Natural Resources Committee on Nov. 22nd, 2022

[Bradley Young]

There have been a number of trade deals that we have negotiated. There are existing trade missions and various provincial initiatives that the federal government also supports through the CFS.

From the indigenous forestry perspective, the indigenous forestry sector hasn't been included in those missions as fully as it could be.

There are indigenous products, indigenous technologies and indigenous businesses that the world is interested in, and we'd be happy to join and help, along with team Canada—under a specific structure, I will say that.

[The Chair, Liberal, John Aldag]

I'm sorry. We're out of time on that one now, so we will have to move on to get to our next person. There may be a chance for others to come back to this, or you could weigh in when you get to other questions.

Next we have Mr. Chahal for his six minutes.

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you, Mr. Chair.

Thank you, witnesses, for your testimony today.

I'm going to start off my questioning with Ms. Coady.

You mentioned and discussed through your presentation the net-zero building strategy and the important role of forestry as contributing to lowering greenhouse gas emissions in buildings.

Can you tell us how, and in which ways, the forestry sector is driving down emissions in buildings?

[Linda Coady]

One of the ways is through products that capture and store emissions on a life-cycle basis or on a basis that can extend into a couple of decades.

A common example of this in British Columbia would be our mass timber sector, which the province has taken a lead in developing. This is as an example of a product that can help with the construction of affordable buildings and taller buildings made from wood, as well as help with carbon reduction.

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you.

I want to pose the same question to Mr. Samray, who talked about the building he's in and about the measurement of carbon footprints in buildings.

Can you also tell us how the forestry sector is driving down emissions in buildings?

[Jean-François Samray]

Yes, it would be my pleasure.

Wood has a negative carbon footprint, and when you use wood, one cubic metre of wood in a building instead of using one tonne of steel or one tonne of concrete, you reduce your GHG content in the building by one tonne.

This is all done through a calculation that uses an external and formal database that takes into account the entire life-cycle analysis of getting that tree from the forest into the building, so everything—wherever there is GHG compared to the business-as-usual situation—is figured in.

In Quebec, there has been a strategy of using wood in government buildings, and for these buildings, we're counting the amount of GHG that has been removed. There are some schools that have been built now. They have applied using wood instead of business-as-usual building materials and have reduced by x number of tonnes the GHG in the building. That's a way that wood can reduce substantially the amount of GHG in the buildings that belong to government.

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you.

I'll move to you, Mr. Nighbor. You talked about accelerating decarbonization in the sector. You also talked about the U.S.A and the Inflation Reduction Act.

Could you provide some specifics on where we in Canada can provide better incentives to help make that happen and if you have very specific examples compared to the U.S.?

[Derek Nighbor]

Yes. On decarbonization, I think there are a number of us. If you look at annual emissions in 2020, iron, steel and aluminum were at over 20 megatonnes. Agriculture chemicals and fertilizer were at over 18 megatonnes. Cement was at almost 11 megatonnes. Pulp, paper and wood were at about six megatonnes.

The issue we're finding—and, as I think I said, rightfully—is trying to get the bang for our buck. Where can we get a megatonne at a time? Where can we get two megatonnes at a time? I get that, but I think we also have to pay attention to the smaller players. With us, the average pulp mill, you might have 100,000 tonnes or 200,000 tonnes max. For us to get to a megatonne, we would have to stack a number of mills.

It's just that kind of middle way. I encouraged Minister Champagne on Friday, and he was open to looking at it. I just think there's been such a focus on big heavy-emitter decarbonization, and I get it, but if we don't pay attention to the middle track, if we don't have a bit of third way here for some of these other players like those in forestry, we're going to get left behind.

On the U.S. piece, I think the clean tech tax credit in the FES is a positive signal. I can't wait to see what the Canada growth fund is going to look like. There could be opportunity there, but I know that for our sector on decarbonization it's, how can we decarbonize lime kilns? How can we do some of this project stuff that's not going to be a megatonne at a time? We have companies ready to do it, but the financial support from government, the ability to tap into those programs, is just not there right now.

[George Chahal, Liberal, Calgary Skyview, AB]

Is there a specific ask that you would have on an incentive tax credit that would be an ask from your organization?

[Derek Nighbor]

I like the clean tech tax credit that was announced in the fall economic statement. I think that holds promise, but I think we need capital funding projects to decarbonize lime kilns. We have a number of mills—a couple of mills in northern New Brunswick and one in northern Manitoba—that don't have natural gas. They can't even dream about.... They're using heavier oil because that's all they have.

One of the solutions for those remote communities, many of which have a lot of indigenous workers as well, is the funding piece, I think. Tax credit is very important, but I would like to see some more funding opportunities in the mid-cap range for sectors like ours that aren't in the range of 10 megatonnes to 20 megatonnes of overall emissions across the country annually.

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you.

[The Chair, Liberal, John Aldag]

Thank you.

We will now go to Mr. Simard, who will have his six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Mr. Samray, I'd like to hear your views on federal support for the forestry sector when it comes to exports, particularly given the softwood lumber dispute.

I read recently that Resolute Forest Products had $500 million in countervailing duties.

This past weekend, I spoke to someone from Groupe Rémabec, in my neck of the woods, and he was telling me that they, too, had had to pay a sizable sum. I'm not sure whether that's confidential information. I won't say how much it was, but it was rather sizable in Groupe Rémabec's case as well.

In 2020, we conducted a study on the recovery of the forest industry. The recommendations that emerged included encouraging the signing of an agreement with the U.S. and, above all, improving access to liquidity. That still hasn't happened, but I'd like to hear what you have to say on the subject.

[Jean-François Samray]

I think the industry is looking for a workable, long-term deal to come out of the negotiations. No one wants to sign a deal that gives them less.

I realize that many of our members have deposits. Keep in mind that deposits collected from all Canadian companies will soon hit $7 billion. Companies and shareholders are very eager to get that money back so they can invest it, but I also think the government should be eager to collect taxes on it. That is taxable money that could help fund social and health care programs.

The U.S. Department of Commerce measures every aspect of support or assistance programs available to the industry. Everything is quantified, and the U.S. Lumber Coalition argued that business programs provided by the Business Development Bank of Canada and Export Development Canada amounted to subsidies. The U.S. Department of Commerce determined that the programs were not subsidies because companies paid for the letters of credit, which they obtain from commercially-oriented federal organizations. The companies have to pay for the letters of credit, which back the security deposits. They are anything but free.

They are not subsidies, and the U.S. Department of Commerce made that clear to the lumber coalition. All of that was rejected.

If you hear people suggesting that it's free money or subsidies, just remember that nothing could be further from the truth. Companies are paying for those sums.

[Mario Simard, Bloc, Jonquière, QC]

Do you think the support the federal government is providing is enough to transform the pulp and paper sector? The sector sorely needs the help. As everyone knows, paper is on the decline.

You mentioned the IFIT program. Do you think the government is providing enough financial support?

[Jean-François Samray]

I don't have the figures for the rest of Canada, but in Quebec, every cubic metre that was processed into value-added products generated $220 in tax and paratax revenue last year.

A third of that revenue goes to the federal government and two-thirds goes to the provincial government. There is no doubt that the industry is capable of developing products that can replace single-use plastics or new green chemical applications, as Mr. Renou and Mr. Nighbor mentioned. Those things are essential.

There are still no regulatory content requirements underlying all that, so there's uncertainty, as Mr. Nighbor said. As far as the IFIT program goes, if Canada wants to be in the same league as Scandinavian countries or the U.S., it's not going to get there with $20 million to $50 million a year. It will take more like $2 billion to $3 billion a year to support the conversion of thermomechanical pulp into kraft pulp mills.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

Mr. Renou, I've been all over Quebec in the past three years to see what organizations like Innofibre and Serex are up to. I've also spoken to people at the Consortium de recherche et innovations en bioprocédés industriels du Québec. I'm always surprised to see how much potential for innovation the forest sector has. Unfortunately, nothing ever seems to happen.

You spoke earlier about the importance of taking a more robust approach to translational research.

How could the government help you with that?

[Stéphane Renou]

There are two ways. First and foremost, the shift towards more basic translational research requires meaningful sustained funding for all of the great ideas.

Here's a very specific example. Research support or funding is always associated with short-term contracts, lasting one, two or three years.

Building partnerships with large chemical companies requires long-term commitments. You can't constantly be working in renewal mode. You can't always be having to check whether your Quebec or federal partner is still in.

When I work on an initiative, I usually involve three or four provinces as well as the federal government, and it takes six months to a year to put the program together. A year later, one of the parties [Inaudible—Editor] drops out.

Let's compare that to what goes on in Scandinavian countries, which we've heard about repeatedly. The big difference is a secure long-term funding model for transformation.

[The Chair, Liberal, John Aldag]

Thank you.

Now, Mr. Angus, we'll go to you for your six minutes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, everyone.

This is a fascinating discussion, and I think I'm going to be calling a few of you. If I don't get to ask you questions, we are going to be talking, because some of these issues need a deeper dive.

Mr. Young, I'd like to start with you. In a previous life, I worked for the Algonquin nation, and the only time we ever got to meet the forestry companies was when we ran blockades. That was the way it was in the early 2000s. Things have changed dramatically since then, but it's still not a fair ground.

We have communities where, to assess long-term cutting plans, to be out there on the traplines and make sure everything's okay, and then to have to deal with mining companies and with hydro projects.... It tends to be the same department on the reserve, but it doesn't have the kind of backup and support that a major company would have. Plus, they also then have to deal with whether they are going to get beyond subcontracting and be able to get out there, take control and do something, as well as do the economic development.

I'd like to hear your thoughts. It's not even the issue of capacity so much, but the financing to be able to protect the forest and put an indigenous lens on development.

[Bradley Young]

What every nation that I'm aware of wants to do is to have a comprehensive base of indigenous knowledge in a modern day format with proper mapping and GIS layers that's dynamic and can model vegetative cover and different types of operations, industrial, traditional—you name it.

That knowledge takes money. This is why in my submission I asked for an across-the-board increase to ISC and CIRNAC's economic development funding envelopes, because they have land planning capacity monies in there.

Is 15% enough? Might there need to be some line item increases to the land use initiatives that they have on the radar? Probably. I think the latest number I am aware of was about $9 million for the whole nation.

If you did some math on the 600 nations—let's say 400 of them need work—you're coming up with $30,000, $40,000 to fund very technical work. What you're asking there is quite complex. I would say that you probably need around $150,000 over a number of years for a nation to say, “Hey, we're ready to talk. We can talk to an FPAC member. We can talk to a PDAC exploration miner. We can talk to our own people about what's there.” I think that's part of the knowledge equation.

For nations that look at these other economic activities, I think lot of folks are realizing that many of them now want to be involved on the industry side of the equation, but they want equity, and they want a measure of control and participation. They don't have equity to buy into an existing firm or an existing operation. That's where this $20 billion that is hanging there for tribal initiatives in the south.... What if there were $5 billion for indigenous forestry equity loan guarantees to buy into operations to get the economy moving, to do it the right way according to indigenous nations?

That's how I like to think about things. It's complex. I don't know if I got to the root of your—

[Charlie Angus, NDP, Timmins—James Bay, ON]

That's very helpful because, to get to the table, it is very complex. You need to be able to map it, and you need the resources to do that right.

In the communities that I've worked with, the number one plan, even ahead of economic development, is protecting the land. That's always first and foremost.

When I talk to Cree communities, to Ojibwa communities, to Algonquin communities, I'm hearing again and again about glyphosate. It's killing amphibians. It's killing insects. The moose are not coming back. It's in the blueberries over a year after the cutovers have happened. We've seen the Monsanto papers released, and there are really frightening documents. Bayer has paid out $10.9 billion over cancer claims.

We're hearing this again and again from indigenous communities who are saying they're not going to go along with this any more. What would you say, representing indigenous forestry, in terms of managing the forest with or without glyphosate?

[Bradley Young]

The precautionary principle would probably be the number one principle that indigenous nations on the land would move to. I think some of the science is coming out with regard to a more naturalistic and indigenous forest management lens on that land base. When you're talking about free-to-grow prescriptions, mechanical or herbicidal, I think the long-term data now is coming out.

Some of the work that's been done by Dr. Simard at UBC has spoken to this. There's a lot of wisdom in the indigenous...but the highest levels of science are also now saying that a more naturalistic way to manage the land base is better.

What the indigenous forest sector would say—and this is actually all over the world.... I've been all over the world, Mr. Angus, on this. Indigenous peoples will say that they don't want to live in a park, but they don't want to live on a plantation.

I think the chemical treatments that you're talking about in that type of intensity are more towards the plantation style of value system, with you're activity base, sir. They want to be in the middle.

They will say that about half of the land base they will use for cultural, traditional setting aside, giving nature some resilience, some capacity to grow, some capacity to do its thing, but the other half they want to make a living with.

Each nation—and this is where the planning comes through—will have specificity. They may want more protection. They may want less, but they all want to make a living, and they all want to be on that land base from time immemorial to seven generations from now.

[The Chair, Liberal, John Aldag]

Great. Thank you.

That concludes our first round. Our next round will take about 25 minutes. We're going to start off with Mr. Patzer with five minutes of questioning.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you very much, Mr. Chair.

Thanks to all the witnesses for being here today.

Mr. Samray, I'm just wondering if you could pick up on a theme you had in one of your previous interventions.

Would it be safe to say—and maybe you could just elaborate on the point you're making—that there's some confusion around what actually constitutes a subsidy?