Haut Plan Vert]

This project offers a number of economic benefits. Land owners will receive new income streams. For the communities, this is a new economic activity. Ultimately, it is a local solution to an income crisis for agricultural producers. A 20% to 40% reduction in energy costs for maple producers will make this activity economically cost effective. Those costs will be more stable and better known.

Furthermore, this short circuit affords significant environmental benefits. A number of studies show an 85% to 90% reduction in CO2 emissions in the combustion of switch grass pellets instead of natural gas or fuel oil. The replacement of three million litres of heating oil annually by a renewable green energy source is not negligible. It will no longer be necessary to transport those heating oil quantities from the major centres. We will also be eliminating the risk of heating oil spills in sensitive natural areas. While it grows, switch grass captures the equivalent amount of carbon emitted during its combustion. This is a virtually greenhouse emission-neutral energy form.

The natural elements for this project to succeed have been combined. The region has fallow land and market potential. We have the basic knowledge of crop techniques. The pelletization technology is well known. The local energy circuit project offers economic and environmental benefits for agricultural and maple producers and will have the effect of revitalizing the community. We have the human resources and the energy necessary to put it in place. This is a great way to address the energy crisis by guaranteeing maple producers a stable price. It is a simple method for offsetting the decaying regions and our declining agriculture. Once again, it is an excellent way to reduce both atmospheric and land pollution.

However, the balance of this development remains a major challenge. No structure of its kind has yet been established. Securing the supply of quality biomass, transforming and distributing it over a maximum radius of 100 km is the issue.

Land owners must invest approximately $1,200 to $3,500 per hectare and wait three years before making a sale. In the short term, we can't guarantee them that their future harvest will be purchased, since maple producers do not yet have the appropriate evaporators. The technology for using the pellets in the evaporators does exist, but maple producers will have to renew their evaporators and storage reservoirs. That's an investment of $20,000 to $60,000, depending on their production.

The idea is to obtain the financial support to carry out the action plan that we are proposing to you here: to encourage and facilitate the switch from oil to biomass among maple producers; to provide the agronomic expertise to agricultural producers; to significantly increase the number of hectares under cultivation and to improve knowledge of the agronomic factors in regions such as ours; to reduce the risks related to coordinating the markets of the various players in order to facilitate decision-making and accelerate the achievement of economically viable production volumes; to implement the processing stage; and, lastly, to support agricultural producers in converting to energy crops.

In closing, we want to thank you for lending your ear. The fact that you have invited us already lends us additional conviction. This journey has stimulated our desire to move forward. Together, we are convinced we will find the ways to make our marginal lands a promising economic and energy contribution for everyone and, it goes without saying, for Canada.

[The Chair, Conservative, Leon Benoit]

Thank you, Madame Patoine and Madame Dubé, for your presentations. We'll get to questions later.

We have as our final witness, from the Forest Products Association of Canada, Catherine Cobden, who is the vice-president of economics and regulatory affairs.

Thank you very much for being here. Go ahead with your presentation, please.

[Catherine Cobden, Vice-President, Economics and Regulatory Affairs, Forest Products Association of Canada]

Good morning all, and thank you very much, Mr. Chair and members of the committee, for inviting the forest industry to speak to you about this important topic today.

I'd like to start with a little bit of economic context for you. I'm sure you're well aware, but the forest industry has been confronted with serious economic challenges in the global marketplace for a variety of reasons, not to mention the basic collapse of our major trading partners economically.

I want to impress upon you that we have not sat still in the face of these economic challenges. Indeed, we have put significant effort into improving our productivity. I believe we now outpace our American counterparts, and I believe we're the only Canadian sector to do so in productivity.

We have worked very hard to expand our markets. No more can we simply rely on the U.S. as a major trading partner, but we're building our global markets, particularly in Asia. We are now the largest exporter to China, for example.

We continue to push forward on our green agenda. We are working hard and striving to increase our environmental credentials so that we can also be the preferred supplier in terms of the green marketplace.

In addition to all of this, our sector is seized with the need to transform our business model. We were quite interested in and were quite taken with what opportunities exist to extract more value out of the wood-based resource. With that, we launched in early last year what we call the Future Bio-pathways Project. This is a comprehensive study that looks at three complementary objectives. Number one, how do we transform the forest sector back to profitability? Number two, how do we protect the 270,000 rural Canadian jobs that the forest industry currently has? Three, how do we support Canada's unique opportunity to be a renewable energy and a clean energy powerhouse in the global economy?

You do have a copy of the Future Bio-pathways report. It has been circulated in advance, and I urge you to read it, but in the meantime I would like to highlight some of it for you. It was not prepared in isolation, and the forest industry recognized that a lot of the leadership in this area was happening outside of our silo. So we invited experts in to support us, and through the course of the project we've had at least 65 experts heavily engaged in this report. They represented the federal government; provincial governments; academics, some of the brightest minds in the country on this stuff; the Canadian technology providers, who are doing fantastic developments; our own members, who really needed to understand the technological, economic, and social implications of these things; and, as importantly, the investment community. This project was in fact led by Mr. Don Roberts, who is currently vice-chair of CIBC.

What did we do? We analyzed 27 technologies, both traditional technologies and emerging technologies. Then we ran them through a whole slew of models to figure out “What if we did it this way?” and “What if we did it that way?” We assessed them under hundreds and hundreds of configurations. We assessed the economic, the social, and the environmental implications of these different technologies. The results were very interesting, and I'd like to share with you at a high level what we found.

Indeed, some segments of our industry are rock-solid and have very sound business fundamentals the way they are. Even though we feel the pain currently, the lumber segment, for example, has sound business fundamentals and will return to its fullest. But we do recognize that some of our other segments do need to transform, that the status quo is simply not good enough. What we found by running these various models is that the integration of bioenergy and bioproduct production into an existing forest operation is economically very significant. Not only that, but it also generates five times more employment than if we were to only do bioenergy products on a stand-alone basis. So what you see is a solid win-win economically, as well as socially, and in addition you get the environmental benefits of the sustainable forest management practised by the industry for the long term.

Essentially integrating a bioenergy/biofuel operation and tacking it on to a pulp mill or a sawmill or a paper mill dramatically increases the economic returns. That's for both, by the way. There's the host operation--the forest industry operation--and the bioenergy operator. We looked at it from both directions and in both cases the return on capital, for example, was increased.

A specific example in terms of biofuels is that we absolutely assessed biofuel technologies in and among the 27, and we did determine that this is a critically important pathway for the industry's transformation. Biofuel opportunities combined with forest operations are economic home runs. There's just no other way to put it.

I'll give you an example. If you combine a pyrolysis plant--one of our typical biofuel technologies, it's one of the examples we studied--with a sawmill in Quebec, you will see the economic returns jump to 24%. That's significantly better than the sectoral average across the country, which is running about 3% to 4%. So the economic returns are, as I said, a home run for our sector.

So the question then becomes, with these sorts of economics, what's the role of government funding? Why do you need us? What's the point? Obviously if those are the numbers you can produce, the investors will flock to you. Well, absolutely, but the role of government is in the short term. This is a question of accelerating the adoption of these technologies. Simply put, the technologies are not quite yet at commercial readiness. We very much request that governments consider promoting things like ongoing R and D—there's no question that has been a tremendous opportunity for us—pilot project funding, and first commercialization movement.

The fact remains that these are the high-risk pieces of this technology adoption. To be the first mover in commercialization of a technology, you are bearing a tremendous economic risk, significantly greater than say the third or fourth adopter. So we really do look for opportunities to see that adopted. Other incentive instruments, like producer incentives, also help accelerate the adoption.

We're not saying that those aren't good, but we're saying what we're really looking for in this industry is to get the first commercialization of these technologies. We really do believe that this model we're suggesting--bioenergy integrated with the forest industry--will have the economics to stand on its own two feet in the long term and will not be looking for financial support from the government. We can do it on our own; we just need to get the technology well into the marketplace.

I want to recognize that the federal government sent a very strong signal that they both understood and supported our biotransformational strategy in the last budget. Budget 2010 established the next-generation renewable power initiative. It certainly appears to us that this is an expression of commitment to our sector and our transformational vision. We really do believe that this will begin and further us on this agenda.

Mr. Chair, from our position as quite a potential player in this area, we do offer the committee a number of suggestions as you take forward and review the funding mechanisms that are available in this area. For example, as mentioned, we would suggest that you focus on adoption, really moving technologies through the developmental continuum from R and D all the way through to first commercialization. That you can do either through direct funding approaches, as mentioned, or through production incentives and that sort of thing. All of these things move the adoption of technology.

As much as a possible, we urge you to take a broad focus to these funds: more of a market-based focus as opposed to a technology or feedstock focus. It is our very significant principle that these funds should be technology neutral and feedstock neutral. Why is that? Because our analysis has shown us that you may think you have a technological winner and an economic winner, but it's a snapshot in time. As some of these other things develop through the continuum, they may indeed become the better economic opportunity. It's really a question of not picking the winners or the losers too early in the development process.

Where relevant, we would suggest you craft your approaches to encourage the integration of the forest industry with these bioenergy opportunities.

I will say it again. What we have discovered is that this is an economic home run for the industry but also for the emerging bioenergy sector. Combining these two things shows that on basic economic metrics, as well as on jobs and employment, you're much better off with a combined scenario.

Finally, and this is of critical importance to the sector, we must ensure that whatever we do in this area ensures ongoing, sustainable resource extraction practices and that we do not get to a point where we're putting so much pressure on the resource that we're into a mode of needing, as our environmental friends say, to hoover up or vacuum up the forest floor.

The forest industry in Canada stands firm on the need for sustainable forest management practices. Our commitment to this has really differentiated us in the marketplace. It is critically important that anything we do in bioenergy and forest fibre does not bring us backwards in terms of that agenda.

Mr. Chair, I hope those remarks are helpful to you. Once again, thank you, on behalf of the Forest Products Association.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Ms. Cobden.

We go now to questions and comments. We'll go to Mr. Regan, for up to seven minutes, please.

[Geoff Regan, Liberal, Halifax West, NS]

If you understand both languages and simply want to listen to the speaker's language with the device, it's the third channel, isn't it?

Thank you very much, Mr. Chairman.

I'm going to begin with Mr. Passmore.

You mentioned that Canada is struggling, compared to the U.S., in terms of the funding governments provide for the promotion and development of biofuels. I'd like to ask you how Canada ranks in relation to other jurisdictions, such as the U.S., in that regard.

Also, we keep hearing that new American initiatives or incentives are providing certainty and stronger incentives and that they're therefore attracting investment and are putting Canada at somewhat of a disadvantage. I'd like your comments on that as well.

[Jeff Passmore]

I guess our big neighbour to the south is pretty aggressive with respect to its renewable fuels mandate and targets. The so-called revised renewable fuel standard, the RFS2, from 2007, I believe it was, established a 36-billion-gallon target for renewable fuels by 2022. Thirty-six billion gallons, just to put that in perspective, is about three and a half times Canada's total gasoline consumption. It's about 30% of U.S. gasoline consumption. So it's an aggressive target. To achieve that target, a number of policy instruments have been put in place.

I should say that right now there are approximately 14 billion gallons of grain-based ethanol--between 12 billion and 14 billion gallons--produced in the U.S. That's in excess of Canada's total gasoline consumption. We consume about 10 billion gallons of gasoline in this country.

To achieve that goal of 36 billion gallons, they have put in place a host of policies. There is a production tax credit. There are grants. There is, of course, long-term support for research, development, and demonstration. There are loan guarantee programs. There are a host of policy initiatives.

I think through the passage of the renewable fuel standard and the regs and this 5%, on average, mandate that's coming into effect in September 2010, Canada has really caught up, not only to the U.S. but to the rest of the world. The whole world is going towards biofuels. Brussels has targets as well for 10% renewable fuels by 2020.

So this is a good step Canada has taken to require 5% by September 2010. I think it puts us on the world stage.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

In terms of funding, you were talking about absolute numbers. I didn't really mean in absolute numbers, obviously. I'm not surprised that we consume less oil in Canada in total, by far, than the U.S., obviously. But in terms of per capita, we keep hearing that the U.S. is spending far more per capita than Canada is.

Ms. Cobden, you're nodding. Do you have any comment on this?

[Catherine Cobden]

I do, actually.

Our industry's perspective is that it's really never going to be possible I think to compete dollar for dollar with the U.S. treasury in this area. They're aggressive and they have deep pockets. We see that.

What we're suggesting is that we need to look at our natural advantage. What's the strategic Canadian advantage, and how do we do this smartly to ensure that we are strategic global players in this area? We should not look at it as a dollar-for-dollar competition, but instead stand back.

This is partly why we've been calling for a clean energy strategy: we need to do that review of the world. I would say that from a global perspective, our track record needs improvement to attract energy investment to Canada. Thinking about how we can do this and use our natural advantages is important.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

My next question is for Ms. Dubé and Ms. Patoine, and also for Ms. Cobden.

Budget 2010 proposes a $1 billion program over three years for the processing of pulp and paper. Based on your experience, what degree of complexity do you expect when it comes to filing an application for this kind of program? What are your recommendations for improving the efficiency of this kind of process, to avoid problems in application filing?

[Lise Dubé]

Access for small groups, above all, is what poses a problem. We are small groups and we act locally. For us, it's really access that's lacking. In the past few years, we've been working and we've found nothing to support us, even with this program. It's probably because we're small that we don't have access to these funds. So I recommend that this be made as accessible as possible. Perhaps the process should be simplified. Our recommendation would be to give groups such as ours access.

We were talking about local production, local crops, local consumption. We think this model could be applied across all rural regions in Canada. If there are other groups like ours in other places, they must be experiencing the same difficulties. One of the recommendations would be to facilitate access to this funding to groups like ours.

[Geoff Regan, Liberal, Halifax West, NS]

Madam Cobden, how complex or how cumbersome do you foresee this application program will be, based on past experience?

[Catherine Cobden]

If you mean the pulp and paper green transformation program, it's actually worked surprisingly well to date. We're very pleased with the program. I say “surprisingly” because it's a lot of money to move in a fairly short period of time.

I want to say for the record that we think this was a very good response. Keep in mind where the program came from. It was a direct response to a competitive distortion that was happening immediately in the U.S., where our competitors were gaining access to a lot more than a billion dollars. I think at last count they were up to about $8 billion. What Canada did was figure out how to bring this back to a level playing field before all the pulp mills in the country closed. This is what we were up against.

It might not be perfect and it might not have all the right applications for every situation, but it was critical, and it certainly is doing the job.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Regan.

We go now to the Bloc Québécois. Monsieur Guimond, you have up to seven minutes.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Mr. Chairman.

Good morning, witnesses.

Thanks in particular to you, Ms. Dubé and Ms. Patoine, for leaving your beautiful Témiscouata to come and give us a picture of what you've been doing in the past few years, which is highly innovative and very different. You explained it very well in your presentation earlier. We can even say that this is really the basis of sustainable development.

I'd like you to clarify some matters for my colleagues around the table. You talked about revitalizing agriculture. You talked about producing bioenergy for maple producers. However, what is the real line between agriculture and biodiesel production for maple producers? What is the situation in Témiscouata with regard to that, and why have you gotten to the point in the past three years where you are reflecting on a project such as this one?

[Lise Dubé]

It was a lengthy process of reflection. I've been an agronomist in this area for 20 years. My analysis is horizontal, but we have observed an increase in the amount of fallow land. Also, with regard to farmers, it has to be said that they are 50 years old on average, that there are no new farmers and that they have abandoned stock production, both dairy and cattle. So they find themselves with land, and grain and hay production are profitable over small land areas. To give you an order of magnitude, the largest operations—there are a few—are 600 acres. That's very small for an operation; there's a lack of profitability, a lack of new farmers. People are slowly abandoning this activity and letting the time go by until they retire.

The cultivation of energy plants can be done on lands that these people leave abandoned. This cultivation is quite similar to that of grain; so there has to be a slight knowledge transfer. They can use the equipment that are on the farms, they can plant with that equipment, they can harvest; so that doesn't require a lot of investment. What people are looking for is a crop that will enable them to earn a better income, that requires few inputs, little labour, because there is no farm labour. That's the benefit and the interest they see in it. These are small local areas where there are one or two farmers per village, and when one disappears, it's like losing 100 businesses in a medium-size or large city.

This has a big impact for us. We're talking about the survival of schools, the post office, basic institutions in a village—which will vitalize it. When we talk about revitalizing a rural area, the idea is to put those areas back into cultivation, which will create employment. People will cultivate, buy and stay there. Those people who are at the end of their careers, after giving up dairy production, nevertheless have a lot of experience behind them. They want to use it to move toward a crop that can make things interesting for new farmers, make it possible to establish a new generation of farmers at an affordable price. These are elements that increase interest in agricultural producers. As for maple producers, I'll leave it to Ms. Patoine to answer.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

You mentioned that you have been working on this matter for three years; so try to explain to my colleagues the extent of the work involved for a very small group such as yours, in a remote area.

Did you find any help or people to support you? In the past three years, how have you gone about achieving the results you have today?

[Lise Dubé]

I have to say I am supported by 100 producers. They support me. I've put in the time, in the past few years, in meetings, and I've put the energy into it. Of course, we had some producers convinced. Among others, one producer was convinced that he had to go into the energy field in agriculture. That really helped. Obviously, when we spoke to governments, local development agencies, we had to convince people that revitalizing a rural area had to be done through agriculture and through local consumption. That's the main challenge because this is a completely new concept. Producing and consuming locally is something very new for a number of people. We have to convince all levels of government of that principle.