Natural Resources Committee on Nov. 3rd, 2020

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Thank you Mr. Samray, Mr. Nighbor and Ms. Lindsay.

You all mentioned the extraordinary potential of the forest to fight climate change. The forest is a carbon sink, and I think this has been demonstrated.

Mr. Samray, what do you think about the possibility of the government setting specific targets to reduce the carbon footprint? If federal government procurement contracts included a carbon footprint criterion, as they do a lowest bidder criterion, then two birds could be killed with one stone—promoting the development of the forest industry while fighting climate change.

Have you ever thought about this type of measure?

[Jean-François Samray]

Thank you for your question.

When you adopt such a criterion, you must be able to quantify it. We are currently developing a tool called a Gestimat calculator. It allows architects and engineers to estimate the amount of greenhouse gases that can be avoided by using wood as a building material. The calculator has been approved by industry and government. Final adjustments are being made and this tool will be available.

In terms of evaluation criteria, just as one can take energy efficiency into account when selecting electrical appliances, one can choose criteria for the carbon footprint of building materials. This would obviously have a stimulating effect on the forest economy, but also on the Canadian economy. There are forests in many communities, and local economies are interconnected, circular.

At the same time, the industry has designed engineered wood that meets the need for prestressed and factory-assembled products, making construction easier and faster. These things are now available. The more they are available, the more the federal government highlights them in its technology showcase, and the easier it will be to sell them internationally because the Canadian government will demonstrate that they are strong, durable, climate change-friendly buildings available to the rest of the world.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

You also mentioned the softwood lumber dispute with the United States. You gave some figures and talked about $1 billion for Quebec and $4 billion for all of Canada.

I've been talking to the people at Resolute Forest Products and others who are at $200 million right now. What seemed to be a problem for them was access to cash. To access current federal government programs, you almost have to be technically bankrupt, which is not the case for the entire forest industry, of course.

Do you think there is work to be done to ensure better access to liquidities? During the last softwood lumber dispute in 2006, the forest industry had to leave $1 billion on the table.

[Jean-François Samray]

It should be noted that the industry has benefited from very good market prices over the last few months, but, over a 10-year cycle, that is not always the case. Companies will therefore need cash to continue their operations and meet their obligations in the coming months.

If the government created a program to allow them to obtain bank letters of guarantee, it could help them to bear the additional costs and overcome this cash shortfall. You'd have to look at it under the World Trade Organization agreements, the WTO, because you have to know how you do it, but I think this is a great opportunity to support the industry.

The WTO ruling demonstrated beyond a doubt that Canada's forest management practices are consistent with international trade rules. So, pending a decision negotiated and agreed upon by the parties, I think it would be very positive to have such government support.

[The Chair, Liberal, James Maloney]

You have 20 seconds, Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

There is another issue that is quite essential, and that is the transition of the pulp and paper industry.

This transition involves upgrading some plants, and the costs are rather high. If there were a federal government funding strategy for the transformation of the pulp and paper sector, do you think that would help?

Do you have a suggestion for an initiative that could be put in place by the federal government to support this transition in the pulp and paper sector?

[Jean-François Samray]

I think my colleague talked about it...

[The Chair, Liberal, James Maloney]

You might have to get back to that in a subsequent question. Unfortunately, we'll have to move on Mr. Cannings.

[Jean-François Samray]

Okay, sorry.

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

Thank you, Mr. Chair, and thank you to the witnesses for being here today.

I'll pick up on something that Mr. Simard was talking about and what Mr. Nighbor mentioned. Mr. Nighbor mentioned my private member's bill on government procurement and using a lens of climate action, cutting down greenhouse gas emissions when letting government contracts for building. I'm happy to say that the bill is in the Senate now and hopefully will start its way back to the House and have enough time to get there.

I'm just wondering if I could ask Mr. Nighbor if he has any sense of how government procurement has been with the construction of large wood buildings. I ask because when the Conservatives killed my bill in the Senate in the last Parliament, I heard from various government members in the House that I should not worry, that procurement was happening, that what I was proposing in my bill was becoming practice in the government. I'm just wondering if that's really the case. Has it been noticeable? What is the state of that?

[Derek Nighbor]

It hasn't been noticeable on the federal procurement side. We have more mature procurement policies in B.C. and in Quebec that we see working. Maybe to give you some sense of the impact, I went back and looked at the UBC Brock Commons 18-storey wood building. It went up in 70 days, four months faster than if it had been a traditionally built building. In its construction, carbon pollution was down 25% to 45%.

There definitely are fewer big trucks on site at construction. It's a faster time to construct. NRCan has done a recent study on value-added wood and engineered wood and anticipates that there is an opportunity to move that production level in Canada from $4.4 billion a year to $6.4 billion a year by 2030. We're seeing companies like Nordic in Quebec, and a new Element5 in St. Thomas, Ontario, and Structurlam in your home community of Penticton. I think there's an opportunity to do more there.

Government procurement can help, but outside of the provincial governments, we haven't seen any noticeable procurement shifts that we'd say are making a difference.

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

In terms of mass timber construction, then, you mentioned Structurlam in my hometown of Penticton. Kalesnikoff in the Kootenays has built a huge, modern plant to do just that. You mentioned a few others. Is there a real trend to create more mass timber facilities in Canada?

Perhaps you can move on from that, and perhaps Mr. Samray can jump in as well, about how that might help us in our domestic market, as well as in the international markets. Building a domestic market might help in cases where we've lost some of the international market, especially in the U.S.

[Derek Nighbor]

Maybe I'll defer to JF on that. I've had a lot of air time here, so he can talk about the Quebec experience.

[Jean-François Samray]

I think it is something that is quite clear. Now it can be done; the know-how is there. The industry knows how to do these things, as Derek mentioned. Of course, it goes faster than when you use concrete. On top of that, when you use engineered wood, you are using wood with more value added. We could also export these products down to the U.S. and not face some extra tax burden, because these are value-added products. Therefore, there is really an opportunity to create jobs, reduce GHGs, and at the same time create an expertise that is hardly taxable on the other side of the border.

So yes, it can be done. The way government can help is to really use its purchasing power as a showcase and to make people proud of what it is. We see more and more schools and municipal pools and stadiums being built, and we don't see any painting on these walls the way it is on the ones made out of concrete. The youth are really proud of these buildings. The community gathers around these buildings because they create a sense of community.

It's good for the environment, it's good for the community, it's good for value-added products and it's really strong on what Canada does best, strengthening engineering and introducing that with new wood products. It's a winning combination.

[The Chair, Liberal, James Maloney]

You have about 40 seconds, Mr. Cannings.

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

Okay.

Just quickly, the other focus of this study is how the forests can help us meet our climate change targets. You mentioned the narrative that forests are a carbon sink. The fact is, they haven't been a carbon sink for the last 20 years. How can the forest industry help the forests help us reach those targets? The forest sector can do what other sectors do, but you are the ones managing our trees. How can we help the forests reach those targets?

[Derek Nighbor]

Kate?

[The Chair, Liberal, James Maloney]

Be really, really quick, please.

[Kate Lindsay]

Okay.

We can share more of our brief, but FPAC, building on the work of scientists at NRCan, has built an additional 30-megatonne contribution of CO2 removals that we can make. That's through sustainable forest management and lots of different innovation within the managed forest—the utilization of wood by creating demand for some of those value-added products so they're not burned in slash piles; and then really some of the transformational changes through the supply chain and the benefits of using wood as displacing other fossil fuel-derived products. There is a full spectrum there.

[The Chair, Liberal, James Maloney]

Thank you.

We'll move to the second round of five minutes each.

We'll start with Mr. McLean.

[Greg McLean, Conservative, Calgary Centre, AB]

I showed up today in person so that I could ask questions. I hope you take note of that.

[The Chair, Liberal, James Maloney]

Duly noted.

[Greg McLean, Conservative, Calgary Centre, AB]

My first question is regarding trade. Obviously, this is a sector in which we do very well in Canada. I noted in the comments made that trade and trade agreements will be an important part of our industry growth, going forward.

In that respect, Mr. Nighbor, can you please comment on how the clean fuel standard will affect your competitive position with our trade partners?

[Derek Nighbor]

I'll start, and Kate can add to it if I miss anything.

I think right now it's a bit early to tell, as there is still a lot of detail to be worked out. Our most initial focus, to go back to my original point, has been to avoid unnecessary duplication. We're an industry that's very comfortable with laws and regulation, let me tell you that. We're very heavily regulated. I think especially in an economic downturn, where the tolerance and the patience for that...is when you start seeing duplication that's driving no human health or environmental benefit.

One of the pieces we're working on in the clean fuel standard right now is related to buffer zones. There is currently a requirement that if your biomass is to be included—I can't remember if the buffer's 25 metres—there is a buffer zone around bodies of water that the federal standard, in draft, has specified. Well, every body of water is different. This goes back to local planning and local science. To make a judgment call that 25 metres or 30 metres needs to be the buffer for every body of water across Canada is ridiculous. We've been working with CCC officials and they've been open to that conversation, but those are the kinds of things....

The clean fuel standard can drive a lot of benefit on the bioeconomy side for a number of our pulp mills, getting into that biofuel space, but the regulations need to be drafted in a way that we're not tripping over existing provincial requirements.

[Greg McLean, Conservative, Calgary Centre, AB]

Thanks, Mr. Nighbor.

I'm sure you have seen that the current legislation or the current regulation that's coming forward does have duplications, so we're hoping for a different outcome.

At this point in time, are you suggesting that your industry will have some exemptions from the CFS as they're being presented at this time?