Thank you, Mr. Chairman.
Good afternoon. My name is Evan Walz. I'm the acting assistant deputy minister for the Department of Environment and Natural Resources with the Government of the NWT. As you noted, I'm joined today by Mr. Frank Lepine, the director of forest management; and Mr. Bill Mawdsley, the associate director.
I'd like to thank the committee for the opportunity to present on activities in the NWT that we feel will help to renew and grow our forest industry.
Mr. Chairman, the Northwest Territories is on the cusp of developing an exciting new biomass industry. Currently, about 30,000 cubic metres of wood is harvested annually, mainly for firewood in the Northwest Territories. There are no significant timber processing facilities, and dimensional lumber production is entirely uneconomical.
Recently an opportunity to produce pellet fuel as a cheaper alternative to imported heating oil has emerged. The government is growing the market for pellets through conversion of public buildings to pellet fuel, and private businesses appear to be following suit. Locally produced pellets will cycle, we believe, millions of dollars into the NWT economy, which would otherwise be exported outside. The new industry will create a range of businesses and job opportunities for communities that typically have low rates of employment.
Developing an industry on the order of magnitude envisioned presented many challenges for us. The primary hurdle was the legislative framework, which restricted timber access to five-year authorizations and therefore discouraged long-term investment. In addition, existing forest businesses were small, and are small, and not able to support any large-scale activity. Finally, government policies and support mechanisms were geared towards that small or nominal forest activity. We needed to look at and improve all aspects of our business in order to ensure this industry could grow.
In 2010 a wood marshalling yard model was proposed that provided a method for communities to establish wood marketing through a community business. The premise was if that community could organize a unified aboriginal business and attract a long-term customer for timber in their area, then the GNWT could be petitioned for a forest management agreement to secure long-term tenure.
A local investor developed plans to establish a pellet mill, and several communities subsequently approached the GNWT, seeking forest management agreements. Our government studied the mill project in detail and saw that the forest management agreement requests had merit. The mill project was privately financed and northern-owned, and their business plan appeared sound.
Now, a lot of investment is required to prepare for scaling up the forest industry. Several small community projects had been done with the federal government's support in the past. Building on this, a much larger and more comprehensive regional proposal was presented to the Canadian Northern Economic Development Agency, or CanNor, as well as to Natural Resources Canada, back in 2011. Approximately $6 million has been provided by the federal government over the last three years towards this industry, and that investment has been strategically targeted to build the foundation for an industry start-up in the NWT.
To date, the government has established two forest management agreements with aboriginal business entities. These represent a new system of timber allocation and tenure in the north that enables investment in infrastructure, equipment, and people. The forest management agreements provide 25-year tenure for forest resources, and provide the ability to support an industrial-scale wood buyer.
The entire GNWT has rallied around the initiative, and there has been broad support from within the government. Focused investments have been made to improve technical forest information, to develop management processes, and to build the pellet market. Other projects provide training and employment opportunities, and support aboriginal business initiatives in forest development. In this, the fourth year of federal support, the initiative has shifted into the implementation phase for the FMAs.
With timber harvesting planned for as early as the winter of 2015, support has been focused on business development, land use application preparation, and harvest preparation. While we have come a long way, continued investment will be required if we intend to take full advantage of this opportunity.
Over the next five years, the forest management agreement holders will need continued support in the area of business development. All aspects of FMA business management and timber sales need to be developed, tested, and mastered. Capacity is also an issue. The NWT workforce is largely unprepared for full participation in technical forestry jobs. While steps have been taken to better define the scope of work required in this area, clearly training investments will be required.
Sustainability is also an issue. Maintaining the health and sustainability of NWT forests is a priority for everyone. Forest inventories at present are patchy and mostly outdated. Major investment will be required to ensure accurate information is available, to ensure sustainability, and to track forest renewal.
In closing, the GNWT sees both short-term and long-term potential in developing forest biomass initiatives, particularly in small aboriginal communities. They create capacity in small aboriginal communities with otherwise limited opportunity. They tap into a growing and sustainable marketplace, and they help to reduce our carbon footprint for both communities and governments. Finally, they establish a base for future business opportunities.
As outlined earlier, continued investments will be required from a number of perspectives, including business development, workforce development, and long-term sustainability, to name a few. The GNWT is confident, however, that with ongoing federal and territorial support, this initiative will help move our communities toward a sustainable future built around the forest industry.
Thank you, Mr. Chairman and committee members. At the appropriate time we would be happy to address any questions you may have.