Thank you, Chairman. Good afternoon, members of the committee.
lt's a privilege to have been invited to appear before you this afternoon. As dean of Canada's largest faculty of forestry, the renewal of Canada's forest industry is obviously of great interest to me.
You've asked me to speak about the third theme of your committee, namely strategic innovation. Within this area, you have identified a number of subthemes although my main focus today will be on the later themes.
lt's now 30 years since Peter Drucker published his seminal book on innovation and entrepreneurship. I believe that the two go hand in hand, and particularly within the context of economic benefits, they cannot be separated. We can all have good ideas, but unless we understand how to commercialize these ideas successfully, we will fail to benefit from them and our economy will fail to benefit from them.
I will not add to the material that I am sure you have already had from other witnesses on the subjects of improving existing forest products and developing high-value products for future markets. Both of these areas have been studied in detail by the excellent work undertaken by the Forest Products Association of Canada and by FPInnovations.
This is an exciting area of future growth and at UBC we will be addressing this through the introduction of a master of engineering leadership in green bioproducts, subject to approval by the B.C. Ministry of Advanced Education. This program will closely follow the industry value chain, from biomass fundamentals, through biomass processing, to bioproducts and bioenergy. Uniquely, 40% of the content will consist of a leadership platform designed to enhance the business, communication, and soft skills of the program participants. This is one of a suite of new programs designed to provide our current and future forest sector professionals with both business and technical skills.
I am pleased that you are considering the optimum use of wood residues. Canada's forest industry has a strong record of improvements in energy efficiency, often through the burning of residues to provide energy. Other residues have been incorporated into forest products or been utilized by pulp mills.
More recently, there have been rapid developments in the wood pellet industry, sourced primarily from residues. The primary market for these pellets has been Europe, although Asian markets are now growing.
The European market is dependent on politically driven requirements related to energy policy. For example, if the new government in the United Kingdom were to loosen its ties with the European Union, as has been threatened, this could affect Britain's energy policy and subsequently its demand for wood pellets. Even without such considerations, I find it rather ironic that many consider the burning of residues to be an optimal use for biomass, when so much research has demonstrated that there are many other potential products that could be generated.
I believe that Canada's universities have a major role to play in the development of Canada's bioeconomy. This is recognized and the FIBRE networks run by the Natural Sciences and Engineering Research Council are an example of successful cooperation between the Canadian forest industry and universities.
This program, which is coming to an end, has however had some significant shortcomings, the most important being the exclusion of many stakeholders in the development of a holistic innovation system for the forest sector. With one minor exception, the FIBRE networks focused on the innovative use of products, the so-called downstream end of the value chain. This has left a major gap, namely in our understanding of forests and future timber supply. With Canada predicted to have a 25% fall in timber supply due to natural disturbances and regulatory changes in the provinces, the importance of this gap cannot be overstressed.
Coming from one of Canada's eight accredited forestry schools, I have been dismayed at the lack of attention being paid to the supply side of the forest equation. We need healthy and sustainable forests if those forests are to support a vibrant forest industry. ln particular, we need to assure customers buying Canadian forest products that they come from sustainably managed sources.
While the long-term impacts of climate change on Canada's forests remain uncertain, there is already evidence that climate-mediated disturbances, including fires and insect and fungal outbreaks, are affecting timber supply. Most models anticipate that the frequency and severity of these disturbances will increase. We need a better understanding of these processes so that we can better ensure the continued supply of high-quality fibres to the forest products industry. If we fail, then we will jeopardize the competitiveness of Canada's forest industry and the natural wealth associated with our forests.
We also need to recognize that the political, economic, and social aspects of the forest landscape are changing rapidly. The Tsilhqot'in decision by the Supreme Court of Canada has radically changed how crown lands are viewed, and new models of land governance are emerging. We are getting much better at valuing our forests for all the services they provide, rather than just the timber. For example, economic value can now be attached to carbon in forests, and in many parts of the world, mitigation banking has become a major business opportunity.
Finally, the ways in which Canada's forests are viewed by our urban populations—who make up the majority of voters, I might add—is changing; and the half-hearted attempts to educate this public about the benefits of well-managed forests have had little success to date. There is likely to be increasing pressure to preserve Canada's boreal forests from economic activity, including forestry. The Boreal Birds Need Half campaign, launched on March 16, 2015, arguing for 50% retention of boreal forests is an example of that.
Managing these demands on land use is what we as foresters are trained to do, but strategic innovation in this area remains remarkably limited, given Canada's size and the value of its forest resources. Such innovation is needed urgently. Without it, the continued uncertainty facing forestry companies operating in Canada will ensure that the current flight of capital that we have seen recently to the American southeast will continue.
Thank you for your attention.