Natural Resources Committee on Nov. 29th, 2017

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

I'd like you to elaborate a bit on the importance of co-management of forests between nations—that is, co-management by the federal government, the provincial government, and indigenous nations. Do you think the move in recent years towards a more collaborative management approach could play an important role in ensuring that Coastal First Nations have the opportunity to benefit from expanded opportunity?

[Paul Kariya]

Our carbon credit corporation, our emergent essential oils corporation, our timber sale licences, and parts of tree farm licences—these are all the result of this kind of negotiation, reconciliation, and getting into co-operative management. I very much believe the future lies in having both governments, in British Columbia and Canada, committed to an application of UNDRIP and to reconciliation.

Making those elements practical, making them a reality, means that you get together, you do joint information gathering, you do joint planning, you do marine and terrestrial planning. This is at the heart of achieving our goals. It's government to government. I'm quite optimistic that we have forged a path, and I'm very proud that the leadership in our nine communities has achieved this kind of relationship with the governments.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Thank you very much, sir. I'm out of time.

[The Chair, Liberal, James Maloney]

Mr. Schmale is next.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Thank you, Chair, and my thanks to the witnesses for being here.

Mr. Murray, when I was growing up in the late 1990s, we had a wood pellet stove. It's a great source of heat. We didn't have natural gas and electricity. Even in Ontario, it was pretty expensive back then. There's my jab for Ontario.

[Voices]

Oh, oh!

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

As you said in your own words, pellets are a fairly new source of energy. In the pamphlet you gave us and in your presentation, you showed the increased demand for pellets around the world. Where else in the EU are you seeing the most growth, and where are you looking for new markets?

[Gordon Murray]

The U.K. has two new plants under construction. Actually, one of them is almost finished, at Lynemouth in northeast England, and then there is MGT power in the Midlands. They are both going to consume about a million and a half tonnes each. Drax Power, our biggest current customer in the U.K., is looking to convert another boiler, which could be another two million tonnes.

In the Netherlands, there has been quite a big internal debate over sustainability criteria, which is mostly solved now. We expect that this market will be active again this year and that we'll see large growth there. Denmark is growing. Italy is growing. However, despite the great prospects in Europe, Japan and Korea are the fastest-growing markets right now. That's all entirely due to conversion of coal power plants.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Excellent.

Most of your production, as you mentioned, was in British Columbia, and some out east. In terms of a production facility in northern Ontario or somewhere in Ontario, why do you think Ontario has been a little behind in comparison to the other provinces?

[Gordon Murray]

I wouldn't say Ontario is necessarily behind. There are actually two or three pretty large plants in Ontario right now—one in Thunder Bay, one in Atikokan, a very large one in Wawa, and then several smaller ones around Toronto and Hamilton.

The very large plant that was built in Wawa is idle right now. That's because the company had poorly designed the plant, and investors just tired of it. I think they're looking for a new buyer to take it over right now.

I think the main issue with Ontario is that to date our industry has been so focused on export markets, and it's really just a function of the distance to port.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Okay. Yes, I wondered if that was the case, considering your diagrams.

Thank you, Mr. Murray.

I'll go now to Ms. Yan. Thank you again, and your brother is a great person. It's good to see you here.

Going to your words, on the third page you were talking about further investment and the need for capital. For the current programs that are available now, are you saying it's insufficient, or are you saying it's there but universities can't access it to do the research?

[Ning Yan]

I think that's a good question. There are a number of programs in place, such as IFIT. I think that program really supported industry quite well, but that program is primarily for the companies to apply for and use to conduct their transformation projects. Universities can be included but cannot take a lead in those projects.

In a way, it's what your point is. Hopefully, there will be more grants available for universities to access and more work done towards these earlier-stage projects. The projects in the IFIT programs tend to be more at the late stage and ready to implement. What I'm saying is we need more support for those early-stage projects that may not have been developed fully and are not ready to be scaled up to a large scale yet, but still have a place to go and can be further incubated and tested out.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Right. Usually banks, I guess, obviously with universities...but even companies have trouble accessing dollars, because if the technology isn't proven or it's too early in the stage, nobody will jump in and provide that boost up.

[Ning Yan]

Absolutely, and I think it's particularly difficult for the forest sector, because a lot of these manufacturing technologies need to go through a scale-up, and before that a lot of risk has to be taken out before they can move up. Some of the projects ongoing in Canada right now, for example, led by FPInnovations, have done really well, but a tremendous amount of work by a team of researchers went into that before they could move to this stage.

If you approach forest product companies and ask if they can put some cash forward to allow these early-stage, high-risk ideas to move forward a bit, you'll find it's difficult, given their current economic situation. They would like to have something ready so they can adopt it. They want to know the exact cost structure and the revenue, how many dollars it's going to make.

I think that's what I'm referring to as the gaps in this kind of innovation value chain, as I would call it. We have a lot of ideas, and there may be early stage, small scale, or maybe larger scale at universities, yet they don't have a proper way of moving out of the university labs to the stage where there can be uptake.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Maybe tweaking the applicant's accessibility might be a better route to go or a route to look at.

[The Chair, Liberal, James Maloney]

I'm going to have to stop you there, unfortunately.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

While you're on a roll....

[The Chair, Liberal, James Maloney]

Go ahead, Mr. Cannings.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Thank you all for coming before us today.

I'm going to start with Mr. Kariya. I'm interested in the carbon credit story. I used to be on the Nature Conservancy of Canada board, and we purchased a large piece of land at Darkwoods, just south of where Mr. Murray is, I guess, down between Nelson and Creston. We monetized some of that purchase by going into carbon credits and selling them to the Province of British Columbia and other markets.

The area that your organization covers obviously includes the Great Bear Rainforest. I'm wondering, first of all, if that is where those carbon credits are coming from, or are they coming from a broader area on the coast?

[Paul Kariya]

It's good to see you again, Mr. Cannings.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Yes.

[Paul Kariya]

It certainly is from within the Great Bear Rainforest footprint, but it's not restricted to that area. The agreement that we have under our reconciliation protocol with British Columbia also includes Haida Gwaii and goes further into other nations outside the footprint of the Great Bear. As other first nations have learned about our agreement, the airshed-based agreements that we've signed, they've also asked us to help market their credits, so the short answer is no. We operate beyond the boundaries of the Great Bear as well.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Perhaps you could quickly give me an assessment of where that carbon credit market is these days and where it's headed. Is this something that other parts of Canada can look to, not just with regard to first nations? I know there are a lot of big private holdings of forests on Vancouver Island, for instance. Are other forest companies looking at carbon credits in Canada to help them at this time?

[Paul Kariya]

It's a complicated picture. I'd say that industry and provinces and jurisdictions are all assessing where they sit with their GHGs, what the outlook is, where government regulation is going to go, and doing things like stockpiling offsets at a cheap cost to be used further. Alberta is a really good example of some upset in the marketplace and how they're handling it.

Let me say this in terms of a recommendation that I've been making to federal ministers: Canada, with its footprint, should probably be looking at—this is the federal government now—its carbon footprint and going some distance in terms of carbon neutrality. Then it could offset that footprint by working with first nations and others. I would look at first nations province by province and at collaborating with the provinces under the pan-Canadian climate framework, but where there is opportunity, Canada should be purchasing carbon credits from first nations to offset the federal government's footprint.

We've made the pitch, as it's going to take some time to get this kind of policy up and running. You could buy from us and bank them and have a credit. It certainly would help us in perfecting what we do. It helps our stewardship work. A good chunk of this money, not all of it, goes into stewardship activity on the landscape and the seascape. We could cut those kinds of agreements now with Canada.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I'd like to move to Mr. Murray and talk about some other local situations.

You talked about how you're using largely waste in your pellets. I know that at least for a while there was a big problem south of you in Nakusp with waste from a cedar pole plant. Are there some restrictions about the type of waste you can use, or is that really not a problem? Is it more about where it is located in relation to your plants?