Canada’s forestry industry: Investing for growth

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Last year, Canada’s forestry industry contributed over $57 billion to the GDP. Exports from the sector are worth $23.6 billion, which translates into a trade surplus of $14.4 billion, second only to the oil and gas industry. As one of the country’s most valuable renewable resources, and largest employers, more than 600,000 Canadians are directly or indirectly employed by the forest products industry, an industry extremely susceptible to the vicissitudes of global markets.

A profound shift is underway. Canada’s pulp, paper and wood producers are looking at new technologies to increase the value of our trees and create a more robust industry, less dependent on commodity markets.  With Canada of the forefront of bio-technology, an adjacent industry that will add value to every tree cut in this country by allocating wood fibre to production processes. Individual plants and mills will be able to channel production from basic materials to bio-products depending on market realities in the emerging bio-economy.

Bio-technology is the future for the Canadian forestry industry, according to Avrim Lazar, CEO of Forest Products Association of Canada (FPAC), whose Bio-pathways project is illustrating the exciting potential for the future of this vital renewable resource.

“A tree is made up of basically the same chemicals as crude oil which is very old rotted trees, so just like from crude oil you can extract everything from diesel to high-end plastics, we are doing the same with trees that are a lot fresher,” says Lazar. “We are taking what used to be used for lumber and pulp and paper and asking ourselves what else can we do with a tree. The answer is energy, plastics, pharmaceuticals, medicines and the key for the industry is adding these sorts of value propositions to our existing industry to extract more value from each tree.”

The bio-technology industry must work in tandem with the traditional forestry industry in order to be economically viable. At this point, the most promising future involves sawmills and engineered wood products together with bio-refinery for production of pulp/bio-energy/bio-chemicals.

“Imagine a conventional forest industry operation. You would see piles of timber or wood chips waiting to be processed, a building housing, a sawmill, or pulp mill and stacks of processed wood or pulp waiting to be shipped,” says Catherine Cobden,FPAC Vice-President of Economics and Regulatory Affairs. “In the near future, some of these traditional operations might include bio-refineries that produce renewable fuels, plastics and chemicals for the pharmaceutical and food industries while also generating electricity that can be added to the wider grid and used in people’s homes. The site would produce little, if any, waste while generating higher income.”

“Already, bio-technology produces enough green energy today to be the equivalent of three nuclear reactors,” she continues. “That is renewable energy, the production of green energy.”

“Many companies are already doing it now,” says Lazar. “I would say within two to three years it is going to be a larger part of the industry.” What does he think will be the catalyst in the next few years? “Some of the technology will be more proven at commercial scale, investments will be coming in, partnerships with the chemicals industry and energy industry will make some of these things happen faster and the marketplace in the next five years will increase dramatically.”

Upward trajectory

According to the FPAC, global market potentials for various bio-products will nearly triple in the next 20 years (to more than $1 trillion) compared to 2030 nearly triples, where as conventional forest industrial products have ostensibly plateaued and are expected to only increase by 10 per cent in the same time frame.
Canada cannot afford to get left behind. “Bio-technology is being in Europe, Brazil, everywhere with a pulp and paper industry is looking at the concept of bio refineries to use the waste for energy and other materials,” says Lazar.  “Governments in other countries are investing quite heavily, probably more than the Canadian government in getting this technology ready.”

Michael Gravelle, Ontario’s Minister of Northern mines and Development, is helping to increase the profile of bio-technology in his region. “I recall one of my former deputy ministers bringing a car door to one of our meetings to make the point that this was a forestry-based product,” he says.

Integrating new bio-technologies into existing production will help ensure a vibrant future and a Canadian advantage for the sector into the 21st century. FPAC research suggests it could increase job potential by up to five times versus standalone bio-energy plant sand is environmentally beneficial.

“The big advantage is to extract more value from each tree, economic footprint is broader so in down markets you are still making money,” says Lazar. “The industry has been very successful in good markets and not at all in bad markets and this would change that to a more certain footprint when markets are weak.”

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