Natural Resources Committee on Nov. 22nd, 2022

[The Chair, Liberal, John Aldag]

Good afternoon, everyone.

I call this meeting to order.

Welcome to meeting number 42 of the House of Commons Standing Committee on Natural Resources.

Pursuant to Standing Order 108(2), the committee is meeting to hear from witnesses for its study of federal assistance for various natural resources industries.

Today's meeting is taking place in hybrid format, pursuant to the House order of June 23, 2022.

Now that we're in session, I would like to remind all participants that screenshots and taking photos are no longer allowed. The proceedings are being televised and made available via the House of Commons website.

I have a few quick comments for the benefit of our witnesses.

Please wait until I recognize you by name before starting to speak. Those of you participating by video conference will have to activate your own microphones, so click on the microphone to activate your mike, and please mute yourself when not speaking. For those on Zoom, there is interpretation available. You have the choice of either the floor, English or French. For those in the room, there is the earpiece you can use for the translation.

All comments should be addressed through the chair. If those on screen want to speak, please use the “raise hand” function. When we get into the questions and answers section, I do allow the members a fair bit of latitude—whoever is questioning—so if they don't get to you, it's because they have a line of questioning that they may want to be pursuing. However, if you feel you want to weigh in, raise your hand, and if they get to you, they get to you.

In accordance with the routine motion, the committee is notified that all witnesses appearing virtually have completed the required connection tests in advance of the meeting.

Now I would like to welcome our witnesses.

Virtually, we have Linda Coady, president and CEO, BC Council of Forest Industries; and Jean-François Samray, president and CEO, Quebec Forest Industry Council. I have been notified that Monsieur Samray has to depart by 5:15 p.m. today, so if anyone has any questions for the Quebec Forest Industry Council, try to get those in before 5:15 p.m. We also have, from the Prospectors and Developers Association of Canada, Lisa McDonald, executive director; and Jeff Killeen, director, policy and programs.

In person, we have three organizations represented. From the Forest Products Association of Canada, we have Derek Nighbor, president and CEO; from FPInnovations, Stéphane Renou, president and CEO; and from the National Aboriginal Forestry Association, Bradley Young, executive director.

Welcome.

With that, we're going to five-minute opening statements by each of you.

If you're ready, Ms. Coady, I will start the clock when you start speaking.

I also will say that I have a handy card system, so I will give you the yellow card when there are 30 seconds left on the clock. The red card means that time's up. Don't stop mid-sentence, but wind up your thoughts. Then we can go on to the next person.

By way of other introductions, welcome to Ms. Gladu for joining us today, and welcome back to Mr. Maloney, who is filling in while Ms. Jones is away.

James, it's good to see you.

With that, Ms. Coady, we'll go over to you for your five-minute opening statement.

[Linda Coady, President and Chief Executive Officer, British Columbia Council of Forest Industries]

Thank you, Chair and members of the committee.

As the president and CEO of the BC Council of Forest Industries, I have the pleasure of representing forest products producers in B.C. Our membership includes companies big and small that make everything from lumber to pulp and paper, and from high-value engineered wood products to biofuels.

We appreciate the committee's interest in our sector. Forestry is an industry that will continue to play a major role in supporting good jobs and helping to fight climate change. These are both, as you know, dual imperatives at this critical time in history.

For those of you who may not be familiar with it, I want to say a few words about the role the forest sector plays in B.C., as well as in the rest of Canada's resource economy. While it obviously isn't as big an economic player as the energy sector, it has a presence at a landscape level that arguably elevates and extends its influence in rural communities and urban centres alike across Canada.

In B.C.'s case, the forest industry contributes $13 billion to B.C.'s GDP and even more in taxes and fees, and creates 100,000 direct and indirect jobs. The sector has an outsized impact on wages and government revenues in B.C., as well as on exports and trade balances that help support the standard of living both in B.C. and in the rest of Canada.

Today, forest products make up one-third of B.C.'s exports, with an exciting opportunity to grow our sector as customers around the world turn to low-carbon, renewable forest products as the building and packaging materials of choice.

Being part of a country with a small, open economy means that strong trade relations and diversified markets are critical to our industry's success. So, too, is our ability to demonstrate global leadership and innovation on sustainable forest practices and low-carbon forest products.

This brings me to the topic of your study. Which federal assistance measures for Canada's forest industry can make a difference? I have five points.

First, Canada needs to stand firm on the role that sustainable forest management and forest products—from lumber and food packaging to biofuels—can play as tools to fight climate change and pollution, while supporting local livelihoods. It is critical that Canadians and customers around the world know the facts about our regulatory regimes and systems for forest product certification and assurance. It is also critical that we show the world we're doing the work to continuously evolve and strengthen our forest management regimes to keep forests and biodiversity healthy and safe, and deal with the impacts of climate change and the disruption caused by forest fires, pests and more.

Second, we must backstop Canada's reputation for sustainable natural resources with policy, regulations and incentives that improve predictability and investment on the land base and enable product innovation and adoption. Among other things, this means taking a more integrated approach to everything we do. This includes maximizing climate-smart forestry and managing forests for all the different values they represent, including timber, carbon and other natural infrastructure.

This will require doubling down on important national initiatives aimed at addressing critical gaps in workforce and skills development, as well as delivering on other federal strategic priorities, such as the buy clean strategy, the national net-zero building strategy and the low-carbon building materials innovation hub. It it will require effective engagement at both the global and local levels on the development of emerging frameworks for regulation, the trading of carbon and biodiversity.

Third, as we look to the future, our industry has an incredible opportunity to help meet the growing global demand for climate-friendly products. This includes our biggest trading partner to the south of the border. It's why a team Canada approach to the softwood lumber dispute is critical.

For decades, and regardless of who is in government, Canadians have benefited from a unified voice on this issue that has extended across party lines and across different regions of the country. We appreciate that, like her predecessors, Minister Ng and the team at Global Affairs are continuing this approach, while driving discussions with the U.S.

Fourth, as we look to the future, we need to continue our efforts on both market and product diversification. Over the last two decades, in partnership with the provincial and federal governments, our industry has developed new overseas markets, particularly in Asia. Our partnership with NRCan on this program has been recognized globally as a leading example of private-public partnerships on delivering results.

However, developing new markets and products is not a short-term exercise. It takes years, product familiarity, codes, standards and market acceptance. That's why this partnership must continue. The point is we have a real opportunity to grow these programs and this opportunity.

Lastly, and equally critically, we need to continue to grow our relationship with indigenous nations as true partners in Canada's forest sector. B.C. became the first jurisdiction, as you know, to adopt and begin to implement the UN Declaration on the Rights of Indigenous Peoples. As Canada looks to implement its own legislation ensuring that first nations and indigenous peoples have the decision-making framework capacity and the resources they need to participate in our sector, this will be key.

In closing—

[The Chair, Liberal, John Aldag]

I'm sorry, but I'm just going to jump in. We're about half a minute over, and I do want to get to the next ones.

If you can make a quick conclusion, that would be great.

[Linda Coady]

Thank you.

In closing, I would like to leave you with the thought that amidst a lot of global uncertainty, B.C. and Canada's forest industry have the people, the products and the know-how to make a difference.

Thank you.

[The Chair, Liberal, John Aldag]

Great. Thank you.

We'll move next to the Quebec Forest Industry Council, and Monsieur Samray.

If I have mispronounced anybody's names in my introductions, please correct me when you take over the microphone.

Monsieur Samray, you have five minutes.

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

Thank you, Mr. Chair.

I'll do my presentation in French in order to accelerate this a little bit.

The Quebec Forest Industry Council, or QFIC for short, brings together softwood and hardwood sawmills, peeling mills, pulp, paper, cardboard and panel board companies, engineered wood manufacturers and wood-based building material manufacturers.

I'm speaking to you today from Distillerie du St. Laurent, in Rimouski. This building is a marvellous example of a company that wanted to use wood in the building's construction. If a company like this can do it, so can the federal government. Its customers love the wooden building, and so do the employees. What a wonderful way to reduce greenhouse gas, GHG, emissions, while making a building aesthetically pleasing.

The lumber industry is an important part of the economy. In Quebec, the forest sector creates direct jobs. In Canada, the sector employs over 230,000 Canadians across 600 communities. I should note that 12,000 of those workers belong to first nations communities. The sector generates more than $80 billion in revenue annually. In Quebec, the forest industry is responsible for more than 140,000 jobs and over $20 billion in sales.

Beyond its economic contribution, the forest is also a powerful tool in the fight against climate change and ecological recovery. Acting as an enormous carbon reservoir, the forest can help us fight global warming. We need to use and manage our forests as sustainably and effectively as possible to enhance their role in carbon capture and sequestration. How? By strengthening forest management and encouraging the use of wood to replace carbon-intensive building materials, thereby supporting long-term carbon storage. That's the case here, at Distillerie du St. Laurent.

That is fully aligned with the direction and priorities the Intergovernmental Panel on Climate Change has set for the international community.

As far as the QFIC is concerned, the Government of Canada must lead by example by encouraging and requiring the use of less carbon-intensive products in its own procurement projects. Every tonne of cement or steel that is replaced by wood cuts GHG emissions by one tonne.

In co‑operation with the Canadian Wood Council, and with the financial support of the governments of Quebec and Canada, the QFIC has developed Gestimat, a tool that measures a building's carbon footprint.

The government should work with us to systematically incorporate the tool's use in retrofit and construction projects, in order to measure the impact associated with the federal government's projects and funding.

Investing in research and development partnerships would result in new wood-based building materials and encourage the use of those materials in construction projects in Canada. The benefit would be twofold: support the development of a strong circular economy and reduce Canada's environmental footprint. This measure could also be used to replace single-use plastics.

Lastly, the investments in forest industry transformation, IFIT, program is one of the funding tools available to our sector through the Department of Natural Resources. Although incredibly helpful, the program is underfunded, especially when compared with the amount of funding invested in decarbonization projects in other sectors. Carrying out transformation projects in the forestry sector is expensive, so government support is needed to speed up not just implementation but also GHG emission reductions. Take, for example, projects to convert newsprint mills into large biochemical plants.

In conclusion, the forest industry follows responsible and sustainable practices in Quebec and in the rest of Canada. The industry is made up of men and women who endeavour to do things better every single day, to leave future generations forests they can rely on and live in harmony with.

If we want forests to continue playing a key economic role and if we want to fight climate change, we need all hands on deck, especially the federal government's. The forest sector is ready to contribute to Canada's economic recovery and our ambitious environmental targets. We are here to work with you.

Thank you.

I would be happy to answer any questions you have.

[The Chair, Liberal, John Aldag]

Thank you for your opening comments.

We're going next to Ms. McDonald from the Prospectors and Developers Association of Canada.

When you're ready, please begin.

[Lisa McDonald, Executive Director, Prospectors and Developers Association of Canada]

Good afternoon. Thank you, Mr. Chair and committee members.

Thank you for inviting me and my colleague, Jeff Killeen, to appear today on behalf of Canada's mineral exploration and development industry.

First, I acknowledge that I come to you today from Toronto on the traditional lands of the Huron, the Chippewa, the Haudenosaunee, Wendat and Oneida peoples, the Anishinabe and the Mississaugas of the Credit, and all of the indigenous nations that have lived on these lands over the centuries.

PDAC is the leading voice of the mineral exploration and development industry ,with over 6,000 members in Canada and around the world, including nearly 1,000 corporate members. Our work focuses on supporting a competitive, responsible and sustainable mineral industry. We host the world's premier mineral industry event each year, attracting tens of thousands of people from more than 100 countries to Toronto for the PDAC convention in March.

Notably, Canada's mineral industry consists of more than 1,100 public companies representing a full one-third of all listings on Canadian exchanges. It is also the largest private sector industrial employer of indigenous people in Canada on a proportional basis and a key partner of indigenous businesses across the country.

Mineral exploration and mining is a major economic driver, supporting 664,000 direct and indirect jobs, and contributing $132 billion to Canada's GDP last year. The economic opportunities presented by the mineral industry are heavily weighted towards northern and remote regions of Canada, and a job in exploration or mining will typically offer a salary nearly three times the national average.

As the world looks for new sources of critical mineral inputs, Canada's vast potential for new discoveries represents one of the greatest economic opportunities in a generation and a fundamental component of meeting our own domestic needs over the coming decades. We know that demand for critical minerals will increase substantially as jurisdictions around the globe attempt to transition to lower carbon footprints, and there is no energy transition without minerals.

Canada can be “the” supplier of choice, both domestically and for our strategic partners. However, to capitalize on this opportunity, we must attract investment in mineral exploration and downstream processing so that our minerals and metals can reach markets within realistic timeframes.

We understand that to drive such meaningful change we must align government policies to strengthen our mineral sector and curtail our reliance on foreign sources that often leverage lower environmental, sustainability and governance standards to compete economically.

It is imperative that support be directed towards mineral supply chains in a logical and rational order so that we build up our natural resource wealth in step with downstream capacity. Otherwise, we risk creating a major supply chain imbalance, as domestic demand could spike well in advance of any foreseeable ability to meet those demands from Canadian mineral sources.

Mineral exploration and mining will increasingly be looking to Canada's north for new opportunities and our critical mineral strategy hinges on industry having access to prospective land. Therefore, it is extremely important that we consider the northern infrastructure deficit and our critical mineral strategy in working towards conserving 30% of Canada's lands and oceans by 2030 and achieving net-zero carbon emissions by 2050.

To achieve such long-term goals in a sustainable way, we must base land management decisions on evidence, such as public geoscience, and maintain a competitive landscape to attract investment into Canadian projects.

Budget 2022 was a great first step by the federal government in dedicating new funding and incentives. However, reaching net zero will require additional financial and fiscal tools considering the sheer scale of electrification and infrastructure development involved in reaching this goal.

We must also be mindful of the level of funding that the U.S. and other nations are willing to commit to secure access to these necessary resources for future generations.

Under this backdrop, we have offered recommendations for budget 2023 that include the following

Increase the mineral exploration tax credit, METC, from 15% to 30% in the territories, and renew it until 2027 in alignment with the new critical minerals exploration tax credit.

Expand the eligibility of Canadian development expenses for critical mineral mine development from 30% to 100% to match eligibility under the current Canadian exploration expenses.

Establish a one-window approach to available funding for early engagement and community capacity building to support indigenous participation in critical mineral projects.

Provide co-funding opportunities to regional geoscience organizations to develop comprehensive regional level mineral and energy potential models to use in land management and conservation.

Thank you again for your time. We welcome any questions.

[The Chair, Liberal, John Aldag]

Mr. Nighbor, we'll go to you.

When you're ready, you'll have five minutes.

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

Thanks, Mr. Chair and members of the committee, and to Lisa and Jeff for enduring all the forestry people today. It's nice to see you both.

Canada's forest products sector is the national voice of the sector. We welcome the discussion. It's a timely one for a few reasons.

One reason is that, as Lisa said as the government prepares to make decisions for federal budget 2023, it's important that we work in partnership to set our sector and its people up for success in the long term.

Second, as we push through these challenging times, we absolutely need greater regulatory and policy certainty. There's a lot and a very heavy agenda at Environment and Climate Change Canada, an agenda whose objectives our sector is very much aligned with, but some of the execution is falling a bit flat for us in some spots. We would really like to see CCC better understand how our sector works. We need it to be more responsive to our concerns in the national and global context. For us, initiatives like the clean fuel regulations and the output-based pricing system, which we support, are creating some problems for us rather than solutions, and are bringing some uncertainty to future investment in Canada.

Third, and importantly, we're seeing a number of things south of the border that must be considered if we're to ensure that forestry workers and broader Canadian manufacturing workers aren't left behind. The U.S. Inflation Reduction Act requires a robust response. While there are some positive signals in the fall economic statement around tax credits and the Canada growth fund, many details are still unclear. The competitiveness risk this poses to Canadian industry cannot be understated, and the speed at which the Americans are moving cannot be underestimated.

The U.S. buy clean agenda is another big factor. Just on September 15, the Biden administration made another America first move, prioritizing the purchase of low-carbon construction materials covering 98% of the materials purchased by the U.S. government. This was announced not only to green federal infrastructure in the U.S., but also to boost U.S. manufacturing. We need a strong made-in-Canada, buy clean, build clean plan in response.

While the softwood lumber dispute continues—and Linda spoke a bit to that—our sector is facing additional trade risk with U.S. customers and in some U.S. states based on American-rooted campaigns of misinformation in an effort to restrict forest product exports heading to the U.S..

FPAC's federal budget submission outlines the areas where we believe sustained investment is required. We're focused on supporting winning programs and on programs that accelerate innovation, that strengthen prospects for Canadian workers and that deliver return on investment for the federal government and Canadian taxpayers.

We have seen proven success in core funding programs supporting FPInnovations, which I'm sure Stéphane will talk about; the leading export market development work by Canada Wood; the leading building codes and standards work that's done by our partners at the Canadian Wood Council; and key NRCan dollars that power the indigenous forestry initiative, which I hope Bradley is going to speak to in a bit. The investments in forest industry transformation are also highly regarded programs by our sector and are consistently and massively oversubscribed annually.

There are a couple of areas where we'd like to see a bit of a different work path with the federal government.

One is on accelerating sector decarbonization. NRCan is our home for forest policy and science, but over the past few years, billion of federal dollars that power industrial decarbonization have been more centralized over at ISED. This has put us at a bit of a disadvantage, as we're not among the heaviest emitters. We have already reduced GHG emissions at our mills by nearly 70% since the early 1990s, so it's a case of what got us here is not going to get us there. Over at ISED, we're being overshadowed by other sectors with bigger decarbonization needs, and the prevailing sense across government is that NRCan is our home. Unfortunately, it's a home that doesn't fund the decarbonization support programs we need.

As I discussed with Minister Champagne on Friday and Minister Wilkinson a few weeks ago, we need a clearer decarbonization road map and action plan for forestry with the federal govenment so that our opportunities are not overlooked. We need access to our fair share of federal decarbonization dollars. We are finding ourselves in a situation where we're being left out because we're not big enough emitters.

The second and final point I'll make is on promoting and defending Canadian forestry workers. We've seen an uptick in anti-Canadian forestry activism in the U.S., and it's impacting our relationships with U.S.-based customers. We're also seeing state legislators in California and New York advancing anti-Canadian procurement bills to restrict Canadian forest products from going into those states.

We're grateful for the support of our federal and provincial governments, but we continue to be in reactive mode. We need a proactive team Canada approach to address these issues. For states like New York, which seemed immovable in their efforts, we need the federal government to send a strong signal back that such a move would have consequences to Canada-New York trade.

I'll leave it there. I look forward to responding to any questions.

Again, Mr. Chair, I appreciate the opportunity.

[The Chair, Liberal, John Aldag]

Thank you.

We'll now move to FPInnovations, with Monsieur Renou.

The floor is yours. You have five minutes.

[Stéphane Renou, President and Chief Executive Officer, FPInnovations]

Thank you, Mr. Chair and committee members.

My presentation will be in English, but first let me say a few words in French.

Thank you for this opportunity to share our views as part of your comparative study. I am proud to be here with my partners in the forest industry. It's a real pleasure.

Thanks a lot, committee members, for letting us in your room today to talk about forestry and where we are. It's great to be with the leading voices in forestry: NAFA, COFI, FPAC, all of the players around us—and don't forget QFIC, of course. We all share this passion for the forest industry, and we all share this vision that the forest industry can have a bigger role to play in the carbon equation going forward.

The world is changing fast, folks. Global warming and the geopolitics of energy and technology will change drastically the landscape of natural resources going forward. We must prepare now. The industry needs to transform to be ready for that world. We need to be in a place where every molecule from every tree needs to be put to good use towards keeping the carbon in the economy as long as it can.

Innovation efforts will be critical to achieve this goal.

According to the 2021 global innovation index, Canada actually excelled in research—patents, papers, all those metrics.

There is one place where we fell short: transferring it to a commercial product. This is where we're lagging versus the rest of the world. This is where we need to put the effort. That's the critical gap that needs fixing, crossing what we call the technology valley of death. This is where I want to play. This is where FPInnovations is playing.

We're focused on the impact in mills, demonstration at pilot scale and results in the marketplace.

Our R and D laboratories now employ about 400 people across Canada. We have labs in Quebec City, Montreal and Vancouver. We actually have programs in every province and territory today. Some are smaller and some are bigger, but we're a bit everywhere.

We have a unique model. We are right between government and industry, right in the happy place. We are trying to please both at the same time, which is interesting, believe me.

Our ambition is basically to get the maximum value we can out of wood. There are two fundamental things we need to do.

Number one is to expand the wood usage. We all talk about it. Make sure wood has its place in construction everywhere. Number two is that all the residues from the industry of traditional wood need to be put to their best use to keep carbon in the loop as much as we can.

The challenges are enormous. We have a big role as the forest industry. There is the reduction of GHG, yes, but there is also substitution. Substitute all products. Sequester carbon into wood construction and other products. That's where we can play a role. Let me give you a couple of examples.

Today we have several demonstrations across Canada where we are paving roads with asphalt that has lignin in it. That's a by-product of the pulp and paper mills—10% substitution. Today we have a mask that we created based on the challenge we got. It's fully recyclable, compostable, based on natural fibre. In a few months that product will be on the shelves.

There is truck platooning. We talked before this session about the challenge of truckers up north and everywhere. We can do a train of trucks, where only one driver is at the front. That helps, basically, to reduce this challenge and will affect 300 communities across Canada.

In collaboration with the Canadian Wood Council, we're working a lot with standards, regulations and guides to help the construction industry to use more wood at every location.

Moving forward now, we're looking, with the Canadian Forest Service at Natural Resources Canada, to create the next generation of programs for innovation. There are three main aspects.

The first is common goods—all the regulation work, wildfire research, carbon evaluation in processes and products, everything we can do to give that strong basis.

The second is to create a pipeline of innovation—all those programs, all those ideas we take from academia, from the world of creation of knowledge, and figure out how we transfer them to a commercial product. Reduce risk to get there.

The third one is my cherished one, pre-commercialization. Get those ideas closer towards commercialization, which involves, actually, collaborating with others on industry, yes, chemical industry, yes, every place where we can basically have a new product, use the fibre, the wood product to create new chemicals, to create new bioproducts, to create a new place where we can have a longer carbon life.

Canada's renewable forests are our natural resource. They have the potential to ensure our sustainable future. Innovation is how we transform the industry.

We have to work together across government and industry every day to get the path forward. We can change the world this way.

We have to grab the opportunity. It is a significant challenge to get all the programs in the right place. It needs your leadership and your support to create the path for innovation. I believe we're going to get there.

I thank you all for your support.

[The Chair, Liberal, John Aldag]

Thank you for your comments.

I recently had the chance to spend an afternoon at the Vancouver facility. I saw some amazing innovations there. I was sent back with some samples. I might even bring some in for a show and tell here, at some point. It was a very worthwhile afternoon.

We will now go to Mr. Young with the National Aboriginal Forestry Association.

Mr. Young, when you're ready, you have five minutes.

[Bradley Young, Executive Director, National Aboriginal Forestry Association]

Thank you, Mr. Chair, committee members and colleagues.

I'd like to thank the committee for the invitation to contribute to the study under way. My name is Bradley Young. I am the executive director of the National Aboriginal Forestry Association. I'm also a citizen of the Opaskwayak Cree Nation in northern Manitou Api. I would like to take this time to recognize the traditional territory of the Algonquin first nations, Kichi Sipi Aski, otherwise referred to as Ottawa.

First, to give a little background on NAFA, we are a non-governmental, first nations-controlled organization focused on indigenous forest stewardship and associated economic development. Over 1,200 indigenous forest sector businesses and over 15,000-plus full-time employees comprise the indigenous forest sector. Maybe it's 30,000 now. In Canada 80% of first nations communities call the forest home. This is where the indigenous forest sector comes from, and NAFA works hard to support it.

I'll turn now to the business at hand. The indigenous forest sector is supported by ISC and CIRNAC economic development programs. However, these economic development funds are spread over 633-plus first nations and their myriad of business entities. Indigenous forestry projects must compete for space in the program with all other sectors of economic activity. The other major support is Natural Resources Canada's indigenous forestry initiative. We suggest modernization of both these budget line items with sector-specific fairness as a principle.

ISC and CIRNAC economic development budgets should be increased by a minimum of 15% to address the historic underfunding of economic development. The indigenous forestry initiative should be renewed at $12 million per year, at a minimum, for five years, from the current $6.6 million per year for three years. Both of these programs suffer from substantial underfunding and oversubscription, from our perspective.

We have followed some of the committee's work on these matters. We remind Parliament that the indigenous forest space communities suffer from unemployment numbers ranging from 50% to 90%. The employment, capital attraction, manufacturing and tax-based maintenance that the indigenous forest sector anchors are absolutely vital for the rural and northern regions they operate in. We also note that many funding envelopes across many other departments contribute to indigenous natural resource development initiatives in part. We suggest that these programs continue to be supported but that we do not forget about the indigenous forest sector, including it as a discrete silo in their eligible sector program and project criteria.

We also take note of the Inflation Reduction Act in the U.S., including the $20 billion over a number of years for American tribal renewable, green and climate change transition projects. This should be studied carefully. Relative supports and time horizons for Canadian indigenous nations, including the bioeconomy, should be considered. The indigenous forest sector has something to add to each of these.

Sectorally, many forest management firms and smaller manufacturing mills are family-run small or medium enterprises. They are greying and rusting, and need fresh capital and energy to operate into the future. Most of their kids and grandkids don't want the businesses. NAFA is advising that a national major indigenous forest sector projects envelope to convert these grey, rusty enterprises into green operations, owned and operated by indigenous groups and entrepreneurs, be established. BDC, EDC, the Canada Infrastructure Bank and related provincial structures for the necessary major capital and finance support resources, along with other indigenous economic development programs and funds for project feasibility and development, should be oriented or reoriented around this pressing structural problem in Canada's forest sector.

Importantly, all working forest businesses, including manufacturing facility projects, should be eligible. With foreign-owned interest, some friendly and some not, circling our natural resources, there's good security rationale behind this suggestion as well. With 10% of Canada's fibre basket under indigenous commercial management now, manufacturers and forest sector businesses continue to emerge and grow.

Supporting indigenous trade missions to take advantage of our progressive trade agreements, such as IPETCA, APEC, CETA, CUSMA and others under negotiation, will also be vital.

Can we start thinking about an Indo-Pacific indigenous forestry trade mission? How about Africa? Non-indigenous industry and indigenous groups in these economic blocs have requested Canadian indigenous forest sector trade missions in the past five years. As of yet, they have largely been unanswered.

[Witness spoke in Cree and provided the following translation:]

Thank you very much, non-indigenous leaders, and also, thank you to all my colleagues and all my indigenous relations.

[The Chair, Liberal, John Aldag]

Thank you so much for your opening comments.

We'll now go into our first round of questions, which will be six minutes each. We'll have four of those.

Just so everybody knows, we were a few minutes late in starting. We'll check in at 5:30 and see where everybody's at and where we're at with our questioning. We may be able to go a little bit beyond, but we'll check in at 5:30.

First up, I have Ms. Gladu for six minutes.

The floor is yours.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Thank you, Chair. It's a pleasure to be at your committee today.

We're talking about how the federal government can better support various industries. My question direction today will be about what governments do and what they don't do, what they fund and what they don't fund, and how that is impacting you.

I'm going to start with the British Columbia Council of Forest Industries.

In 2015, Chrystia Freeland said that within weeks we would have a softwood lumber contract. That never happened. We had the CUSMA negotiations and again, there was still no deal. Then we've seen multiple tariffs from the U.S. and basically protectionism happening.

How has all this lack of action on the part of the government impacted your industry?

[Linda Coady]

As you know, this is almost an intergenerational dispute that's been going on. As I said in my remarks, the federal government does play a key role in anchoring the relationship with the U.S. and in developing consensus on the Canadian side on how to approach things.

Our understanding right now is that the opportunity for a negotiation with the U.S.—another negotiation that might lead to a settlement—isn't on the table in 2022-23, but there will be opportunities moving forward.

It is something that our industry is working very closely with the federal government on and we do rely on them.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Sure. Thank you so much. That's seven years with no action and no plan for next year.

Let's go then to the Forest Products Association of Canada.

I want to talk about the clean fuel standard. You mentioned regulatory certainty.

What problems with the clean fuel standard are impacting your industry?

[Derek Nighbor]

Thanks.

There are two main things. One is around how Canadian biomass is viewed. This is what otherwise would be wood waste from our sawmill. The tree is harvested after the plan and the consultation happen. It goes to the mill, wood is created and you get shavings, bark and sawdust. The treatment of that biomass under the clean fuel regulations is not yet recognized. That's one of our big issues and we need certainty there. There was talk at the officials level of setting up a new regime to determine if it's sustainable or not.

It's sourced from public, provincially managed forests where there are detailed consultations and science. Millions of dollars of planning goes in and there's an approval process. Our position is that if it comes from a provincially approved forest management plan, it should be recognized as sustainable.

That's the first frustration we have right now. We're continuing to work through that with officials.

The second one is around what qualifies for credit generation under the regulation. That's still to be determined, but we have some big companies that have opportunities to invest in other countries that want to see what that plan is.

Those are two big issues. They are the issue of the treatment and the recognition of the sustainability of biomass from well-managed Canadian forests, and how we can get some certainty around how the credit generation framework is going to unfold.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Yes, I think uncertainty is driving a lot of projects to not be built and driving investors to not invest.

My next question is for PDAC. You talked about us needing to have a competitive regulatory environment for approving new projects and making Canada attractive to investors.

Could you elaborate on what you think the federal government should do or not do to move in the right direction?

[Jeff Killeen, Director, Policy and Programs, Prospectors and Developers Association of Canada]

Yes.

I'll handle the answer if that's okay, Lisa.

When we think about what we need to do in Canada.... As Lisa mentioned in her opening remarks, I think budget 2022 was a good first step. We saw new incentives being committed to. We saw new funding being directed, or notionally being directed, towards infrastructure. Those are two pieces we definitely think need to be a continual focus.

We're quite aware of the infrastructure deficit in Canada's north, as mentioned in the opening remarks as well. By and large, that's where we're going to see our members moving in the future—more exploration into northern parts of Canada—because that's where the opportunities do lie.

We do feel that tax incentives are one way to fuel a competitive landscape here in Canada.

We have seen the flow-through share regime—which ties to these tax credits—be highly successful. I think last year alone we saw over $1.5 billion raised through flow-through share issuances, which directly leads to exploration going into the ground in Canada within 18 months of that. We're seeing that effect this year.

There is somewhere in and around $4.3 billion being spent in Canada alone on mineral exploration this year, and that's a number provided by Natural Resources Canada.

When we look within that number, though, there is only about $200 million being spent on what we consider critical minerals.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Excuse me, I'm coming to the end of my time.

To all the witnesses, if you have input on what we should do on tax credits, could you submit it to the committee chair?

Thank you.

[Jeff Killeen]

Thank you very much.

[The Chair, Liberal, John Aldag]

You still have 45 seconds if you want them.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Sorry. Well, then, I shouldn't have cut you off. My phone is probably not timing right.

Let's talk about market diversification.

With the rise of protectionism in the U.S., we really need to find other partners. I'd like to hear from the Forest Products Association of Canada and the National Aboriginal Forestry Association. How can we diversify?