Natural Resources Committee on Feb. 1st, 2018

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

Yes.

[Rod Badcock]

A biodesign cluster still exists, by the way. It was an initiative of FPAC; Bioindustrial Innovation Canada, which is located in Sarnia and has done a good job of building a bioeconomy complex there, I would say; Gnome Canada; and FPinnovations. The idea was that they brought together a number of companies that are in the bioeconomy supply chain. Many of them are in the forest sector. I think I said there were over 70 of them, and they included major forest products companies like Resolute.

Antoine, I hope you don't mind my saying that CelluForce was involved in the initiative as well.

It tied together the entire value chain, and the idea was that it could be a supercluster, although it would be a somewhat dispersed supercluster. That organization put together an application to the ISED supercluster program, and unfortunately they weren't successful. They still exist and still have an interest in trying to string that together. My point in talking about them was that it's an excellent opportunity to enable that value chain collaboration, the example I described of the Canadian university going down the wrong path with the adhesive formulation. Our experience is that that's not the exception. That happens a lot, and it happens because of a lack of industrial guidance, and the biodesign supercluster is a way this could be corrected.

I should just clarify that they're not a client of ours. We were a supporting organization saying that this was a good idea, but I'm not a client.

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

Okay.

Maybe both of you might be able to answer this one. You were talking about the robust global competition in your statement. What are you seeing in the global marketplace? Is it government partnerships? Is it just private dollars working better? What are you seeing?

[Catherine Cobden]

The fact that the individual governments have created detailed strategies for bringing the bioeconomy to fruition suggests it's not just a competition among businesses, but also among governments. This speaks to my call for action, which I like to give everywhere I can, that we need to go beyond the framework, as good as it was, and actually get into details. The framework has many components to it and each one of those components needs detailed strategies to fully execute.

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

Four minutes. I'd better get going. No, I said I'd split my time.

I'll go over to Ted.

[Ted Falk, Conservative, Provencher, MB]

Thank you, my honourable colleague.

I'm not sure where to start. Mr. Charbonneau, I'll begin with you.

Your company has four major partners, including FPInnovations and Domtar. A lot of these companies receive federal funding and you say you're creating a lot of high-wage manufacturing jobs for people on government dollars. What kinds of markets are you opening up?

[Antoine Charbonneau]

As I mentioned, 2017 was the first year of commercial sales, so we are selling in oil well services. We're also aggressively pursuing different markets and I have to say that the biomaterial applications are growing very quickly. That is a suite of applications that we're finding a lot of success in. You have greases, paint, and coatings.

Regarding the high-paying manufacturing jobs, right now we are still ramping up, so those are plans for the future. We are crossing the valley of death, and it's a real situation for a start-up company where you have the technology and you have the investments, but there is a lot of risk involved. There is still a lot of process improvement that affects the cost of the material. Then there is integration of the material in customer formulation. It's quite complex, but as I mentioned, we're developing multiple applications.

[Ted Falk, Conservative, Provencher, MB]

Good, thank you, Mr. Charbonneau.

Mr. Badcock, I'll turn to you as well. You indicated that biomass is very expensive. Why is that? Why is it more expensive here than just south of the border with our neighbours there?

[Rod Badcock]

There are a number of answers to that question. I would say I'm at risk of maybe getting at cross-purposes with some of my customers here, but I'll give you my honest opinion. We can look at the utilization rate of logging equipment across the country—and FPInnovations has done this, as have we—which refers to the percentage of time that a piece of logging equipment can operate versus how much it is operating. Just as in any manufacturing sector, uptime is key, and our uptimes are not great. In Nova Scotia, where we have very specific knowledge, 60% is about average, and it can be a lot lower than that. When you have expensive capital equipment like you have in the forestry sector, it's imperative to run it at high levels of uptime, so one of the major challenges is improving the uptime of our logging sector.

I would like to say that it is possible. While the average that we see in Nova Scotia is 60%, the range is quite high. Some are very good at this, 75% being an upside.

[Ted Falk, Conservative, Provencher, MB]

I have another question.

[The Chair, Liberal, James Maloney]

You're not going to be able to ask it, I'm afraid, because you're out of time.

Mr. Cannings.

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

Thank you all for coming before us here today.

I'm going to start with a very high-elevation question, just to change gears. As you know, I'm a big supporter of the forest industry; I'd like to see it succeed. There's a lot in my riding and my province. I'm from British Columbia, I'm an ecologist, I come from a biology background, and I've worked with forest companies in the past. Ms. Cobden mentioned that sustainability is paramount. That's where I come from with the forest industry. I'm very much a supporter, but I demand sustainability, and you said that was important. Mr. Badcock said we were underharvesting by 30%; that's the first time I've heard that figure.

I just wondered if maybe both of you could comment on this. In British Columbia, most foresters would admit that we were overharvesting for a century and now things have changed. We are seeing drastic reductions in the annual allowable cut, partly because of that and partly because of beetles and fires. We have climate change coming. I'm just wondering if you could perhaps—it's a big question—briefly comment on where you see sustainability in Canadian forestry, where we could harvest 30% more and still maintain the environment in the way Canadians demand. I don't want to mention the word “caribou”, but I just have.

[Voices]

Oh, oh!

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

I'd just like you to comment on that in some way.

[Catherine Cobden]

I'll start. I'm not going to be able to comment on the harvest study, although I am very curious and interested in perhaps getting more information on that myself; that would be great.

As we discussed, it's not only an imperative for the good of Canadians to be sustainably managing our forests; I actually would like to put it in business terms, which is, I believe, a market imperative. It's one of the reasons Canada really has the gold standard in terms of certification and certification adoption. We have, by far, the greatest third party-certified land base, which is fantastic. However, it isn't an agenda solely based on taking care of the planet. It's also an agenda for business to be thinking about not just taking care of the planet, but also about the fact that their market requires it, so I really appreciate you reminding us that it's important.

I'll go a step further because you said caribou. I'd like to say that we should be able to find solutions that balance species. You're an ecologist; we can balance species and jobs, but we can't be one pole over the other, in my opinion, especially given my background in these communities. The jobs really matter, so we have to figure this out. It's going to take a lot of solid thinking—the best and brightest—to sort this through, but I believe it can be done.

[Rod Badcock]

I don't have a whole lot to add.

That was very well said, Catherine. I would say I don't profess to be an expert on caribou or wildlife management issues—

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

I shouldn't have said that.

[Rod Badcock]

—in B.C. or the prairie provinces.

I will say there's a lot of misunderstanding about the forest industry, and I have no reason to think this is any different across the country. I've worked across the country, but my specific knowledge being from Atlantic Canada, I would say that one of the things that strikes me is today in Nova Scotia that only 23% of our crown land is available for unrestricted forest management. The rest is tied up in some way, shape, or form in protections that provide for wildlife habitat protection.

I say and acknowledge that as a fact. In a recent survey of the general public we just did—I say “we”, being the industry in Atlantic Canada—on what they thought about the forest industry, about one-third of the respondents thought we were harvesting more than 50% of our forests on an annual basis. If that were true, the industry would be out of business in two years.

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

Two years.

[Rod Badcock]

There's a disconnect between the public perception and what is actually happening on the ground in the forest industry that I think is very important for the industry to try to correct. It's not a trivial task. There are challenges in communicating those messages, but I think it's important that we continue and build upon our efforts to do that.

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

I will turn to Monsieur Charbonneau.

I assume that with CelluForce and Domtar, you're associated with companies and operations that are primarily in the pulp and paper industry. I'm wondering how you see these CNC and other products as helping out the pulp industry, particularly as we've seen a serious decline in much of it because of a lower demand for paper. Do you see these new biomaterial products as an additional source of wealth for Canada, or as just replacing products that are no longer in demand?

[Antoine Charbonneau]

First, it's a misconception that we are selling mostly to the pulp and paper industry. Actually, our material is sourced from the pulp and paper industry, so it's a high value-added application, but most applications are outside of pulp and paper.

Potentially we often compete against petrochemicals. In the case of biomaterials, it's a very difficult fight. Most biomaterials or bioproducts don't necessarily have all the specifications of petrochemical-based materials, and, of course, these have been spec'd in. Customers expect such a high level of performance even though it may not be necessary. CNC actually enhances the properties of materials and allows bridging the gap in the case of biomaterials. That is just one aspect.

In other applications, for example in oil well services, we have displaced the petrochemicals that were traditionally used, because of the exotic properties of our materials. Our material has a very high-charged density, and we're able to perform much better in lower quantities than the traditional petrochemical-based materials.

[The Chair, Liberal, James Maloney]

Mr. Serré.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Chair, and thank you to the three witnesses for your work and the preparation you have done to present today.

I know this is a young industry, and there is a huge potential market, not only across the country, but also the billion-dollar market that exists today in Europe and Asia that we have to try to find ways to attract.

I don't have much time in the seven minutes I have, but I want to make sure of something in regard to the comments from my honourable colleagues across the hall here. I hope they're not suggesting that they weren't giving any grants over the last 10 years to stir private sector development. I think there were some grants given in the past—

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

I liked it.