Natural Resources Committee on Nov. 3rd, 2020

[The Chair, Liberal, James Maloney]

Welcome, everybody.

Thank you for joining us today for our meeting.

In our first hour we have some familiar faces: the Forest Products Association of Canada. You guys need no introduction and you know how the process works too. Derek Nighbor and Kate Lindsay, thanks very much for joining us today. We really appreciate it. From the Quebec Forest Industry Council, we have Jean-François Samray.

Each group has up to 10 minutes to deliver opening remarks. You can speak in the language of your choice; translation services are available. Without taking up any more time listening to me, I will turn the floor over to you.

Derek and Kate, why don't you start us off since you're first on the agenda?

[Kate Lindsay, Senior Vice-President, Sustainability and Environmental Partnerships, Forest Products Association of Canada]

Thank you, Mr. Chair.

Good afternoon. Thank you so much for the invitation to be here.

I will be starting, and then Derek will be speaking as well.

Canada’s forest products sector is ready to play a key role in driving economic recovery, especially in rural and northern forestry communities, and at the same time bring health and environmental benefits and greater self-sufficiency to Canada and Canadians.

As mentioned, my name is Kate Lindsay. I am FPAC's senior vice-president, and am joined today by my colleague, FPAC's president and CEO, Derek Nighbor.

Let me begin by talking about the fundamentals upon which Canadian forestry is built.

Canada is blessed with a tremendous natural and renewable resource in our forests. We have the second most forested lands in the world, making up 40% of our land base.

Canada’s managed forest—the area under active management—is primarily under the purview of provincial governments. Of the lands on which FPAC member companies operate, 94% are on Crown lands and are subject to among the most rigorous governance frameworks in the world.

Canada’s forests and our sustainable forest management regimes are dynamic in nature, continuously evolving to respond to the natural, human and societal shifts that require small adjustments, or sometimes more significant adjustments over time.

Forest management planning in Canada happens at the local level and is driven by science and detailed modelling. It considers dozens of values, from wildlife habitat requirements to watershed protection to fire risk mitigation. It receives and reflects input and knowledge from local municipalities, indigenous peoples, regional recreation and outdoors groups, and other area rights holders and stakeholders.

As with any local land development planning, there are often competing values and interests. It is part of our job to work with local communities on solutions that find balance and co-benefits.

Layered on top of provincial rules and local input is another level of accountability and transparency—third party certification.

Just 11% of the world’s forests are third party certified; 35% of those certified forests are here in Canada. It’s another reason why, in a recent Leger study of nearly 200 global wood, pulp, and paper buying customers, Canada ranked number one in the world. International customers cited quality, reliability, sustainability and good forest management as reasons Canada is their number one choice.

This natural Canadian advantage is a huge opportunity for us as we look at post-pandemic recovery opportunities.

I will now turn it over to Derek Nighbor who will speak to some of the solutions and recommendations.

[Derek Nighbor, President and Chief Executive Officer, Forest Products Association of Canada]

Thank you, Kate.

Thanks, Mr. Chair and members of the committee.

I want to turn to those opportunities, and some of the areas in which we see forestry workers doing even more for both our economy and the environment. The first we brand under safeguarding the future of our forests. Climate change has emerged as one of the most important transformational challenges, placing unprecedented pressure on our forests’ capacity to remain healthy and resilient. We've seen this in worsening pest outbreaks in the east and the west, and in wild land fires. Forests that are actively managed for the long term, together with the wood products harvested from them, are a key tool in the fight to address climate change. Active management will continue to provide those societal benefits, as well as to build more resiliency into Canada's forests for the future.

One of the other areas is bringing more capital investment to Canada. We have worked with FPAC members and non-members in recent months and have identified over 140 shovel-ready capital projects worth over $1.5 billion in value that can sustain and grow jobs across the country, improve our competitiveness and improve our environmental performance. I look forward to talking with you a bit more about those details.

Next is jobs and products for our people. We can sustain and grow family-supporting jobs in communities that desperately need them. By strengthening our sector domestically, we can also ensure that we have a strong supply of lumber and wood products, pulp and paper, wood fibre-based health and hygiene products, and bioproducts made right here in Canada so that we can provide for our people. Doing this provides important opportunities for SMEs, including the over 1,400 indigenous-owned forestry businesses that are a critical part of our sector. I think back to earlier in the spring, when President Trump stopped that shipment of 3M medical masks at the border. They contained northern reinforced pulp from Canadian forests. That was a reminder to us about the importance of and the opportunity for greater self-sufficiency in terms of how we manage the resource and we deal with value-added manufacturing here.

The other solution is to grow export markets. We're really well positioned to be a global leader in sustainably sourced, manufactured renewables and in bringing more quality and innovative products to the world. We have a few comments on how you can help get us there.

The first area is greater clarity between federal and provincial governments and more predictable or certain access to the working land base. As Kate said, 94% of the lands upon which our members operate are governed by provincial governments. We need your support to ensure greater coherence and clarity between federal and provincial jurisdictions and certainty around access to that land base. Wood fibre is important to workers, contractors, and forestry communities. Increasing levels of duplication between federal and provincial governments inhibit our ability to attract the much-needed capital.

On market access and market development, we'd like to see a continued focus on completing trade agreements, diversifying and growing export markets, and modernizing building codes to allow for bigger and more resilient carbon-storing wood buildings that will bring benefits to our people.

The final comment I want to make is about selling Canada’s good-news story to the world. Our pulp and paper mills have reduced GHG emissions by about 70% since the early 1990s. In its most recent report on the state of Canada’s forests, Natural Resources Canada has confirmed that our managed forest is a carbon sink of 14 megatonnes. Canadian forestry has a compelling story that resonates with our global customers. Despite this Canadian advantage, our customers and investors are increasingly being targeted by anti-industry groups and misinformation campaigns to drive business away from Canada. This is putting Canadian jobs at risk in the process. We need our federal and provincial governments to stand with us so we can sustain and grow jobs, keep our northern communities safer from fire, and advance the economic and environmental benefits that Canadian forestry and forest products provide.

I want to thank you for the invitation to be here today. We look forward to getting into a bit of a discussion on these items during the Q and A.

Thanks again.

[The Chair, Liberal, James Maloney]

That's great. Thanks very much.

Mr. Samray, we go to you now.

[Jean-François Samray, President and Chief Executive Officer, Quebec Forest Industry Council]

Thanks, Mr. Chair.

Part of my presentation is in French and part is in English.

My name is Jean-François Samray. I am the new CEO of QFIC, the Quebec Forest Industry Council. I am really happy to be with you today.

I am not going into the same details as Derek presented. I will just bring you some images and more details of what it looks like in a province like Quebec.

The Quebec Forest Industry Council represents close to 250 members who are active in sawmilling, hardwood, softwood, rotary cutting, pulp and paper, panel manufacturing, and, increasingly, engineered wood, which is used for a new type of construction.

In Quebec, each year, the forest industry provides more than 140,000 well-paid jobs, directly or indirectly. The average annual salary is $66,000. The members of the Forest Industry Council and the jobs they create generate an annual $4.8 billion in taxes paid to the governments of Quebec and Canada.

That is $4.8 billion paid in income taxes from the industry to government.

This is based on a turnover of $20 billion. This contribution from the industry as a whole represents 4.7% of Quebec's GDP. Nearly 70% of Quebec municipalities have a very close link with the forest and have jobs that depend on the forest sector. The degree varies according to the region, but it is clear that, in Quebec, in approximately one municipality out of five, when the forest goes, everything goes. On the other hand, when these activities slow down, it is a disaster, and the economic vitality of the community as a whole is put at risk. I am sure that the same is true in most other provinces and regions of Canada.

In Quebec, there are 905,000 square kilometres of forest.

The Quebec forest is more than 900,000 square kilometres—close to a million square acres. Annually we cut, replant and harvest 0.2% of that area.

As Derek Nighbor mentioned, forestry practices are very important in Canada, and they are the most regulated. For example, in Quebec, 0.2% of the total area cut is harvested and processed. In other words, it is done in a very sustainable way.

The Quebec forest sector is suffering the consequences of a fifth wood dispute with the United States. This affects not only Quebec, but the entire Canadian forestry sector.

I would like to remind the members of the committee that the countervailing duties triggered at the U.S. border are something we monitor very closely. Currently, we've gone over $4 billion, and of that amount, $1 billion is coming from Quebec companies. This is money that cannot be used for modernization, the purchase of new equipment or the deployment of new technologies to make the Quebec and Canadian forest industry even more efficient.

It is important to the forest industry that WTO rules be respected and that an agreement be negotiated. This is important to us, but I think it will also be important to remind our neighbours that even the National Association of Home Builders has written to President Trump. In addition, nearly 98 members of the U.S. Congress have written to him asking that a solution be found, because this situation is hurting the American middle class. We would really like the federal government to find a negotiated solution.

As for climate change, as Mr. Nighbor said, it is the forest that grows and sequesters carbon, but it is also the forest that is used for wood construction. Every cubic metre of wood used in construction will store one tonne of carbon over the long term.

It will be important, when considering programs for inclusion in the next budget statement, to highlight Canada's exemplary role in wood construction, and to support this type of construction. This is important because it would kill two birds with one stone: reduce GHG emissions and stimulate the economy. What's more, it would make us proud. After all, prominent on our flag is a maple leaf that comes from a tree. What better way to show it off than to have a built heritage!

The pulp and paper sector is also fundamental. This sector must adjust and pivot. The current regulatory project to replace single-use disposable plastics will only make sense if we can replace these disposable plastics with cellulose products from the forest. In this regard, the government-funded Investments in Forest Industry Transformation, or IFIT, program is very popular with the industry. I know you've already increased the budget envelope, but for every dollar invested in the industry, there are 10 requested. The IFIT program needs to be reviewed to ensure that it meets processing and GHG reduction needs. This is very important for the industry.

The aluminum dispute has been resolved, now it's time to settle the lumber dispute. This will give us a good idea of where we're headed.

The development of public policies and programs for the use of wood in construction should also be accelerated.

Finally, let me reiterate that the pulp and paper sector is important. This is the sector that uses all the sawdust and residues from the sawmills, from the secondary and tertiary processing. The majority of pulp and paper mills are located in Quebec because of the low cost of electricity and the proximity of the fibre. These mills must be allowed to pivot their packaging products and replace single-use products. The creation of accompanying programs would allow the Government of Canada to stimulate the economy while reducing GHG emissions and lowering pollution.

When we do these things right at home, all international market development programs will have a technology showcase to demonstrate that Canada has the best-managed forests in the world and that we are proud to use wood in our economy and to reduce our GHG emissions. That's why we're offering these solutions to the world.

Thank you for your time. I would be pleased to speak with you.

[The Chair, Liberal, James Maloney]

Thank you very much, Mr. Samray.

We made up some time there, so first up is Ms. Harder.

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you, sir. I am in the committee room.

[The Chair, Liberal, James Maloney]

That's why I couldn't see you.

The floor is yours.

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you so much.

My question goes to Mr. Nighbor. I'm keenly aware of a promise by the Prime Minister to plant two billion trees in 10 years. He made this promise a little bit under pressure from Greta Thunberg last September when he met with her on the campaign trail. To date not a single tree has been planted, as confirmed by numerous sources, including an official, the assistant deputy minister who was here last week. She not only told us that not one single tree had been planted, but also that there is no plan to do so, which was a little bit disheartening for us to hear in terms of how far that has gone.

To reach their goal of planting two billion trees by 2030, some basic math would tell me that the government would now need to plant roughly 1.2 million trees per day, which seems like a lot. You would know better than I do about that. I'm wondering if you can tell me a little bit about what kind of pressure this amount of trees would put on nurseries to grow millions of seedlings in order to get them into the ground within the time frame, which is the remaining nine years, and make good on that promise.

[Derek Nighbor]

I'll speak to that and, Kate, if there's anything I miss, feel free to come in afterwards.

We offered advice to the government on how to launch a successful tree planting program, and I'd be happy to share that through the chair to the full committee.

Our industry plants five to six hundred million seedlings every year across the country. I'm really proud that this year the plant went ahead without any major outbreaks—and that came with a lot of collaboration with governments, northern mayors and councils and northern indigenous communities. We did such a good job that the tree planters were worried about the northern locals in terms of contracting COVID. A lot of great work was done. We do have a lot of experience in this area.

In the advice we shared with the government, there were a couple of things. Number one, seedlings don't just pop up. We need time to build capacity, and it can take up to four years to build that capacity. Given that we plant on average a thousand trees every minute, once the capacity is there, we have the ability to do that planting. It's the capacity crunch we worry about for a couple of reasons. Number one, you want to get value for taxpayer dollars here, because, if you have a surge and there's not enough capacity, the prices are going to go through the roof for both the federal government and our companies, and that's not great.

The other thing we'd want to do is to make sure that experienced people are doing the planting, those who are planting for resiliency, so that those trees don't die. I really hope that as the government goes forward, we're going to tap into existing resources—provincial governments, indigenous communities and nurseries—that have a lot of expertise. It's really not a time to find some newbie to start doing this stuff, because it is very complicated work, and you want to be planting the right trees in the right places. The nursery capacity, I would say, is a really big challenge.

I'd like to see that you also don't want to have this two-billion surge and then just stop planting. If you want to build that business capacity in that nursery sector, I would love to see a longer-term commitment to continue to do this so that the investments would be worthwhile.

The other thing I'll add, in terms of the planting itself, is that we see a huge opportunity for more urban forests, in more urban communities and rural communities, in addition to planting in areas of our working forest that have been hit by pests and fire. As Jean-François said, we replace what we harvest in Canada. We actually replace more than we harvest, but if you have land that's attacked by pests or is burned by fire, there's a bit of a gap there, because on provincial lands it's incumbent on the provincial governments to replace those trees. If they don't have the budget to do that, you're relying on natural regeneration, and in some scorched areas that natural regeneration might not be happening.

This is also why we asked the federal government to please work with the provinces who know this stuff. Please work with indigenous communities who know this stuff as you determine where in the working forests we can also plant trees beyond those in just the urban and rural parts.

I've taken up some time, but I hope that helps to answer your question.

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you, Mr. Nighbor.

[The Chair, Liberal, James Maloney]

You have one minute left.

[Rachael Thomas, Conservative, Lethbridge, AB]

You made an interesting point, though. You said that your company plants five to six million trees per year. If the government is to make good on their promise, they're going to have to plant 1.2 million per day. Is that doable?

[Derek Nighbor]

I think it depends on when the planting starts. I'm not privy to the exact plans. As I said, we can plant 1,000 a minute if we have the infrastructure and the workers in place. The supply crunch issue you need to watch is the nursery capacity, which can impact your ability to get the seedlings, and also to get them at a good price.

You also have to consider the labour. You know, you need boots on the ground to do this planting. There's a fair bit of planning in terms of the infrastructure required. I'm not a silviculture expert myself; I don't run a nursery. Our companies work with those companies, but I would really encourage the government to work closely with them. That's essential to the advice we provided to the government.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Nighbor.

Thanks, Ms. Harder. You're right on time.

Up next we have Mr. Weiler for six minutes.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Mr. Chair.

Good afternoon, Ms. Lindsay, Mr. Nighbor and Mr. Samray. I really appreciate your taking time out of your busy schedule to meet with us today.

Of course, COVID has caused all of us to pivot and be quite flexible and adapt to changing circumstances. We're really grateful that you were able to make some time to join our committee on such short notice today.

In my home province of B.C., it's really been a perfect storm that is impacting forestry, as you know, including from COVID-19, the fibre supply and climate change, among others. While there's been a reduction in demand for pulp and paper, we have seen growth in demand for wood as construction projects and home improvements.

The study that we're doing is looking at the economic recovery of the forestry sector. In the first hour we're really going to focus on the state of the industry, and in the second hour, more on innovation.

I really appreciated your comments earlier. You mentioned some of the challenges and opportunities for the forestry sector. I was wondering if you could speak a little bit to what role you see the federal government taking to support value addition within Canada.

[Derek Nighbor]

Is that for me, Mr. Weiler?

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Sure, this first question is for Mr. Nighbor.

[Derek Nighbor]

Great.

I think there are a number of things. Not far from your home community in Vancouver, we saw a recent move by the Vancouver City Council to move their building codes to 12 storeys. They joined 13 other B.C. municipalities, including Richmond and Surrey, that are working in that space.

We have seen the Horgan government commit to a value-added strategy, which we welcome. I think that's great.

One of the things for us, in working with that, is that in order to ramp up that kind of demand, you need to make sure that the supply is sustainable and also that there is certainty on that land base to support that business growth.

We're quite confident that the sustainability factors are there. Our goal is to keep those forests as forests forever. Provincial governments, including the chief forester in B.C., Diane Nicholls, set that allowable cut every year based on what the forest looks like. That is why we've seen a really difficult time in B.C. coming out of the mountain pine beetle and then the 2017-18 fires that, in some communities.... I know that not far from where Mr. Zimmer lives, you've seen some communities lose 20%, 30%, 40% of their allowable cut. That has meant too many mills chasing too few trees and has led to some of the closures.

I think there is a whole host of issues at the provincial level in B.C. around stumpage costs—and that could extend to Quebec and Ontario and different provinces in terms of that cost to operate. But based on the stuff we can control from a federal level, I think that with the value-added strategy around supporting tall wood, building codes, ongoing innovation—I know that Stéphane Renou of FPInnovations is going to talk a bit about that later on—we do see huge opportunity in the value added.

Government procurement is another area. I know that Minister Murray and Andy Fillmore have been working on some of that. Richard Cannings had a private member's bill as well on that, so I think that government procurement is also an avenue to explore.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Great. Thank you, Mr. Nighbor.

Also in your comments you mentioned looking at some of the opportunities in terms of jobs and products for the people. You mentioned ways that we could strengthen the sector domestically, and also how we could provide innovative products to the world.

Could you comment on what the federal government can do to support marketing wood products around the world, in addition to what it's doing already at this point.

[Derek Nighbor]

You should keep supporting organizations like Canada Wood and Quebec's equivalent wood promotion business. There are a lot of federal-provincial industry dollars going into some of those private-public partnerships to help grow markets. I think we have an opportunity to do more in that. I think the work that Canada Wood and we do on the lumber side is fairly advanced and working really well. I'd want to maintain that momentum. Let's continue.

As one of our CEOs says, “China is the new China”. There continues to be a lot of opportunity in Asia for us. I think our exports to the U.S. now are about $22 to $23 billion, and into Asia they're almost $9 billion, so that's progress from a number of years ago.

I would challenge the government—and we'd love to work with you on this—in finding other ways to grow markets for some of these new emerging materials and products in the biospace. In other words, is there anything more we can do on the pulp and paper side to brighten their business prospects?

[The Chair, Liberal, James Maloney]

You have one minute, Mr. Weiler.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

I just want to touch on a question that one of my colleagues mentioned about the plan to plant three billion trees.

Mr. Nighbor, you mentioned the government's support for reforestation this year. I was just hoping you could talk a little bit more about what that's meant for the ability this year to still carry out the tree planting work that needed to be done.

[Derek Nighbor]

There was a $30-million COVID-related program that was launched to support contractors. That's being funnelled through the provinces, and we appreciate the federal support there.

I'd say there are mixed reviews now on how that money is flowing through at the ground level. I would also say that $30 million is not quite enough. If you think of all of these people going up where Bob Zimmer lives and you can't put six in a truck or in a van and you can't put 20 in a tent.... So there were a lot of contingencies and a lot of additional expenses.

But listen, we appreciated the support and the most important thing is that we got the plant done and everybody stayed healthy.

[The Chair, Liberal, James Maloney]

Great. Thanks very much, Mr. Nighbor.

Mr. Weiler, I appreciate that. You were right on time.

Mr. Simard, over to you for six minutes.