Natural Resources Committee on March 7th, 2023

[Stéphan Déry]

Mr. Chair, as I said earlier, we look at each project on its own merits.

The Canada Revenue Agency building in Shawinigan is a pilot project whose goal is to significantly reduce the amount of carbon used in cement.

We are reviewing all projects that are, or will be, under way and analyzing potential solutions to find the best fit for each one.

Let me go back to one fact. In my opinion, the change in the 2020 national building code will also help promote the use of wood. The code now allows up to 12 storeys, instead of six, as was the case in the 2015 code.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much. I understand that completely.

Please enlighten me. In the type of analysis that you do, I assume that you use a grid with certain criteria. One criterion that I think is critical is the cost, the lowest bidder principle, assuredly.

As we know, the major problem with mass timber construction today is that costs are a little higher because it's not part of our culture. From a structural and engineering standpoint, you have to expect slightly higher costs.

Don't you think there should be some alignment between the lowest bidder and the one whose costs are slightly higher, but who offers much greater environmental benefits?

[Stéphan Déry]

Thank you for the question.

I think Public Services and Procurement Canada is a leader in recapitalization projects.

I'll say this couple of words in English: the shadow price of carbon.

When the industry was calculating the price of carbon at $50 per tonne, we started calculating it at $300 per tonne for a building with a 40‑year useful life cycle. In our major projects, I think that has made a difference for wood, including mass timber, because the cost of a project is calculated over the useful life of the building. In this case, we're talking about 40 years, according to our calculations.

In my opinion, this should favour bids that offer—I won't say the lowest price—the best price, taking into account the environmental impact.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Déry.

Mr. Smith, in your remarks, you mentioned the 2017 forest bioeconomy framework for Canada, and you later circled back to tell us that a renewed forest bioeconomy framework was endorsed in 2022.

You said that the most relevant challenge for us today was the lack of support for demonstrations and scale‑up funding, which are needed to approve and commercialize innovative technology products.

That was music to my ears, because that's what the entire forest industry has been trying to say for several years. Now, obviously—I'm not trying to be abrasive—it seems like there's a serious gap between what you're saying and government action.

I don't see any concrete action from the government. I don't know what took place between 2017 and 2022, but since 2022, people in the forestry sector keep telling me that the investments in forest industry transformation program, or IFIT, is the only program they have. They say that it's underfunded and that they are the poor cousins of the natural resources sector.

Do you have any examples of government support that would allow us to reverse this lack of support for the bioeconomy sector?

[Gregory Smith]

Thank you very much for the question.

The renewed bioeconomy framework that was released and approved by the CCFM last year offers a number of different actions that can be taken to support the bioeconomy, one of which is promoting innovation and supporting innovative wood product use and demand creation within Canada. In promoting the industry and supporting the forest industry, since 2017 Natural Resources Canada has delivered a number of products that aim to promote innovation and the use of wood in demonstration projects as well.

I can speak about a few. In particular, the green construction through wood program has a number of activities, including funding demonstration projects, providing wood education and re-examining building codes, and is expected to lead to a decrease in greenhouse gas emissions of between 0.6 megatonnes and one megatonne by 2030. This program has provided over $2 million in support for developing and building the future capacity for wood design at Canadian engineering and architectural schools across Canada, which has also led to the addition of courses on wood design and construction in curricula at accredited engineering, architectural and construction-management programs in Canada. That's how it's building the baseline of what is needed to promote building with wood in Canada. In addition—

[The Chair, Liberal, John Aldag]

I'm sorry. I'm going to have to jump in. We are at the end of our time here.

If there's a concluding sentence, I'll give you that before we move on.

[Gregory Smith]

Okay.

There have also been tens of millions of dollars in demonstration projects across Canada that are promoting mass timber use.

Thank you.

[The Chair, Liberal, John Aldag]

Thank you.

We'll now move to Mr. Angus for his six minutes.

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

Thank you so much.

This bill is something that I think is really important. The question is whether or not it will be taken up and made real. We know that 25% of Canada's greenhouse gas emissions come from the construction sector in residential and commercial projects. The world building council has called for a 40% reduction in GHG emissions in construction by 2030.

To Natural Resources Canada, has there been any analysis of where we stand? Have we seen any drop at all in GHG emissions? We've been focused at our committee very much on the oil and gas sector. Given the 40% call to reduce in construction, where are we at on that?

[Gregory Smith]

Thanks very much for the question.

The information that I can provide today is that the program that I spoke of, GCWood, that was promoting building with wood across Canada, supported a number of activities—demonstration projects; wood education, as I previously mentioned; and revisions to building codes. It's expected that this would lead to about a 0.6 megatonne to 1 megatonne decrease in greenhouse gas emissions by 2030. This is both stored emissions and avoided and mitigated emissions.

This is but one of the types of programs that have been delivered to transform the forest sector since 2017. It's the one that has the closest relation to the discussion today.

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

I guess my concern is that education about wood products to me is something that's very motherhood. We could be doing that at any time, but if we're trying to get a 40% reduction by 2030, there doesn't seem to be much fire in the belly there.

I note that the 2017 budget gave $39.8 million over four years to promote wood projects. Was all that money spent? Would you be able to send us a list of what projects got funded?

[Gregory Smith]

Yes. We would be able to do that.

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

Thank you.

In the previous round of questions, I asked about the Inflation Reduction Act, where Biden has put a major drive on wood investment to the tune of $100 million. Has Natural Resources Canada looked at the impact that the IRA could have in terms of our competitiveness? If Biden is putting such massive investments in mass timber products, where will that leave Canada? Have you done any analysis on that?

[Gregory Smith]

Thank you for the question.

Yes, the IRA has been studied quite heavily from various aspects at Natural Resources Canada. However, I would say that at this time we're still studying where these programs are being delivered, how they're being delivered and their nature. That would have to inform at that point what the potential impact could be. I would say there's still some clarity to be determined, based on how these are implemented.

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

Thank you for that.

We know that in terms of sustainable building, mass timber projects and building with much reduced GHG impacts, the Europeans are way ahead of us. This is a very serious issue for them. They also have very serious housing programs at their state and municipal levels. In Canada we have Doug Ford paving over the greenbelt to build monster homes.

I want to get back to the question about this 40% reduction. Do we have to legislate something in order to make this happen? We have building codes, we have federal building codes and we have issues that are being built at the provincial level. This legislation is, I'd like to think, one part of it, but how are we credibly going to get to this 40% reduction and show that we can actually compete when the Europeans and other jurisdictions have really put the investments on the table—for example, the $100 million that Biden is doing? What are we looking at from NRCan's point of view in terms of promoting wood and making this a reality?

[Gregory Smith]

Thank you again for the question.

I think it's important to note that the 40% decrease here would be from both operational emissions—heating, space heating and things like that—and low embodied carbon. These are both very important aspects to address from the building sector. Natural Resources Canada is working on all these areas to try to address greenhouse gases from the building sector, including currently developing a green building strategy in order to address heating emissions from buildings. In addition, as Stéphan noted, there is discussion around a buy clean strategy, which is ongoing, that will also have a focus on embodied carbon.

There are a number of initiatives under way at Natural Resources Canada to address emissions from the building sector. Wood will be a component of those, but it will involve many other things as well.

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

Thank you for that.

In my region in northern Ontario, we've seen a number of mill closures because of the unfair impacts of softwood lumber. We can compete—we have the resources—but some of our mills have just not been able to continue.

When I was recently in Berlin, we met with housing authority experts, and they weren't really aware that Canada had mass timber products to sell. They were thinking that they could only get this from the Scandinavians, so I guess my question for NRCan is this: Do we need to be doing a better job to say that we can compete and that we can sell into these other markets? It certainly would be an incentive for our mills that have shut down because of the impacts of the unfair softwood lumber deal to actually be able to provide alternate opportunities for investment.

[The Chair, Liberal, John Aldag]

Would somebody like to give a quick answer? Then we'll be out of time in this round.

[Gregory Smith]

I think that would be me.

We have been delivering programs since 2017 to promote the trade in Canadian wood products. This will continue to be an important area. Of course, on the mill closures, yes, there has been very difficult pricing at times in recent years, in the last years, that has caused those as well.

Thank you.

[The Chair, Liberal, John Aldag]

Thank you.

I'm now going to look to the members for direction. We're at about 5:05 or 5:07, somewhere in there. We could do a round of two and a half minutes each, or if we feel that we've had enough testimony for this part of the meeting, we could move to the next part of the discussion, which is on travel. I'll leave it to the will of committee whether you want to do an abbreviated round or whether we're good and we want to talk about the travel question that I need to get solved by Friday.

A quick round...? Okay. We'll do a quick round of two and a half minutes each.

Charlie, do you want to weigh in on it? The Conservatives have indicated an interest, and I think Mario had an interest in an abbreviated round. How about you?

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

As much as I love talking and hearing my colleagues talk, I feel that we're all pretty much in agreement on this. I'm ready to move on, but I will go with the will of the committee.

[The Chair, Liberal, John Aldag]

All right. We'll do it.

In the next round, I have Ted, George, Mario and Charlie.

Mr. Falk, would you like to start? You have two and a half minutes.

[Ted Falk, Conservative, Provencher, MB]

Okay, Mr. Chair. Is Earl going to get a chance, or do I have to share my time with him?

[The Chair, Liberal, John Aldag]

You can pass your time or you can share your time, but this will be the last chance. You have two and a half minutes.

[Ted Falk, Conservative, Provencher, MB]

Okay, very good.

Mr. Smith, you talked about the benefit of trees. I love timber frame homes and timber construction. I'm a fan of that. You mentioned that one of the benefits is that carbon has been sequestered in the lumber, in the timber that's going to be used. Has your department factored into your calculations at all the amount of carbon that will no longer be sequestered because that tree is going to be harvested? What would that be?