Natural Resources Committee on April 28th, 2015

[Lyle Dinn]

In the Yukon, so far the support has been pretty limited. It's not similar to NWT, but we have had funding from CanNor on inventory projects associated with the territories. We have benefited over the last three years, but with a different sort of model, and not to the extent nor the value of the projects in the Northwest Territories.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Okay, so you're in an earlier phase there.

[Lyle Dinn]

In some ways, yes.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Okay.

Brian, I want to turn to you. I was wondering how receptive the markets have been to the development of these new products. Are there any downsides or impediments?

When we talk about importing we mean importing products from other provinces in Canada, not federally or internationally, correct? What are some of the market forces that you've been dealing with?

[Brian MacDonald]

Right out of the gate, I think of the variable cost of oil. If you want to encourage convert to another fuel source, you have to be able to incentivize the end user. At this point there's very little incentive to convert over. Most do it simply based on economic modelling. There are a few who do it for environmental purposes.

At the end of the day, most people require some type of incentive to do that. At this point, there isn't very much incentive in the north to do that, from our experience in the Yukon.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Ms. Crockatt.

We go now to the official opposition, the NDP.

Mr. Bevington, you have up to five minutes.

[Dennis Bevington, NDP, Northwest Territories, NT]

It's a good dialogue. I think some clarification is needed on the development of the biomass industry in the sense that there is significant private sector involvement in it, setting up the equipment and providing the pellets. Certainly, within the industry as well.... The Government of the Northwest Territories has been instrumental by converting large buildings over to wood pellets and opening up a viable supply source for the rest of the community.

Could you talk about how that industry is developing and making a difference for everyone? My question is to the Government of the Northwest Territories.

[Evan Walz]

Yes, that has been an important element, as we mentioned in our presentation. As a government we've tried to take steps to move public buildings to biomass fuel, and others seem to have followed suit. We have a number of industrial clients, school boards, and schools that are moving towards this technology and doing so with good success.

There has been from an industry perspective, MP Bevington will know, some involvement and a lot of interest from industry in developing a pellet mill here in the NWT. That has really helped to push us towards making more use of this technology and trying to find a sustainable, built-in-the-NWT approach to this issue we have. It has also helped us reduce our greenhouse gas emissions and decrease the volume of fuel that we are burning in some of these buildings.

[Dennis Bevington, NDP, Northwest Territories, NT]

I'm just going to change the subject a little bit here because we're talking about forest uses.

To the Government of Yukon, last summer probably the largest money-maker in your forest industry was the mushroom harvest, and that's an ongoing opportunity. Maybe you could describe what goes on with that and what significance that has. The morel mushroom industry worldwide is in the multi-billion dollar category.

[Lyle Dinn]

Thanks for identifying what was a very exciting summertime for us here in the territory last year for morel mushroom picking. For those who didn't know—it's a pretty transient work source and it's hard to get the numbers—we're looking at $3 million to $5 million of economic activity associated with the morel mushroom boom that lasts about six weeks.

Our legislation allows for the permitting of non-timber forest resources so we're very interested in the long-term management of those. As well we see opportunities in products like chaga tea and birch syrup, and there are other forest sector things that are going on in the territory at this time.

[Dennis Bevington, NDP, Northwest Territories, NT]

I don't know if the GNWT wants to comment as well.

[The Chair, Conservative, Leon Benoit]

Would someone from the Government of the Northwest Territories comment?

[Evan Walz]

I'll ask Bill Mawdsley to provide some comment.

[William Mawdsley]

The Government of the Northwest Territories is aware of the opportunities that present themselves through things like the morel mushroom harvest, birch syrup, and other non-timber forest products. It's an area we're just getting our feet wet in. We don't have a regulatory framework together yet, but we're looking at how other agencies are doing it in Canada to avoid the same mistakes they've made.

We are aware of the opportunities that are there and we are looking at how government can assist people who might want to get into that without interfering with the market.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

Thank you, Mr. Bevington.

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

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Chair, I must apologize for this question, but I ask for clarity's sake to both the representatives from the Yukon and the Northwest Territories. I keep hearing about how industrial users—government users—are switching to pellets for their heating. I have lived in both Whitehorse and Yellowknife for short periods of time, and from my perspective, considering how much it costs to ship fuel up north, why wouldn't it be cheaper for everyone to use pellets?

I understand if you have an infrastructure set up, but for someone who is building a new residence or facility, are the costs comparable or why on an economic basis is not everyone converting over to biomass wood pellets in the territories for heating?

First to the Yukon and then to the NWT.

[Lyle Dinn]

I take it your question is more on the domestic side, but I think a lot of it comes down to preference. Some folks really like oil and there's an established business sector there. I think as the information gets out around modern pellet systems that are available....

The amount of use will increase. For instance over the last three to five years, we've seen year-over-year increases on the domestic use in Whitehorse of pellets. The information is getting out there. I think it's just a matter of time to catch up.

Yukon has a long-lasting love affair with wood, so if it's not pellets a tremendous number of people in the Yukon certainly burn cord wood. Certainly wood products are not new.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Would the same be for the NWT and it's just a matter of time before people switch over from fossil fuels to pellets and other wood products?

[Evan Walz]

I think that's fair to say. The infrastructure right now is slightly more expensive.

One of the other issues that we've noticed is that people are a little concerned about supply. The fuel oil has a regular well-established supply chain. I think people are a little unfamiliar with, and maybe a little skittish of, a solid a supply chain on the pellet front. Over time I think that will disappear.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

In your opinion, if someone builds a plant it will become sort of self-fulfilling. Say's Law states that supply creates it's own demand.

[Evan Walz]

That is certainly one of the things we look forward to, yes. We can address the issues associated with supply chain by having a plant and a supply that's built here in the NWT.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I want to follow up with the representatives from the Yukon.

People talk about how far away you are located from various places, but as you know, Whitehorse—which is not necessarily where most of the timber resource is, but is one point of reference—is not that far from Skagway relatively speaking.

If the infrastructure were put in place at the port, what is the potential that one could look at watching Canada's exports to China grow vastly? Once you hit the water—yes, different ports take a couple days, plus or minus, more—would you not be very competitive with places like Prince Rupert and Vancouver? If they get the infrastructure in place, what is the potential for export to China from a place like the Yukon or northern British Columbia?

[Lyle Dinn]

I think it would be a dramatic improvement from the current situation. The opportunities, I think, are there. We haven't been able to.... There have been several leaders on the wood pellet side and the forest products side that have come to the territory. They keep running into that barrier of export as a byproduct, over and above the domestic use. They see that ends up making their businesses not feasible.

The other crux of it is that at the Fort Nelson railhead, the bulk of forest resources that are of a commercial scale are in the Watson Lake area in southeast Yukon. That's still roughly around 500 kilometres from Skagway.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

The general problem is that where the forestry resources are in the Yukon is still far away. The forest product isn't evenly spread around the territory.

[Lyle Dinn]

Yes, the bulk of the opportunity is isolated.