Thank you.
I very much appreciate the invitation to be here today. I'm here representing the forest products industry. We have members from coast to coast from 200 rural communities, and we represent 230,000 employees in the forest sector.
Given the abundance of forests in Canada, it is very good to see this committee looking at the renewable energy sector as you assess energy use and innovation.
I thought I'd start my remarks with a bit of a global perspective on how Canada is doing vis-à-vis others in attracting investment into this space. According to Bloomberg New Energy Finance—I don't know whether you're following it—investments in biofuels and bioenergy are approximately $200 billion globally.
Leading nations are taking very different approaches to the issue. For example, the U.S. and Brazil, as you're likely aware, are heavily investing in corn-based ethanol, and Europe and China are the dominant players in biomass energy generation. The U.S. is also dominant in a much smaller segment, next-generation biofuels. Canada's share is quite small compared with the rest, but we are attracting 8% of the global investment in biofuels and are attracting 3% of the global investment in biomass energy.
Given our vast forest resource and Canada's large forest sector relative to our global competition, it would seem reasonable to ask ourselves a number of strategic questions: What is the right portfolio mix of bioenergy versus biofuels versus next-gen biofuels versus other products that can be made from Canada's forests? What are the barriers to investment? Are Canada's forests a Canadian advantage in this context?
So, what is the Canadian forest industry perspective specifically on bioenergy? Let me take a minute first of all to describe to you the current context of the industry.
Following years of poor economic conditions and structural change in some of our markets, such as newsprint, FPAC member companies have embraced a multi-faceted transformational agenda, and it is already positioning us in many ways. First, we are one of the most productive sectors in Canada. We're also Canada's leading exporter to China and are Canada's leading exporter to India as well. We are setting a global standard in sustainable forest management and we're an innovations adopter to extract more value from every tree that we harvest in Canada.
Last year we launched vision 2020 to demonstrate the potential of the transformation we feel is before us. We have three goals with vision 2020 that we believe give you a sense of the importance and criticality of our transformation.
First, we want to further improve our environmental footprint. While we've done a lot already, we want to do 35% more reduction in just eight years.
Second, we'd like to see 60,000 new hires in the forest industry, and we hope to work with NAFA and others, because we sure hope that a number of them come from our neighbours, the aboriginal communities.
Third, we believe we have the potential to generate an additional $20 billion in economic activity in the next eight years. We're at $57 billion at the moment, so the trajectory is quite steep.
Bioenergy is an incredibly important part of the mix of our transformation agenda to extract maximum jobs and economic opportunity from every sustainably harvested tree in Canada. To give you a sense of scale, the Canadian forest industry generated 47,000 terajoules of electricity in 2011. That is the equivalent of approximately three nuclear reactors. Some 80% of it was bioenergy-based, utilizing residual forest material from our operations, as previously described. We have completely eliminated energy generation from coal at our facilities—no longer do we use it—and we've reduced our reliance on heavy fuel oil by 91%. This has translated to a greenhouse gas emissions reduction of a whopping 73% since 1990. So as we have followed this trajectory, we've continued to reduce our emissions quite substantially.
I'd like to take a moment to recognize the Government of Canada's pulp and paper green transformation program. This has been a key contributor to our success.
This program recognized the link between our sector's competitiveness position and the adoption of greener technologies and practices. Through the careful selection of projects, the program has bolstered the production of biomass energy and improved our energy efficiency dramatically. It also resulted in greenhouse gas emissions reductions equivalent to approximately 150,000 cars being taken off the road annually.
Incidentally, it also protected and/or created tens of thousands of jobs in our communities across the country. These are rural Canadian jobs, and they're really critical. It also created countless temporary jobs that we have not been able to put a fine print number to.
Where are we going from here? Between 2009 and 2011, FPAC undertook, with a broad base of stakeholders, a groundbreaking and I would say a globally envied study called the bio-pathways study. It analyzed the opportunity to see what more we could do with the forest resource we have in Canada. We asked ourselves the question whether, since we have the trees, we should be making pulp and paper, or whether we should just be doing bioenergy or doing a combination thereof, etc., or should it just be lumber.
When we did the detailed analysis and looked at the emerging technologies and compared them with the existing technologies, we found 36 different innovative technologies that were within our grasp to be adopted by the forest industry. Within our grasp means within a two- to five-year window; they were that far advanced in their technology innovation. Many of them were bioenergy technologies, but I also want to stress that many were actually technologies to produce other bioproducts from wood.
In the interest of time, I thought I would share with you the major conclusions of the study. If any of you haven't looked at it or have an interest in looking at it more, we have a lot of information on our website and I'm happy to follow up.
The major observations were that there are existing opportunities today to extract more value from the trees we're harvesting. We need to take this seriously and we need to take the bio-economy seriously. It's an interesting fact that 30 of the Fortune 100 companies are taking the bio-economy seriously.
Bioenergy and bioproduct production actually performed better and are more job rich when done in an integrated fashion within the existing forest industry. When you're considering the installation of a bioenergy plant, you should be thinking about how to integrate it within the supply chain of the forest industry.
Bioenergy goes hand in glove with the production of other bioproducts, and in some cases production of other bioproducts is equally important or maybe even more important for the long-term survival of the sector.
Bioproducts, a category that includes bioenergy, biochemicals, and biomaterials, can utilize existing residue streams. We don't have to harvest more trees. We don't want to, nor should we hoover up the forest floor; we can do this within the existing residue stream that we have. It's diversion from landfill and diversion away from products that are just not profitable and that no longer have a market. As a final point, a lot more innovation is coming.
There are barriers to this investment: the price of fossil fuels, technology adoption risk, length of runway for developing markets for these new products. They remain our biggest challenges in reaching this potential. Some of these challenges, we believe, can be overcome with smart policy thinking. They can be strategized around and they can certainly be managed.
One suggestion is that, rather than the expensive and technology and/or product specific subsidies we're seeing in China, the U.S., and Europe, FPAC feels it is essential to take a broad technology-neutral perspective that gives companies the freedom and room to make investments and the right business decisions for their own transformation.
We recommend supporting innovation and idea generation through the innovation system. A lot of that work is already being done. Ultimately, we need support for the commercial demonstration of these new innovations. Getting over that valley of death is the hardest part.
And you cannot attract investment from the outside world, meaning from the traditional banks. Even venture capitalists are very tight on this. So we need the ability to partner, to demonstrate that these technologies work commercially. Then the sector takes it from there.
It is then up to the sector to share the risk. We believe the federal and provincial governments are a strong public policy base for this, but that in the long term this is industry's job.
In conclusion, Canada does have a tremendous potential. Vision 2020, the goals I've described to you, the bio-pathways project, and our vast forest resource demonstrate that potential.
Bioenergy is a key part of the mix, and it's an exciting opportunity. We have a lot of opportunity ahead of us. We need to assure ourselves that we will continue to use our forest resource sustainably—that is a no-go place; it has to be and must be sustainably used and managed—and that we support as broadly based an approach as possible, one where bioenergy, biochemical, and other bioproduct production can be produced in concert, not in competition with one another.
With those remarks, I thank you very much for your attention.