Evidence of meeting #55 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 yukon.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Evan Walz  Acting Assistant Deputy Minister, Environment and Natural Resources, Government of the Northwest Territories
George Ross  Deputy Minister, Energy, Mines and Resources, Government of Yukon
Lyle Dinn  Director, Forest Management Branch, Government of Yukon
Brian MacDonald  Chair, Dakwakada Development Corporation
Frank Lepine  Director, Forest Management Division, Government of the Northwest Territories
William Mawdsley  Associate Director, Forest Management Division, Government of the Northwest Territories

4:20 p.m.

Director, Forest Management Branch, Government of Yukon

Lyle Dinn

How was the biomass strategy developed? Let me try to emphasize the objective of the strategy. With that tremendous amount of importing of fossil fuel, the Yukon is looking very hard at the underutilized wood resource to capture and maintain some of that money that is leaving the territory. That's the impetus. That's the direction.

We see that as a tremendous opportunity to bridge the gap and get our industry from being hand-to-mouth, year to year, into an area where we see some tremendous growth so that we could have some long-term sustainability in our forest industry.

4:20 p.m.

Liberal

Geoff Regan Liberal Halifax West, NS

Mr. Dinn, what is the main source of heating in the Yukon? Also, could you tell us more about the details of the port upgrading that is under way in Skagway? Did you say it was 150 kilometres away from Whitehorse?

4:20 p.m.

Director, Forest Management Branch, Government of Yukon

Lyle Dinn

Yes. The Skagway terminal is in the engineering phase. My understanding is they are looking heavily at several mines developing in the Yukon for the export of ore. They are not looking at a container type of development, but it has more to do with a bulk cargo ore terminal upgrades.

As for what our heating demand is and how it is fulfilled in the territory, 17% of our heating is through cord wood, through existing fuelwood permits, and the remaining is primarily oil and propane, I think around 70:30.

4:25 p.m.

Deputy Minister, Energy, Mines and Resources, Government of Yukon

George Ross

If I could just add to this answer a little, Mr. Chair. The key question there had to do with impediments to developing a biomass strategy, I believe. I would observe for the committee that our overarching objective in the Yukon is to use biomass energy to reduce dependency on imported heating oil, etc., in the territory. Challenges are fairly obvious in implementing a strategy like that. It has a lot to do with the incentives provided for transition from one fuel source to another for residential heating and the companion changes to the forestry activities that can produce the furnish for pelletization and mobilization into heating. A fairly complex set of economic conditions and policy and program conditions have to be in place for that to be successful.

The goal for the Yukon is fairly clear, and that's to use forest resources for higher value-added purposes and to reduce our dependency on imported energy, but a lot of pieces have to be put in place to make that happen.

4:25 p.m.

Conservative

The Chair Conservative Leon Benoit

Thank you very much.

Thank you, Mr. Regan.

We now go to the five-minute round. We'll start with Mr. Norlock from the government side.

4:25 p.m.

Conservative

Rick Norlock Conservative Northumberland—Quinte West, ON

Thank you, Mr. Chair, and thank you to the witnesses for appearing today.

I worked in northern Ontario back in the mid- and late eighties. The Shell Oil Company had two pellet plants that produced wood pellets in the area that I worked in, Iroquois Falls and Hearst, Ontario. I had a wood pellet furnace. It wasn't a furnace; it was a boiler. But I also had a European-style electric boiler. It ended up both were economical, except that the wood pellet required a little more energy to clean out every now and then, so I went with the easy way out, and like electricity, took the path of least resistance.

We're dealing with technology from the mid-eighties, some intellectual property. Have any of you considered going to a company like the Shell Oil Company and asking them for a feasibility study as to how to use your biomass to produce wood pellets? I'm told they only use steam and the natural lignin within the wood. There are no adhesives, so it's very environmentally friendly. I wonder if either of the northern governments have done any exploration on that end, because that company is very familiar with that particular technology.

4:25 p.m.

Conservative

The Chair Conservative Leon Benoit

I'll go to the Government of Yukon first.

4:25 p.m.

Director, Forest Management Branch, Government of Yukon

Lyle Dinn

Not to my knowledge. We haven't reached out to a company like that, but we're in the early stages of biomass strategy. We'll be seeking a number of inputs into that strategy, and that'll include commentary on technology and intellectual property.

4:25 p.m.

Conservative

The Chair Conservative Leon Benoit

Thank you.

From the Government of the Northwest Territories....?

4:25 p.m.

Acting Assistant Deputy Minister, Environment and Natural Resources, Government of the Northwest Territories

Evan Walz

I'll ask Bill Mawdsley, the associate director of forest management, to address that.

4:25 p.m.

William Mawdsley Associate Director, Forest Management Division, Government of the Northwest Territories

Good afternoon. I'm Bill Mawdsley, associate director, Northwest Territories.

During our process of identifying the wood pellet industry as a viable opportunity in sustainable forest management, we did work through FPInnovations and other specialists in Canada on the necessary means for acquiring raw material, methods of making pellets, the quality of the material we have available for making pellets, and whether the pellet industry is economically feasible, given the market conditions that exist in the Northwest Territories.

Insofar as the technology is concerned for making a pellet and making heat out of it, the technology has advanced considerably in the last 20 years since wood pellets first came on the market. We're seeing very great success, especially with institutional systems. The individual is also commenting on the viability of it. In the Northwest Territories we are faced with very high fuel costs, which also translate into very high power costs, so the market and the market offset of the biomass pellets is very high.

4:30 p.m.

Conservative

Rick Norlock Conservative Northumberland—Quinte West, ON

Thank you, and just for your information, there were two reasons that those two communities and the Shell company ceased production.

The first was that all of a sudden natural gas became much cheaper. There was a decline in the cost of natural gas, so the efficiency or the economic reasons diminished. As well, there was a slowing down of the lumber industry; they got most of their biomass from bark and sawdust. But you're right, the technology.... I've done some research into it in the past, and you can chip your wood, etc.

Also, I don't know if you explored this, and I suspect it is a bit far-reaching for you, but in northern Ontario they're considering using biomass to produce ethanol, and of course, ethanol goes a long way to stretch your petroleum dollar. So I wonder if you've looked at various enterprises.

The other one is just to use either sawdust or wood chips to fire into a boiler at high speed and high temperature, and do something like they do in some of the Scandinavian countries. I know in Hearst, Ontario, most of the schools as well as municipal buildings were all built very close together, so you could have one power plant produce heat for a number of buildings. Have you looked into that? In most northern communities the buildings have been built close together.

Have you looked at that as energy efficient, not necessarily using biomass to make pellets but using different forms of biomass to produce heat? I'm told it can be self-sustaining also. You produce steam, which can be used to generate electricity.

4:30 p.m.

Conservative

The Chair Conservative Leon Benoit

Thank you, Mr. Norlock.

We'll have very short answers, maybe first from the Government of the Northwest Territories.

4:30 p.m.

Acting Assistant Deputy Minister, Environment and Natural Resources, Government of the Northwest Territories

Evan Walz

As Mr. Mawdsley mentioned, the work that FPInnovations did considered all those options, and at the end of it we landed on using biomass for pellets. As far as ethanol goes, we simply don't have the volumes here in the Northwest Territories to make that work.

4:30 p.m.

Conservative

The Chair Conservative Leon Benoit

From the Yukon....

4:30 p.m.

Director, Forest Management Branch, Government of Yukon

Lyle Dinn

I just want to echo the comment from the Northwest Territories around the economies of scale. Some of those comments are really the Yukon flavour at this point in time. We do have one infrastructure heating project in Dawson City, which has a central heating system, and it benefits the community by heating multiple buildings in that location. That is the modern-day chip boiler.

4:30 p.m.

Conservative

The Chair Conservative Leon Benoit

Thank you.

Thank you, Mr. Norlock.

We'll go now to Ms. Crockatt, from the government side, for up to five minutes.

4:30 p.m.

Conservative

Joan Crockatt Conservative Calgary Centre, AB

I too am going to start with the two government leaders, but Brian, I don't want to leave you out, so I'll come back to you before long.

Some of this ground we've sort of covered, but I wanted to get a really clear picture here. What we're hearing at this committee is that there has been a very dramatic turnaround in the forest industry from where it was the last time we took a look at it. Some were calling it a sunset industry. It was facing some fairly significant challenges, not the least of them being the spruce budworm and the pine beetle, and now things look considerably different.

I'll start with Evan Walz, and then go to George Ross. What really changed here, and which government programs actually worked? I think we want to hear what has helped with the turnaround of this industry.

4:30 p.m.

Acting Assistant Deputy Minister, Environment and Natural Resources, Government of the Northwest Territories

Evan Walz

Thank you, Mr. Chair.

I may ask for some assistance from Frank and Bill with this.

You asked what worked. Clearly, the support from the federal government was instrumental—CanNor and NRCan. That really helped us move this forward. I think I would also be comfortable in saying that the seminal change in the industry—

4:30 p.m.

Conservative

Joan Crockatt Conservative Calgary Centre, AB

Could you go into that rather than just referring to them? I'm hoping to drill down. I think we've heard before that those two programs helped. Can you give us a little bit more direction on what you felt actually worked in the turnaround?

Was it the amounts of money? Was it how responsive it was? Was it the fact that these programs could move and fit? Were we proactive? Were you proactive? How did it go?

April 28th, 2015 / 4:35 p.m.

Acting Assistant Deputy Minister, Environment and Natural Resources, Government of the Northwest Territories

Evan Walz

I'll ask Frank Lepine to provide a little bit more detail on the CanNor funding.

4:35 p.m.

Director, Forest Management Division, Government of the Northwest Territories

Frank Lepine

Yes, thank you very much.

One of the things that really affected how we view forest products was the assessment of the cost of energy over time. I heard a reference to natural gas. Unfortunately we don't have a source of natural gas in the Northwest Territories that's readily available to us.

In 2011, the government completed a biomass energy study looking at alternative forms of energy for heating, electricity, and so on. That's really the driver behind this, or where we've come from. In the past, we produced two-by-fours and two-by-sixes like everybody else, but being so far from the common market, it was a failure at the outset. We were in losing markets.

We see that with the creation of a base industry, we may have the ability to create a local sawmill and local markets for the Northwest Territories. But for us, the starting point is the development of that biomass energy strategy.

4:35 p.m.

Conservative

Joan Crockatt Conservative Calgary Centre, AB

Okay, thank you.

Mr. Ross.

4:35 p.m.

Director, Forest Management Branch, Government of Yukon

Lyle Dinn

Yes, good afternoon. It's Lyle Dinn here.

What really happened in the territorial renewal of 2003 was devolution. Yukon now exercises complete control over its forest resources, so the decision-making is here and it's local. That, in and of itself, along with the completion of our regional forest management plans, which are treaty based, has given us the platform and the social licence to make decisions in which our community and our industry are much more reactive.

That has set the stage for continued investment. We're at the point now where, with technical support and capital investment, we could really move the forest industry into the future, here in the territory.

4:35 p.m.

Conservative

Joan Crockatt Conservative Calgary Centre, AB

Were there any other programs that you accessed, such as the ones in NWT that helped you to develop the industry there?