Natural Resources Committee on March 5th, 2013

[Bradley Young]

Okay, you've got to get your points across. I'm not going to address the exact comments of the member of Parliament, outside of maybe with a little humour—

[Joan Crockatt, Conservative, Calgary Centre, AB]

What did you mean by yours, then?

[Bradley Young]

J-grade cedar from Taan Forest Products, the Haida Nation's forestry company: let's build that home out of Taan Forest's western cedar J-grade lumber. Let's build business with first nations.

Let's engineer these homes to the highest standards. Maybe we'll take some FPAC and FPInnovations know-how from their dozens and dozens of scientists and let the first nations and the first nations trade associations democratize this technology and access the right investment pools.

Let's get it done in Canada's first communities. That would be my answer there.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Okay.

I'm going to move on to you, John, so that I can ask you a bit more about metering. What I hear about meters is that they do work to reduce consumption, but consumers don't like them. I'm wondering if you think that the best way to go is to meter. If so, how do you individually meter your various utilities and commodities so that people can track their usage? I think studies show that they do decrease consumption.

[John Dickie]

There's no doubt that they do decrease consumption. It's sometimes in the order of 30% or 35%. People don't like them because they add an element of uncertainty to the bill. In many cases, people don't realize that in an average apartment building when you go to submetering, or some landlords have the metres for electricity installed so they can measure what electricity is going to what unit, you find that about 15% of the users use a great deal; about 15% are on average; and 70% are using less than the average, so they would save. There's always this concern that “Oh, no, it won't be me who gets the savings.”

One of our provincial groups put out this great cartoon. It had a young person—I'm afraid I took a dig at teenagers before and now I'm going at young people, but if you keep me long enough I'll get to the seniors. The young person is sitting there with his big high-def TV and his three computers running, and all this blah, blah, blah, with power cords like you wouldn't believe. Beneath that picture is a senior citizen sitting there, freezing, and paying the same for electricity. It's stupid. Let the person using all the power pay for it.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Crockatt.

Your time is up.

We go now to Mr. Nicholls, followed by Mr. Allen and Ms. Liu.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair.

I would just mention that member Pat Martin is a carpenter so he knows wood.

Our business at hand, which the NDP proposed, is to look at how we can improve our competitiveness globally by improving innovation. The idea isn't about picking winners and losers. It is about knowing your strengths, weaknesses, opportunities, and threats.

With that, I'd like to ask a few questions of you, Ms. Cobden. I've looked at the report produced by FPAC. In the report, “Transforming Canada's Forest Products Industry”, on page 8, “Next Steps”, you say:

With regulations in the works worldwide to address climate change, and growing public scepticism about the environmental risks associated with further development of oil sands and nuclear power, the time is right to showcase Canada’s natural advantages and international leadership in sustainable forestry.

With that, do you believe that regulations addressing climate change can drive innovation, and thus productivity, in our economy?

[Catherine Cobden]

One of the things that we're really for, specific to your question, is consistency of approach. As many of you around this table are business people, you probably know that one of the things that kills investment and kills businesses is a lack of predictability and consistency. FPAC isn't advocating for a particular approach to any one of the many hurdles and issues we face, but we are advocating for a consistent approach.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Thank you.

I also noticed in your report that biomass from trees fuels two-thirds of the energy requirements of your member companies. The surplus of that is sent to the grid.

I had a chance to visit Dapp in Westlock County where they have a biomass plant selling energy to TransAlta, to the grid, powering about 600 homes. This was powered by Edmonton's wood waste streams.

They told me that boilers from pulp mills closing down could be repurposed to generate electricity. Is this a possibility?

[Catherine Cobden]

It is.

Ideally, we'd keep the pulp mills running and we'd diversify the mix of products they make so that everybody keeps running. That's the real vision behind bio-pathways. If you take any of your existing forest industry assets, be it a sawmill, a pulp mill, an integrated paper producer, a tissue mill, and add these types of technologies to them and diversify the products mix they were making, you'd actually be protecting more jobs and positioning yourself for better economics in the long run.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

I was amazed that they had bioproducts such as the ash they were distributing to farmers as fertilizer. It was a fascinating and a very positive story.

Could you table the two bio-pathways project reports with the committee?

[Catherine Cobden]

I'd be very happy to.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Thank you.

I'd also like to address the green transformation program. The government claimed that the mission of the pulp and paper green transformation program is accomplished. It's kind of disturbing. The way it's presented is that it was a success and now it's over.

Do you think there should be some sort of next step to that program? Are they consulting with you about a next step?

[Catherine Cobden]

Do you know what we really liked about PPGTP? We liked the creativity behind it.

It would have been really easy for any government to respond to the competitive distortions we were seeing in the marketplace with just a quick fix-it, slapdash subsidy like you saw in the U.S. Instead, they designed a program that actually advanced us from a competitiveness position on green credentials.

So I do have to say, and go back to, that I'm very sincere about the benefits of the pulp and paper green transformation program.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Thank you.

I just have one more thing to add that sort of contradicts your report on bio-pathways, where you say:

The government of Canada has already invested in the transformation of the forest products industry. But more must be done so that the industry can produce long-term plans and share risks and rewards in a more vibrant, green, knowledge-intensive economy.

[Catherine Cobden]

Yes. It gets back to my commentary during my appearance here, that in fact the type of support we need is the one that's across that valley of death, more things like the IFIT program. That was a very small $100-million program. We had $2.2 billion in interest from the industry side, so $100 million doesn't go very far.

We had 65 projects. I think at least a third of them were bioenergy based. That also signals that a third of them were biochemicals, and another third were biomaterials.

So our agenda is not strictly bioenergy, and I don't think it should be.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Nicholls. Your time is up.

We'll go now to Mr. Allen, for up to five minutes.

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

Thank you very much, Mr. Chair.

Thank you to our witnesses for being here.

Ms. Cobden, I'd like to start with you. It's about the pulp and paper green transformation program.

There's one mill in my riding, which was a beneficiary of AV Nackawic. They did a number of projects in the mill that significantly lowered their energy usage. One of the comments they made to me, when we were talking about doing a couple of the announcements, was that we got that right as opposed to the U.S. Theirs was just a plain subsidy on operations. It didn't encourage any innovation. It didn't encourage any savings in energy costs.

What is the report card on how the mills have done? Most importantly, how have some of your other operations, and the sawmill operations, been able to improve their energy use over the last little while as well, to make them more competitive? As we know, it's been a real challenge because of board lumber prices and whatnot in the U.S. market. What have those sawmills done?

[Catherine Cobden]

Across every side of the House, there have been mills in ridings from every political party that have benefited tremendously from the pulp and paper green transformation program. I do want to make that clear. I don't think we should make it a political agenda.

The investments were targeted in a smarter way than in the U.S. program. I completely agree with that analysis. In fact, I continue to add my voice to that point.

By lowering energy, in the AV Nackawic example, but it happened all across this country, you're really supporting and giving an opportunity for a competitive position for these mills in the long run. So the report card is high.

Could we do more? Should we do more? Of course. We'll never say no to that. There is more opportunity. But if we had to capture opportunity, we would like to suggest that it should be in the form of that IFIT program, because it's tremendous.

By the way, it's applicable to sawmills as well as pulp mills. I think your question is extremely valid in that the pulp and paper green transformation program could not apply to sawmills. There is a gap. Part of our opportunity is to support further their transformation.

The number one finding from bio-pathways was that sawmills were the centre of the universe as it related to forestry economics. You want to do something for sawmills in the long term.

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

Thank you.

Mr. Dickie, I want to ask you about this submetering and how that applies.

Having been in apartments and whatnot in New Brunswick, in a lot of cases they were individually metered, except for the common facilities. When I say “common facilities”, I mean the hallways and other things. Each individual apartment had its own meter, and therefore the energy use, including the heat.... In vast cases in New Brunswick, the heat is either electric or oil. In this case it's electric.

Is this a phenomenon where we see a mixture of these types of things happening in different provinces, where different provinces see different things? Or even within the provinces do you see different activities going on?

[John Dickie]

When the heat is provided by electricity, the electricity, including the heat, can be submetered. That's not a problem. What I'm addressing here is the notion that the landlord has a central boiler—usually a boiler, which is usually natural gas-fired, but it could be oil—and then the boiler emits hot water. The hot water then goes to the different apartments.

If this problem were solved, the flow and the temperature of the water being delivered to each apartment could be measured, and then the cost, and then there'd be a carve-out for the common areas for that piping, or just the residue would be left with that. The cost of the oil or natural gas could then be charged to the users.

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

Okay.

That takes me to my next question. When you talk about the CCA class, you're talking about class 43.2 and the 50%. That was in your numbers that you used in the net present value analysis, as opposed to 4% now.

[John Dickie]

Yes.

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

That basically is a special class enacted in 2010 for clean energy generation equipment, typically for ground source heat pumps, active solar and heat recovery equipment. I'm wondering, if you look at the stock of all your apartment buildings and heating systems, would the heating systems you have in your current stock in Canada actually meet some of those requirements?

[John Dickie]

Very few of them fall within those renewable categories. Our desire was to expand that class by a modest amount, including these high efficiency boilers, furnaces, or in fact, chillers. We were involved in discussions with the government, with the officials in Finance and others, with a view to trying to determine what would both be worth doing and what there might be an appetite for. We looked at other more expensive changes, what the Finance officials regard as bigger changes, and those were rejected. This was the one that there seemed to be an interest in discussing. That's why we brought it forward.