Government pledges $292.5M to help mills produce bio-fuels

The federal government pledged $292.5 million Monday to help Canada’s sagging forestry sector develop renewable energy from biomass.

The announcement came the same day the Forest Products Association of Canada (FPAC) released a study saying the industry needs to make dramatic changes in order to remain viable.

Integrating Canada’s traditional lumber operations with bio-fuel and bio-chemical production would protect thousands of forestry jobs could potentially produce as much power as nine nuclear reactors, FPAC said.

Blending forestry operations with bio-energy production could put the country’s forestry sector back on track and even lift Canada to “clean energy super-power” status, according to the group.

Wood fibre, for instance, can be converted into a variety of high-value products including bio-fuels to heat homes or power cars as well as bio-chemicals to make cosmetics, solvents, food additives and renewable plastics.

Years of intensive research and development have produced technologies that open up a world of possibility for the forest products industry in Canada,” said Pierre Lapointe, president and chief executive, FPInnovations.

If we follow this new model we will be able to produce power on the scale of nine nuclear reactors, enough to meet the energy needs of 2.5 million homes, or one out of every five homes across Canada,” said FPAC President and CEO Avrim Lazar.

The integration model would allow the industry to extract the maximum value from every tree harvested, he told decision makers in Ottawa Monday.

An integrated mill – one that produces wood, pulp or paper as well as bio-energy and bio-materials – would also provide fives times as many jobs as a stand-alone operation, the study found.

The industry currently employs 270,000 Canadians but it shed 50,000 jobs after the economic downturn led to a collapse in global demand for lumber and paper.

Forestry is an approximately $65 billion a year industry and represents nearly 2% of Canada’s Gross Domestic Product.

This new integrated model will cause investors to take a fresh and more optimistic look at the economic potential of Canada's forest products industry,” said Don Roberts, managing director at CIBC World Markets and leader of the FPAC study.

In a separate announcement on Monday, the federal government said it would spend just over $1 million to help protect forestry-dependent jobs against wildfires in the country’s West.

The money will fund forest fire reduction treatments on 125 hectares of land in the Cariboo-Chilcotin region.

“Today's announcement will help our region emerge from this challenging time more prosperous and stronger than ever,” said Dick Harris, MP for the Cariboo – Prince George region.

At least partial funds for both forestry-related initiatives came through the government’s highly-touted Economic Action Plan.