Natural Resources Committee on Nov. 22nd, 2017

[Robert Larocque]

That's a funding support there. A LEAF program, for example, that we had in 2008, 2009, 2010, and 2011 really helped us out in China—a demonstration project. That's the kind of demonstration funding that would be great if we did get together to build a car that is half made of wood, but that's not available right now.

On the policy side, to me it's just ensuring.... We have to be very careful, especially on carbon policies. Right now, the support from the federal government would be to make bioenergy, but for every one job in bioenergy directly.... You're better off to make lumber. Then you make biochemicals and pulp, and then you make bioenergy. There is no policy to support the use of wood or biomaterials. What I'm afraid of is that when the carbon policies that exist now come out, they will favour building plants that are going to use forestry just for bioenergy. From a total-job perspective or economic growth, you're better off to promote the primary sector, and then finish off with energy.

That's an example that I'm working on with Environment Canada, Natural Resources, and ISED, saying, “Look, I support policies there, but you're maybe going a bit too far, and you might have a perverse effect on what you want at the end.” Those are examples of the government that.... The last one is that the government is.... I really believe that we can decide to make whatever we want, but if we're not careful with our forests, they're not going to be there in 2030 the way they're there today.

[Mary Ng, Liberal, Markham—Thornhill, ON]

On the de-risking piece, where are the opportunities in a practical way? You're both in this business. In terms of de-risking, what is it that the government could do?

[Pierre Lapointe]

For example, one of the areas in which government has been trying to help us is in going from the lab scale to a tonne scale. That is very costly, and it is an area in which the government has been shy to invest in the past. Now it is changing a bit, especially with NRCan and the Quebec government and B.C., but this is an area where we need to focus on being able to go from kilogram to tonne very fast—the pilot scale.

[Jean-Pierre Martel]

If I may add on the de-risking, I think you're putting your finger on exactly some of the right issues and where additional funding will be needed. We need to realize that when we look at investment and de-risking, we need to look at the process, and the products, and we need to de-risk the market as well. Very often with those new value-added products or markets, it's to be the first one out there, because they're niche markets. They're value-added, but small markets. It's very important for Canada to be one of the first out there. We need to realize that we're not alone. There's a lot of competition coming from Brazil, Chile—

[Mary Ng, Liberal, Markham—Thornhill, ON]

You're talking about market adoption.

[Jean-Pierre Martel]

The market, unfortunately—

[Mary Ng, Liberal, Markham—Thornhill, ON]

It's about incentivizing around market adoption, so that we can show what it is that we're doing, how it is that we're doing it, and that we indeed can be a leader; therefore, you catapult into showcasing that for our exports.

[Jean-Pierre Martel]

That's it exactly—and fast-tracking the process.

[The Chair, Liberal, James Maloney]

You have 10 seconds, if you want to use them.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you for your testimony.

[Robert Larocque]

I'll just give an example. Jet fuel is perfect. We think we can make it. We just need some support if we work on a project between our company and Air Canada for testing that product in their jets and engines. Another one is locomotive. We need to work with CN and CP, but it takes time to build a brand new engine that can receive biofuel-type product. That's the kind of concrete example that we're living right now. Marine is another.

[The Chair, Liberal, James Maloney]

Thanks.

Mr. Falk, I'll give you about four minutes.

[Ted Falk, Conservative, Provencher, MB]

Mr. Larocque, I would like to start with you. I want to pick up on part of your report. You talked about a partnership with the agriculture sector on a proposed biodesign supercluster, and you have some very noble ambitions inside of that, such as, accelerate disruptive technologies, sustain rural economies, and improve the environment. You have established some targets as well. Unfortunately, the supercluster was unsuccessful. Can you expand on that a little bit? Why were you unsuccessful?

[Robert Larocque]

A government program was announced for a supercluster initiative. They received more than 50 applications. Now I think there are nine, and we were not selected for the next wave. When the government announced it, only four or five were to be selected.

We have been in contact with ISED. What we're trying to do now is still deliver our program, but look at different government initiatives, such as the strategic innovation fund and the clean growth fund that came out last week. It's a matter of finding a niche. I'm not saying it's unfortunate, but some of those programs do have limitations on accessing the market. The supercluster initiative had, I think, 75% of the $250 million in funding going directly to accessing markets. We were really excited about that one; it addressed a niche that we did not have. Now we're working with the federal government to find out if we can fit our projects within existing programs.

[Ted Falk, Conservative, Provencher, MB]

Right now lumber prices are fairly high.

[Robert Larocque]

Yes.

[Ted Falk, Conservative, Provencher, MB]

What kind of reinvestment is the industry making in the new initiatives and maybe reaching this objective on their own?

[Robert Larocque]

The lumber prices are high, but 20% is going to countervailing duties to the United States, so in my mind, the lumber prices are the same as they were about 18 months ago. We're investing as we typically would have done 18 months ago. We have seen energy projects, prefabricated wall, and some investment in engineered wood, but without those countervailing duties, if the price was where it is, there would be a lot more investment.

[Ted Falk, Conservative, Provencher, MB]

This lack of a softwood lumber agreement is really hurting your industry, then.

[Robert Larocque]

It's not helping us accelerate our transformation. Let me put it that way.

[Ted Falk, Conservative, Provencher, MB]

I'd like to ask a question which all of you can answer, if you choose to, although, Mr. Lapointe, I think probably you have been speaking to it a bit. You're working on biofuels. How close to mass production would the industry be?

[Pierre Lapointe]

Four or five years.

[Ted Falk, Conservative, Provencher, MB]

Where would the problem be?

[Pierre Lapointe]

I would say there are two problems.

One issue is going to be the interaction between different technologies, so gasification and liquefaction. That's the challenge we have on the technical aspect.

On the policy aspect, we have a major issue, which is that not all of the provinces have policies on using a percentage of biodiesel. In Quebec, it's zero. In Ontario, it's 5%, or something like that. So when you're putting in for commercial trucking drop-in biodiesel, the policy of the percentage of biodiesel in the fuel is really becoming a major issue.

On the technical aspect, because of our relationship with Neste, Total, and some of those guys, we feel comfortable that within two years we will have solved those issues.

[Ted Falk, Conservative, Provencher, MB]

Thank you.