Natural Resources Committee on Nov. 20th, 2025

[Robert Froese]

Certainly. There's no contest. The carbon that is in forests came from the atmosphere, and if we choose to use wood as a building material, then that carbon is sequestered in the products. If we choose to use steel or concrete products that have high-input energy in terms of their development, then that often comes from fossil sources.

We also have the opportunity to regulate how the carbon is sequestered in the forest land base through management. The carbon that's in our forests came from the atmosphere. If we leave them alone, the forests will burn, and it will go back to the atmosphere. Then the forests will regrow and will come back. It's a closed-loop cycle. However, we have the technology and the know-how to influence it, and that was one of the messages I wanted to make in my opening statement. We have the technology and the know-how to affect how that cycle develops in ways that can cause a benefit for us. The opportunity is to just ignore it all and leave it alone or to engage proactively in using wood as a material.

I think I would also add that we have to reflect on our history. The problems we have in our forests now with wildfires are the result of our success in suppressing wildfires. A lot of carbon is built up in our forests. There are jurisdictions in the world where there's a tremendous net-negative current carbon flux from the atmosphere into forests that relates to past exploitive management.

Again, we have a choice here, but if we leave our forests alone, the carbon will go back to the atmosphere.

[The Chair, Liberal, Terry Duguid]

Thank you, both.

Mr. Simard, you may go ahead for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Mr. Froese, I'm going to ask my question quickly. Both in your opening remarks and in your answers, you did a good job of explaining that forests are carbon sinks. If we want to keep it that way, we need to cultivate them. That's what silviculture is.

In recent years, we've seen insect epidemics and wildfires. I'm from Quebec, but I know British Columbia and the rest of Canada experienced the same things. There is a little federal funding to support forest communities in that regard, but almost none for silviculture. The government did away with the two billion trees program, and as far as I know, there isn't a federal program that supports silviculture—a very important sector of activity. Take, for example, the recent boreal caribou situation in Quebec; forestry companies were asked to close logging roads. The two billion trees program could have been used to close logging roads.

Can you tell me what types of federal support are available for silviculture, to your knowledge?

[Robert Froese]

We have a program in Alberta, called FireSmart, that exists in many other jurisdictions. Certainly, a large amount of applied research and technology transfer and knowledge transfer has gone into educating communities on how forests can be managed in their vicinity to help reduce the potential for a catastrophic fire. There's been a significant investment in many locations in silviculture directed specifically at that target. Given the catastrophic fires that have happened in Alberta in the last few years, there's been very significant renewed attention given to implementing those programs on the ground. The exact source of funding for those I'm not aware of, but certainly support has been made available for understanding how silviculture can be used in those contexts.

The one thing I would add is that it's very important, when thinking about fire, to understand that there are circumstances where fire is unstoppable. Weather circumstances can conspire to.... For example, with the fires in Banff, basically nothing could be done once that fire started, but much can be done before a fire starts to alter the situation. I think the knowledge and information are there. It's a question of putting the resources in place to implement them.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much.

Mr. Stephen, you talked a lot about bioproducts and biofuels in your opening statement. The Standing Committee on Natural Resources did a study on energy two or three years ago, and we heard from witnesses on the subject of biofuels. Generally, what they told us was that, without carbon pricing, developing a market for biofuels would be tough, because they cost a little more than other types of energy.

In your view, then, is there a future for biofuels without carbon pricing?

[Jamie Stephen]

I think there has to be a valuation of carbon. How that is structured really depends. Number one is to recognize that when we talk about wood, really the only commercial technology is combined heat and power. My Ph.D. is actually on liquid biofuels from wood, but we have been trying this for about 50 years. It's just not carbon-efficient, and the capital costs are very high.

We propose focusing on this bioenergy with carbon capture and storage. For half the emissions in the world, it is actually of lower cost to continue business as usual and to remove those emissions after the fact using bioenergy with carbon capture and storage in western Canada. For half the emissions of the world, it is of lower cost to avoid the emissions, with fuel switching, etc. We have to understand that there are two sides to the carbon equation. We have to live in economic reality, which means that in aviation, for instance, it is of much lower cost to continue using Jet-A1, or conventional jet fuel from kerosene, and to remove the emissions after the fact using BECCS, than it is to fuel-switch to avoid the emissions.

This has to be considered in all of Canada's climate plans, because the reality is that the lower the cost for fossil fuels, the higher the cost it is to fuel-switch away from that fuel. If you have natural gas at five dollars a gigajoule and you switch to wood, the implied carbon cost is lower than if the natural gas was one dollar a gigajoule.

Your question related to carbon pricing, but fundamentally I would say it's about carbon valuation. This is where the federal government can play a very critical role. Its jurisdiction generally does not extend into electricity systems, but it can be the primary offtaker for carbon dioxide removals. This is what we see in Sweden, for example. The Swedish government has allocated $5 billion Canadian to purchasing BECCS CDRs. We fundamentally believe it is also a key component of what should serve as the Government of Canada's backstop on industrial carbon.

[The Chair, Liberal, Terry Duguid]

Thank you.

We're now into our second round, colleagues.

We will start once again with Mr. Malette for five minutes.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you.

Mr. Froese, when we talk about mill closures, should Canadians understand that we're losing not only jobs and paycheques but also the tools that keep our forests healthy?

[Robert Froese]

Candidly, I think Canadians should be terrified of losing the tools to keep our forests healthy—terrified.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you.

How much does having all these mills down affect our regeneration capabilities and the process for the future?

[Robert Froese]

Again, engaging in active forest management is very difficult if there's not a revenue-generating opportunity. It's very easy to look at revenue generation as kind of a dirty part of what we do. I've argued for my entire career that when we remove a tree, we're making room for a new one. If we can't do that in a cost-effective fashion, then we just basically walk around and we get what we get from our forests and what nature will provide to us.

In terms of regeneration, forests have managed to regenerate themselves and have been very vigorous naturally, prior to any humans arriving in North America, but we can direct that in a constructive fashion, often far more effectively and efficiently than nature can and in a more timely fashion, through silviculture. We can end up with scenarios in which young forests burn and the seed source is then no longer available for regeneration. If we have an active forest industry and forest sector, we can invest in reforestation and put trees back faster than nature would in those circumstances.

In terms of our ability to regenerate forests, we'll be fine if we just walk away and leave them alone, but we won't get the kind of value that humans demand from them. Again, I'll just say that the loss of a vigorous forest industry means the loss of an opportunity to direct forests in ways that benefit society and the ecosystem.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Could you expand on not only the benefits but also the control of environmental pollution?

[Robert Froese]

One of the consequences of industrial development in the forest is the legacy of roads. We understand across North America that the construction of roads changes the ability of humans to access the forest as well as the patterns of use by wildlife.

My expertise is in forest growth and yield and silviculture, not wildlife, but we understand that roads have a significant impact on the movement of predators and other species into those systems and affect those values. Without our opportunity to regulate what's going on in the forest through active management, we lose the ability to address those values.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

To Dr. Stephen, what would be the possible scale of investment in jobs if Canada embraced district heating and combined heat and power generation fuelled by biomass? What could be the economic benefit to this whole country?

[Jamie Stephen]

Number one, we already have about 180 district heating systems in Canada. Most of them operate on gas. The Government of Canada is actually a large owner of district heating systems, mainly through the Department of National Defence. There are 27 military bases, and most of them have existing district heating systems. Even the building you're in today is heated with a district heating system that, at one point in time, was planned to be operated as a combined heat and power plant fuelled by biomass.

That is something for which we already have existing infrastructure, and these types of assets can be developed with institutional capital, with no investment by the Government of Canada. It's simply an offtake agreement. The same is also true if it's not connected to a district heating system on the power side. That's where the power purchase agreement comes in.

This is what institutional investors want to put their money into, but they have to be guaranteed that offtake. That's where the Government of Canada, along with our universities, can play a critical role, creating that market and driving a market for low-grade wood and allowing for enhanced forest management.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you.

I guess I'm over time.

[The Chair, Liberal, Terry Duguid]

Yes, your time is up.

For some reason I'm being very generous to you today, Mr. Malette. Your questions are so thoughtful. Thank you so much.

We are now on to, finally, Mr. Guay.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

Thank you, Mr. Chair.

Mr. Stephen, Mr. Froese, thank you very much for being with us today. It's very helpful.

I'm going to direct my question to Mr. Stephen.

Mr. Stephen, I'm assuming you have seen part of budget 2025, which the government tabled and got approved on Monday night. Importantly for this discussion, we've expanded the clean technology investment tax credit to include the biomass industry, and it's retroactive back to 2023.

Are you aware of that? What's your impression of this measure? Is it going to help the decarbonization of our country and our forest industry? I'm curious to hear your feedback on that.

[Jamie Stephen]

Absolutely. It's the investment tax credit, which is now 30% for combined heat and power plants and 15% for biopower alone. It is certainly helpful, but it doesn't matter what that investment tax credit is if you cannot get access to the electricity grid. It's one of these things where the numbers can improve potentially to the point where the provincial government says that it will sign a power purchase agreement, but my experience is that it's a little hard to understand the position of some of the provincial governments, particularly because they also own the forest, as to why they have denied access to the grid for biomass power plants.

This is why I bring the suggestion on the DND bases side, because you can essentially have a behind-the-meter type of situation. It is certainly helpful. It helps to improve the economics and drives down the levelized cost of energy generation, but by itself, it's insufficient to lead to significant investment in development.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

I like your idea for DND. If you would be kind enough to submit that on paper to the committee, we could include that in our recommendations, and it would be very much appreciated.

You are aware that there are some provinces and utilities in this country that are thinking of firing back coal plants. Do you think the biomass or the biofuel alternative should be considered or could be an economical solution in that case?

[Jamie Stephen]

Absolutely, and this is where I come back to bioenergy with carbon capture and storage. This is from the Canada Energy Regulator in its modelling for a net-zero world in 2050. It modelled that the number one source of electricity generation in Saskatchewan, which is where I grew up, would be biopower. People ask how that would be the case. That is because you're generating two products. You're generating electricity for local use, and you're generating an exportable carbon dioxide removal. The sale and the margin on that carbon dioxide removal lowers the net cost of energy.

The Canada Energy Regulator found that the net cost of energy would be negative. In other words, it would out-compete everything else because of the sale of this carbon dioxide removal. We do have some existing coal-fired assets, primarily in Saskatchewan, and then obviously there has been the conversion of the coal-fired power plants in Alberta to gas, but those plants can be retrofitted. In general, the fuel by itself, if you're just talking electricity, will be higher cost, but this is where the addition and the additional product are really critical to making those economic numbers work.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

Thank you very much.

I hope, as a good Saskatchewan native, you'll be well received in Saskatchewan. More importantly—and that's important—I'm trying to understand the role of your enterprise. Are you consulting? Are you building the projects? Are you helping with the technology for the proponent that would build the project? Talk to me a bit about the positioning and how we can help.

[Jamie Stephen]

Historically, we've been an adviser, but in 2021, we started working with institutional investors advancing projects. We essentially serve as development support for institutional investors.

[The Chair, Liberal, Terry Duguid]

We are going on to Mr. Simard for two and a half minutes.

Go ahead, Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Mr. Stephen, I want to follow up on our previous discussion.

When I spoke with the witnesses about bioenergy, I was always under the impression that developing a market was very hard, because the molecule price was ultimately more expensive when bioproducts were involved. However, I thought that developing the market would be possible if incentives, carbon pricing and other such government measures were in place.

We talked about carbon pricing, but the clean fuel regulations are another consideration. I'd like to know whether you think it's important to keep those regulations in place.

I have another quick question. Earlier, in response to a question from my friend Claude Guay, you said that fibre access was a problem in some provinces. I had always heard that bioenergy was made from waste, so there were no projects to produce bioenergy using the whole fibre. It's kept for building, but energy was produced mostly from waste.

My two questions, then, are about clean fuels and the use of waste.