Evidence of meeting #47 for Natural Resources in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was wood.
A recording is available from Parliament.
Conservative
The Chair Conservative Leon Benoit
We'll resume the committee with a witness by video conference from Quebec City. We have, as an individual, Luc Bouthillier, full professor, department of wood and forestry science, faculty of forestry, geography and geomatics, Université Laval.
Thank you very much, sir, for being with us today. We'll get right to your presentation for up to seven minutes and then we'll go to questions and comments from members of the committee.
Luc Bouthillier Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
Thank you, Mr. Chairman.
Members of the committee, I would like to thank you for your invitation, and especially for having me appear live by videoconference.
I would first like to stress one fact that you have probably been reminded of frequently: Canada is a forest nation with considerable wealth. Just one figure is needed to establish this: 348 million hectares. That is the same as 700 million football fields. That is our ultimate wealth in a green economy. But are we making the most of it?
One figure bothers me. I have been a forester for almost 40 years now. Ten years ago, Canada had 360,000 direct jobs related to this industry. Today, that number is 215,000 jobs. So, we have lost 115,000 jobs while we are sitting on this wealth. Obviously, these are significant job losses because they affect regional Canada—Skeena, Kapuskasing, Shawinigan and Corner Brook. Regional Canada is affected by this forestry crisis and this loss of 115,000 jobs.
It is important to do something. Ten years ago, the pulp and paper industry generated sales of $40 billion, while today, that amount is $25 billion. Fortunately, things are a little better on the wood products side of things. Still, in both cases, the profit margins rarely exceed a few percentage points, which doesn't give much leeway. For pulp and paper, this is calculated in fractions of a percentage point. So there is even less leeway.
However, there is a possibility of recovering our primary market. In Canada, forestry is first of all an export industry, with the main client being the American market. This market has improved: it needs much more softwood lumber, among others.
For all wood products, residential and non-residential construction in the United States offers very good prospects that have been taking shape for the past 24 months. Interesting things are on the horizon. This prospect of the American market, which is going well for fine paper used in offices may be extremely appealing. Obviously, fine paper may be the last chance we have to make money. As well, the exchange rate is a real advantage for us. Every dollar in revenue that we earn in the United States is worth more in Canadian dollars.
In the very short term, there is a market that could earn us revenue and enable us to change this attitude of considering resources in a somewhat predatory way. That attitude served us well in the 20th century. We were happy to harvest the forest at the lowest possible cost, but now we need to take advantage of the coming years to move toward something else and realize that the future of the forestry industry depends on the ability of the industry, of academia and of those people responsible for public policy to take the forestry industry into a green economy.
What do I mean by “green economy”? It is an economy that aims to create the most wealth possible with the explicit intention of being concerned about the distribution of this wealth and the secondary intention of minimizing the environmental impact, the risks, and avoiding the breakdown of ecosystems.
All of that may seem very theoretical and very strange.
However, if we look at the most recent Davos forum, Paul Polman, the president of Unilever, explained that the company, which manufactures detergents, soaps and personal hygiene products, has set for itself a vision of doubling the economic impact from a green economy perspective, while reducing by half the environmental footprint of the company's various activities. I think that it is perhaps time that a number of leaders in the forestry industry and the governments form this partnership to adopt such a vision.
A small research project I'm working on makes me think that this is possible. In eastern Canada, specifically eastern Quebec, we are trying to see how the development of forestry bioenergy can galvanize disadvantaged communities and diversify employment.
What do we mean by that? It is in its very early stages, but we are seeing that when we give up petroleum products for forestry energy, where we used to employ one person a year, we could employ up to seven people a year by diversifying the forest production chain toward community heat generating units.
That is something to explore, especially since we realize that it is possible when leaders of the various communities decide to play their role in the context of a green economy. What this does is galvanize their communities because we are creating local jobs and because we need people who are better trained to fill these jobs, since remaining efficient is important.
We also realize that technological innovations are needed. We need systems that use this bioenergy in a way that maximizes heat performance while decreasing the environmental footprint. Organizational innovations are necessary because this forestry bioenergy must be part of the value creation chain for the entire forestry industry. Social innovations are needed because the way communities are organized must take this kind of innovation into consideration.
If this is possible on such a small scale, with a category of specific products, such as forestry bioenergy, I think we could imagine green construction in the same way. We could probably adopt that as an objective in the space of 15 to 20 years, to double the wealth from the manufacture of wood products while decreasing the environmental footprint by half.
Conservative
The Chair Conservative Leon Benoit
Professor, excuse me. We want to make sure we give members a chance to ask you questions. Could you end your presentation here? If you have other things to add, you can add them as you're answering the questions.
Let's get to the questions and comments now. Each party will have seven minutes. You can divide that time as you choose.
I'll start with the government side. Mr. Trost, you have up to seven minutes. If you'd like to divide it or split it, go ahead and do that.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Mr. Chair, if I don't finish the time with my questions, I will share it with my colleagues.
In the beginning of your presentation, you talked about the United States being our primary market. This is predominantly an export market. I found it interesting that, in comparison to other witnesses we've heard from on the other two days, you didn't talk about the growth in Asia. I understand that the Quebec and Ontario forestry industries are in a very different market, naturally, from British Columbia. China is not quite as close to Quebec as it is to British Columbia. But where they've had their great success is diversification of their markets overseas.
Has the forest industry particularly in Quebec looked for international markets in the same way that British Columbia has? If so, where? If not, why not? What fundamentally would make the more eastern Canadian market different from the western Canadian market in driving for new markets, possibly Europe or somewhere in the east? What's the difference between the two sides of our country in looking for diversification of international markets?
February 19th, 2015 / 5:10 p.m.
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
Of course, British Columbia is closer to Asia than eastern Canada is and the forest industry in British Columbia was very keen on developing the Chinese market and it was done very successfully. For the Quebec industry, we are further away from the Asian market, and I've mentioned—
Conservative
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
Yes.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Is there potential for the unique products? You were talking about some of the bioenergy products. Europe loves green products relatively more than Asia does. Are there some synergies there?
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
Of course, there are synergies there. With the free trade agreement with the European community there is an opportunity that eastern Canada should seize for green construction, for bioenergy with pellets and briquettes and things like that. Actually, right down here in Quebec City there is a huge port development in order to allow wood pellets from Ontario and Quebec to be directed to the United Kingdom as soon as possible. We are speaking about hundreds of thousands of tonnes of pellets. There is something to do, and it's being done.
In terms of green construction, we are a bit behind our friends from Scandinavia. Finnish and Swedish companies are ahead of us in terms of green construction. It's a ball game in which we have to make progress very soon.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
I'd like to follow up on some of the remarks you made about technological innovation. Other witnesses have made similar sorts of remarks, but they also paired them with the concept the we need to improve education.
Can you comment on how those two elements need to work together? I'm presupposing they do need to work together, but if they do, how do they need to work together, and do we need to increase our educational component in implementing some of these technological innovations you and some of your colleagues are coming up with in the lab?
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
Yes, it's another challenge we are facing. It's rather easy to develop new recipes in the lab. The idea is to export those new products and new recipes from the lab to the processing plant, and we are facing a tremendous.... If I compare what is going on in Sweden, for instance, with eastern Canada—I have in mind New Brunswick, Quebec, and Ontario—most of our workers in wood processing plants have minimal computer knowledge. If we are really serious about the automatization and development of processing plants that are more productive, we have to rely on workers who have computer knowledge, who have a feeling for participating in organizational innovation.
When you try to achieve a better product at the lowest cost, you need to rely on the guy on the floor who knows exactly what is going on, but he has to have the words to express himself. That is the main challenge we are facing in terms of training if we want to be successful with regard to technological innovation.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Trost.
We will go now to the New Democrats, to Monsieur Aubin and Monsieur Caron. You are splitting your time. Go ahead, please, for up to seven minutes.
NDP
Robert Aubin NDP Trois-Rivières, QC
Thank you, Mr. Chair.
Good afternoon, Mr. Bouthillier. Thank you for being part of our meeting.
It is a pleasure to see you, especially since you were often my forestry reference when I was teaching geography.
I live in Trois-Rivières, where many absolutely extraordinary projects are under way, particularly at the Université du Québec à Trois-Rivières. You must surely know Mr. Mangin. There is also Kruger, which is involved in a project on cellulose fibre and biofuels. You also spoke about the project that you are developing in Laval.
Compared to Germany, Switzerland or other European competitors, do you think Canada is “in the game” when it comes to the continuum between basic and applied research leading to concrete application on the job market?
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
We have no reason to be ashamed when we are comparing our research labs, be they in British Columbia, Ontario or Quebec, to those in Sweden, Finland, Germany or Austria, the main locations.
Moreover, you need to see the French and British laboratories. The Université de Bordeaux, like Oxford, is developing research partnerships. In fact, we are absolutely “in the game”. Perhaps at the practical implementation stage—and in my opinion this is not a public policy issue—our manufacturers seem a little more timid. It is important to say that it is hard to be innovative and responsive when we don't have any financial leeway—
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
Go ahead.
NDP
Robert Aubin NDP Trois-Rivières, QC
In terms of research, is your public funding comparable to what is found elsewhere?
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
The forestry sector is complex. In terms of industrial innovation, if we are talking about wood products and new processes, I think our funding is fairly competitive. There is also the whole resource development side of things. The cost of wood for a sawmill, for example, is about 70% of its operating costs. For pulp and paper, that percentage varies between 40% and 60%, depending on the channels. Land planning actions need to be taken because it is not normal for the cost of wood to skyrocket in Canada.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Good afternoon, Mr. Bouthillier.
Innovation in the pellet market is something that intrigues and interests me a great deal. There are projects in eastern Canada, including in Saint-Jean-de-Dieu in my riding, where a Belgian company is running a project to produce torrefied pellets. We are also hearing about a Finnish company that is currently working in New Brunswick. However, there does not seem to be progress in Quebec. In fact, all the pellets currently being produced are intended for export. Nothing is being produced for the domestic market.
Yesterday, I asked Mr. Lapointe from FPInnovations the question. He thought that one of the problems for wood pellets in Canada, especially in eastern Canada, is the cost of the pellets, which makes competitiveness difficult because these companies are subsidized on the European market. However, that is not the situation in western Canada.
Is that also your analysis of the situation?
How do you think we could ensure that pellets are something to be promoted for the Canadian industry?
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
Canada is a very big country. I will answer your question from the Quebec perspective.
Wood pellets are not finding their niche on the domestic Quebec market for the simple reason that hydroelectricity is a challenge. Being competitive is extremely difficult. That's why we need to focus on the European export market, among others.
I think we need to prove ourselves in Quebec. We need to keep in mind that we need to offer a good product that is energy efficient and inexpensive. Competition from Hydro-Québec is strong. However, we can win points if we operate through the regional government. We need to prove the value of boiler rooms and heat generating networks, sort of like in Rivière-du-Loup, Amqui and the Gaspé Peninsula.
Yes, we can make more people from our regions work, while promoting forestry products considered as waste and prove that forestry bioenergy can play a role in Quebec and Canadian energy portfolios. In doing so, we might be able to develop the boiler industry, for example. We know how we have been burning wood since the Neolithic age. It isn't a great source of added value.
From a transitional perspective, there really is something to be done, especially since we need jobs in our rural communities. Developing this channel will allow us to benefit from an export market that we have, here and now.
Conservative
The Chair Conservative Leon Benoit
Thank you, Mr. Caron.
Mr. Regan, go ahead, please. You have about six minutes.
Liberal
Geoff Regan Liberal Halifax West, NS
Thank you very much, Mr. Chair.
I would also like to thank the professor.
I would like to speak briefly about the added value that bioenergy may provide. It isn't an ideal situation with respect to added value, but it is something transitional that may help create jobs in the regions.
I would like to speak about the issue of distance. Before developing new products for the market, what are the obstacles or limits to commercialization? What does the government need to do to help with this?
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
Take green construction, for example. In this construction system, the amount of intrinsic energy is decreased to reduce the impact and, above all, to create a very energy efficient building.
The United Nations Environment Programme includes a component on construction standards within the climate change initiative. As far as I know, Canada is virtually absent from the negotiations, while it should be very sensitive to this in order to develop the same kind of construction standards here.
In recent years, we have focused a lot on examples. If we favour wood construction, people in the aluminum, plaster or other industries immediately rear their heads and say that wood construction is not better than the others. I think we need to have an operations framework, as well as environmental and performance standards that will force our manufacturers to provide the best product at a competitive price.
Unlike the Scandinavians, we haven't developed any skill in design and architecture to produce the best wood products that are good, environmentally. Wood has an advantage, and it isn't at the political level that we'll make that advantage known. Rather, we need to put it in competition with other materials. We need to offer competitive wood products, in other words “cheap and cheerful”.
I think that we could develop typically Canadian products by drawing on the United Nations Environment Programme's construction standards within the climate change initiative. This would enable visionaries of the Canadian forestry industry to hold a much greater place than they currently do, particularly when it comes to institutional construction.
Liberal
Geoff Regan Liberal Halifax West, NS
Canada was virtually absent from the UN negotiations. Have you already mentioned that to the Government of Canada? If so, how?
Full Professor, Department of Wood and Forestry Science, Faculty of Forestry, Geography and Geomatics, Laval University, As an Individual
No. This is the first time that the Canadian authorities have asked me about Canada's possible contribution to the UN bodies. I would not say here that Canada is absent. All I want to say is that, when those things are examined in United Nations forums, including matters relating to construction standards, Canada's presence is not obvious.