Natural Resources Committee on Dec. 7th, 2020

[Paul Lefebvre, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

As you said, maybe we'll bring the conversation a bit further east from our friends from the west.

Mr. Yakabuski, it's always a pleasure to see you.

I have a few questions for you. You talked about certain supports at the beginning of the COVID pandemic for the forestry industry. As you also alluded, the forestry industry pretty much came back after shutting down at the beginning. There were still supports that we provided through the provinces. In your remarks, you alluded to having supported the safety of tree planting during the season with around $3 million. I know that the feds have provided around $30 million through the different provinces as well.

I just want to make sure. Was that $3 million that you were able to provide with the help of the feds or was that on a stand-alone basis from the province?

[John Yakabuski]

Hey Paul, it's good to see you again as well.

The short answer would be that was money we received from the federal government. As you know, much of the funding dealing with direct supports through the pandemic, simply because the federal government has the fiscal capacity that the provinces don't, has come from the federal government. That $3.5 million, I think it was, was to ensure that we could continue with the tree-planting program for this season, as well. The issue was ensuring that it would be done safely, given the conditions they're working under because of COVID-19. There were additional supports given to us from the federal government on that.

We got it done.

[Paul Lefebvre, Liberal, Sudbury, ON]

Exactly. I think it was very successful.

Now, I want to talk a bit about the forest sector investment and innovation program, FSIIP, that you have in the province.

What is the budget for that? What is the uptake?

Is that each year? You said that's around $10 million each year.

Which companies? Can you describe some of the projects that you've been able to help?

[John Yakabuski]

It is $10 million a year. It replaces a previous program.

We had our first recipients this year. It actually was an operation in southern Ontario that produces pallets and recycles—more recycling than anything else. It's quite an operation. It should maintain about 66 jobs and provide 20 more jobs for a very sustainable and environmentally conscious business, which is recycling material that would otherwise be thrown onto a scrap heap or a landfill or burned.

Also, the new technology that they'll be using in improvements in that operation will make it even more environmentally sustainable.

That's the kind of thing we want to see. It used to be substantially a loan program. Now there's potential for some of it to be a grant, if they meet all of the benchmarks throughout the term of the contract.

[Paul Lefebvre, Liberal, Sudbury, ON]

All right—

[John Yakabuski]

Other than that, it's a fifty-fifty loan.

[Paul Lefebvre, Liberal, Sudbury, ON]

Okay. Perfect. Thank you.

With respect to you what you said and obviously the announcement of your reprioritizing in the industry of your department with respect to the forestry sector and certainly trying to support it, what budget measures have you put in place for that? What is the funding that you've allocated to your new forestry strategy?

[John Yakabuski]

On the forest sector strategy, Paul, as a northern MP, you'd know what's going on up there with regard to the industry. It was the number one ask for a priority for the industry for us to move on this new forest sector strategy. We're actually before the Treasury Board in our multi-year plan when it comes to the funding, so I can't talk about that just yet, as you would be fully aware. We believe we have the strategy, and it's less about the amount of budget we're putting into it as opposed to the conditions we're creating, along with the industry, to make it far more sustainable and far better.

As you know, the pillars are stewardship and sustainability, putting more wood to work, improving cost competitiveness, and fostering innovation, markets and talent.

For those four pillars, it's as much about looking at the forest industry from a different lens and making sure it can reach its potential. When we talk about the amount of production out of the industry, it's only going at a little over 50% of what it was just 20 years ago. We're looking to a four-pillared approach of a new forest sector strategy in improving all of those conditions. As the number one pillar is stewardship and sustainability, we want to make sure that we can continue to have that reputation worldwide as one of the most sustainable and environmentally conscious industries out there.

In Ontario, it has about 147,000 direct and indirect jobs and an $18-billion economic impact for the province, so it's more than significant here, and I—

[The Chair, Liberal, James Maloney]

Thank you.

I gave you some extra time there, Minister, only because you've been neglected to this point. I thought you needed to catch up a bit.

[John Yakabuski]

Thank you very much, Chair.

[The Chair, Liberal, James Maloney]

We'll go to Mr. Simard for two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

I may not follow your recommendations. It's not that I don't like Ontario, but I think I'm going to go after Ms. Nicholls again. It's not every day you get to talk to a chief forester who probably has a little more knowledge.

You know, Ms. Nicholls, I come from a forested region. I feel like I'm hearing about the potential of cellulose fibres and all the developments that can be made from wood chemistry and biomass. I feel like I've been hearing about this for the last 15 years. Unfortunately, we have the impression that there is a lot of delay in the emergence of the forestry sector.

In that sense, I'd like to hear your thoughts on government measures that could be put forward to support what is being done in research and development, which is still fantastic. Just think about what FP Innovations is doing. Even back home, there are many college centres working specifically on this issue. I see all the potential for innovation that's there, but I can't see how it's taking shape in the markets.

Given your expertise, what do you think could be done to facilitate the emergence of this sector, which would be very beneficial in the fight against climate change?

[Diane Nicholls]

Okay. That's a big question.

You are right. People have been talking about these new products for quite some time, and we're not seeing commercialization to the fundamental level that we're needing.

When you look at Scandinavia, however, they have been successful in producing some of these products, and when you think about what wood chemicals are being used in the cosmetic industry, that's a multi-billion dollar opportunity.

However, most people don't know how to take it to that level, and that's the commercialization. We have good research, we have good technology and we're starting to see some start-ups, but the piece we're missing, certainly in British Columbia, is that next step of taking that research and putting it into a commercial enterprise and showing the pathway forward.

How can we do that? Government has a lot of different programs. A lot of those programs can really help to move the dial in the sense of maybe focusing on commercialization, or giving incentives to commercialization in the sense that if you go into these new venues, there is an opportunity to have government support for a period of time, whether it be a loan or a grant or a combination of loan and grant, with parameters—

[The Chair, Liberal, James Maloney]

Ms. Nicholls, don't take this personally, but I have to interrupt you again. I'm sorry, it's just the march of time.

[Diane Nicholls]

That's fine.

[The Chair, Liberal, James Maloney]

We will move on to Mr. Cannings for two and a half minutes.

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

I'll jump right back in and ask Ms. Nicholls another question and I think Monsieur Simard was touching on this in his first intervention.

In British Columbia we have the Wood First Act.

Quebec has their Charte du bois.

I have a private member's bill that died in the Senate in the last Parliament, but hopefully it's coming back from the Senate this time. It tries to incentivize the use of wood in government infrastructure and in government projects, not by demanding that you use wood, but by asking the government to do a greenhouse gas emission footprint analysis of building products before putting out projects for contract, to look at the footprint and then choose the one that best meets those environmental goals.

Has there been any thought to do that in British Columbia, and if not, how is the Wood First Act accomplishing its objectives? I think it's more of a suggestion rather than a real stick.

[Diane Nicholls]

At this point the Wood First Act is a suggestion, as you put it. That's a good way to describe it. However, work is being done on it to bring some more strength into that act. We don't know what that looks like yet. We've just got a new government in place, of course, so we're looking for those mandate pieces in the direction. There is a strong will to look at that act and see potentially what more can be done.

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

Thank you for that.

Just very quickly on a totally different topic, you also mentioned biodiversity. I've been hearing concerns from my constituents and others about the use of herbicides in forests, especially in the Interior, to promote conifers at the expense of deciduous trees.

I'm wondering whether the government is pushing back on that and trying to maintain that biodiversity for obvious reasons, but also for fire suppression reasons as well.

[Diane Nicholls]

In British Columbia, we have a biodiversity network system and we also have practice requirements to maintain biodiversity across the land base. It's ingrained into our forest management framework.

With regard to herbicide use, there is concern in northern British Columbia about the use of herbicides for coniferous species. We commissioned a report to see how widespread the use is because it has been decreasing at a substantial rate over the last 10 years. It's only used in very limited circumstances at this point.

With this new government, we are looking at our forest management regime in our mandate. Part of that is looking to update our forest management regime to make sure we have the ability in the legislation to maintain that mosaic of forest that we need and to allow for greater biodiversity.

Herbicides are a very useful tool.

[The Chair, Liberal, James Maloney]

I'm going to have to stop you there.

We will go to Ms. Harder for five minutes.

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you, Chair.

Minister Dreeshen, the federal government has announced the clean fuel standard, CFS. Its intent is to reduce carbon emissions and to clean up the environment. Interestingly enough, the forest industry does that quite naturally just because managed forests we know sequester carbon.

It would appear to me that the clean fuel standard is going to harm the industry. We know that the industry puts a fair bit of money into innovation and scientific advancements. Now, needing to take that money and put it toward the clean fuel standard is a direct cost to them. There is potential, then, that the increased cost to the industry could penalize their ability to advance science and innovation and therefore do more harm to the environment than good.

Can you comment on that further?

[Devin Dreeshen]

It's interesting...more added regulations that are put on our industry when we already have, I would say, the best standards in the world. I think you'd be very hard-pressed to find large forest sector industries in other countries around the world that actually have as high standards as we do here in Alberta, and also in Canada.

When we look at global capital, it goes to where it can make the most amount of money. If we keep ratcheting up our regulations to unsustainable levels—our regulations actually being unsustainable—then we're just going to see more mills and more investment in places like Russia, and other places around the world selling lumber at a discounted rate.

When we talk about climate change and global warming, having lower-standard countries produce more and more wood products, with one planet, doesn't make any sense to me. When you look at the clean fuel standards and any more regulation that gets layered onto what the provinces already do with our sustainable management frameworks—which every single forester in Alberta has to do—it doesn't make any sense. That competitiveness just hurts our industry and we're going to see that global capital go into other markets.

[Rachael Thomas, Conservative, Lethbridge, AB]

When you talk about global capital going into other markets, obviously that's boosting their industry. That's helping their country. That's giving them the competitive edge on the world stage. I'm just wondering if you can expand on that a little bit more in terms of being practical. What does that look like with regard to our own industry, its own sustainability and its own competitiveness?

[Devin Dreeshen]

Just in an Alberta snapshot, we have about $200 million in royalties coming from timber dues from foresters directly to the provincial government. Then, with the transfers we have to the federal government, where over $20 billion more is going into Ottawa than is actually being transferred back to Alberta, that $200 million in royalties is significant. That comes from not having mill closures and not having too much regulation that squeezes off investment and creates job losses and creates an area in which you can't actually invest and grow businesses.

I will put the $200 million in royalties in context. This year we were actually projecting as a province, for our entire energy sector—our oil and gas royalties—to clock in about $1 billion early on this year. When you look at the $200 million in forestry royalties, it's very significant. That only comes with investment and mills of all types, not just making two-by-fours, but our value-added pulp and paper. We need all of the variety of products we have here in Alberta to be firing on all cylinders to make sure we can have good-paying jobs in rural and remote areas in the province. Also, they're huge contributors to the bottom line of the province.