Natural Resources Committee on Nov. 27th, 2025

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Thank you, Mr. Chair.

I am going to start with Mr. Renou, please.

You mentioned that we need a regional approach. I'm from British Columbia, with roots in Alberta. What would a regional approach mean for British Columbia versus Alberta and wherever? What would the features of such a—

[Stéphane Renou]

That's fantastic. I love British Columbia. It's a fantastic case study because you have, really, three regions in British Columbia. You have the interior, the coast and the island. There are three completely different forestry ecosystems.

The interior was absolutely ravaged by the mountain pine beetle. The cost of harvesting went up dramatically. Why? All the good wood, which was in the middle on the plains, was ravaged. Now you need to go higher up the mountainside and the hills, and the cost is going up continuously.

You have several players. Let's dream for one second that everybody works together. We have this little Finnish or Swedish team and we create a large pulp mill in the middle that can get the chips from everybody. It's a co-operative, a collaboration. I don't know what it is, but technically and economically it creates a grandiose mill in the middle that takes the chips from all the sawmills. That will help everybody tremendously. That's the regional approach.

Then you need to deal with first nations, and we have several of them. You need to deal with access to fibre. I remember the tears in the eyes of a CEO who was showing me maps of the island and telling me, “I don't know how to get to trees anymore because all the roads are caught by old-growth sectors by first nations, where I don't have a deal.” The complexity of British Columbia are those multiple facets that came, through legislation, all at the same time. Industry could not adapt to all of that transformation.

You look regionally and you sit down with the key producers, the politicians and everybody, and say that if we don't agree on the path, Prince George will close and Quesnel will close, one after the other, down to Williams Lake.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

What you mean by region is not British Columbia versus Alberta.

[Stéphane Renou]

No.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

It's within a political—

[Stéphane Renou]

It's a forest basket. That's what I meant.

I apologize. I cut you off.

Fundamentally, the forest sector is based on trees, and the quality of the trees and the distance to them is everything. It's much more difficult when your mill is on the side of a lake. You have half of a circle to get to it, so your transport cost is much higher. If it's in the centre, it's cheaper because your radius is smaller. It's those things, and then the species and all of those.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

This focus on innovation that you're speaking of, would that similarly be regional?

[Stéphane Renou]

Absolutely. That's because each region has characteristics from a species perspective. Black spruce up north in Quebec have a mechanical quality that is phenomenal compared to those on the western side. Transport in some regions is blessed by rail in large quantities, so their cost of transport is different. Access to the supply chain downhill is also an important thing. It's really multi-faceted. How can I create a good regional business? Then you're having all the other challenges from a political standpoint and a business standpoint.

If we don't do that, what's the alternative? Competition drives everybody to wait for the other to go down to get market.... By that time, we may be in trouble.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Much of what goes on in the forestry industry is under provincial jurisdiction. What can we as the federal government do to facilitate this kind of regional approach and regional innovation?

[Stéphane Renou]

The federal government, other than tariffs and also environmental regulations, has this thing called leadership, through which you can help facilitate as well. I think that's where we are. The government also can be involved with all the resources of the entirety of Canada in terms of research, science and supply chain policy at the Canadian level from a supply perspective—which you started to do with Build Canada Homes, etc. There's a link there, but the leadership role, I think, is going to be key.

[Ron McKinnon, Liberal, Coquitlam—Port Coquitlam, BC]

Where would you like us to lead? In terms of leadership, what direction should we be going in?

[Stéphane Renou]

There's a task force that has been proposed. I'm always a bit worried when I hear the term “task force” because it can turn into many things. I will be happy to see within that task force policy-makers, politicians, economists and scientists so that there is no hidden corner of the equation.

[The Chair, Liberal, Terry Duguid]

Thank you.

Mr. Simard, you have the floor for two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

Earlier, in responding to my colleague Mr. Guay, you concluded with quite an interesting statement: Today, if we want to innovate, the major problem is that the company’s contribution is not there. We completely understand why. There is therefore a need for the government to make some adjustments.

Next, there’s a major difficulty related to the number of funded projects. We received a response from the department some time ago concerning the number of projects funded under the innovation program called Investments in Forest Industry Transformation, or IFIT, among others. Out of 140 projects across Canada, 37 were selected for two years. Personally, I would like to conduct a comparative study, but for an industry like the forestry sector, I find that there’s not much federal government support.

What tool could help you be a bit more flexible and kick off this innovation phase with the support of businesses?

[Stéphane Renou]

First of all, the IFIT program is one of the programs that has been very successful in the industry. I understand your point of view regarding the proportion of funded projects, but this program offers interesting funding ratios and compels the industry to participate. The difficulty for our colleagues at Natural Resources Canada lies in the volume of requests and the number of experts needed to analyze them and demonstrate their relevance in political and economic terms, among others. We can’t keep up. Why? Because there is a shortage of those rare individuals who understand economics, business and science equally well. So there is important work to be done in terms of regionalization and prioritization.

Let’s be clear: The industry is suffering and it submits many requests, when it can, but its willingness to take risks and make capital investments is no longer there. We must therefore direct the programs toward what can help it immediately and adjust the criteria a bit, while remaining relevant on a regional and economic level.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

There is also an adverse effect of the tariff war, namely that no one is willing to invest in innovation because people do not have cash and are simply trying to survive at the moment. This is a fundamental issue. Mr. Rustja will be able to elaborate on this.

You insisted, Mr. Renou, on a regional approach. Several witnesses have come to the committee to say that the forestry sector should be seen as a chain. The moment you cut one of the links in the chain, the whole chain is broken. We’re currently cutting several links in the chain. There are therefore chips, among other things, for which there’s no buyer.

I’d like to hear both of you on the importance of maintaining the integrity of the chain, perhaps by adopting a regional approach.

[The Chair, Liberal, Terry Duguid]

We're at time, but I'll allow a quick response.

[Stéphane Renou]

I'm going to be fast so that he can say something.

The chain is integrated regionally from the forest to the paper mills. The biggest cost in the forestry industry is transportation. Today, we take chips produced in central Ontario and transport them to Chibougamau to make pulp. Today, in British Columbia, wood chips are being transported from the south of the province to the north, and this is being subsidized because there are gaps in the supply chain.

The danger is that pieces fall off because the interests of business owners, who are not always local either, are at stake.

[The Chair, Liberal, Terry Duguid]

Thank you.

Give a really quick one, Mr. Rustja.

[Steven Rustja]

Really quickly, I couldn't say it better than he did.

[The Chair, Liberal, Terry Duguid]

Wow. That's very efficient. It speaks to your emphasis on efficiency. Well done.

The last two speakers in this round are Mr. Rowe, followed by Mr. Danko.

Mr. Rowe, you have five minutes.

[Jonathan Rowe, Conservative, Terra Nova—The Peninsulas, NL]

Thank you.

My first question is for Mr. Rustja.

In Newfoundland and Labrador, we have an offshore oil and gas industry, and there are a lot of policies in place that are hindering investment. They're creating uncertainty. A lot of federal policies in place are creating uncertainty in that market.

You said it's better to have a bad deal now than a good deal later. Is that because of the uncertainty? Is it better to have a bad deal now so that it creates the certainty required for investors and business owners to double down in the market?

[Steven Rustja]

For me, it's less about government policy and things like that. You can work around what you know. When you don't know what the future is going to be like, it's very hard for any corporation to invest money into their businesses.

Right now, there are a bunch of people who would be doing things. Instead, they're either closing their businesses or shutting them down, rather than reinvesting in them.

[Jonathan Rowe, Conservative, Terra Nova—The Peninsulas, NL]

It's a matter of risk management.

[Steven Rustja]

It's 100% risk management.