Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 8 - Evidence - Meeting of September 29, 2009
OTTAWA, Tuesday, September 29, 2009
The Standing Senate Committee on Agriculture and Forestry met this day at 5:06 p.m. to study the current state and future of Canada's forest sector; and to consider a draft budget.
Senator Joyce Fairbairn (Deputy Chair) in the chair.
[English]
The Deputy Chair: Honourable senators, our chair, Senator Mockler, is back at home in New Brunswick doing good deeds. I know that he would like to be here and that he would be pleased to know that we have a full room, and that is first class.
The committee is continuing its study on the current state and future of Canada's forest sector.
Before we hear from the witnesses, we will take a few minutes to examine the budget that is before you.
(The committee continued in camera.)
(The committee resumed in public.)
The Deputy Chair: Thank you for coming. We are delighted to have you here as witnesses this evening.
Mr. Binot, we will start with you and carry on through, and we are pleased that you have come this way today. I know that our chair would be thanking you.
Jean-Marie Binot, Professor, Forestry Faculty, University of Moncton, as an individual: It is a pleasure for me to be here today.
[Translation]
I am the dean of the of the Forestry Faculty of the University of Moncton, New Brunswick. I have been a university professor since 1985, a forestry engineer since 1975, with a specialty in silviculture, and I have benefited from both Canadian and European experience. My presentation will be about the common problems of hardwood forestry. My testimony today will deal with the upstream conditions hindering the development of the hardwood forest industry.
What we call the wood product chain includes the entire process that starts with the tree produced in the forest, which goes through a first transformation, for instance into pulp, a second transformation that can result in industry lumber, and a third transformation that could result in furniture. We see an increasing product value along the wood product chain.
My presentation has to do with this part, namely all the elements that are present in the forest environment. My presentation aims to emphasize the need for producing quality trees, so that progress can be made along the wood product chain mentioned here on the right side of the slide.
I will very briefly present the main observations of the forest industry. I will not go into detail, I will simply say that I took note of the observations made by various organizations such as l'Association des fabricants de meubles in Quebec, Industry Canada, FPInnovations, the Government of New Brunswick, Forintek Canada, a work committee that was created in northern New Brunswick called Madawaska-Restigouche, the Roche report, which was developed for New Brunswick, and also some comments made by Shermag Inc.
Let me give a very brief summary of the main observations of the forest industry. The companies, as a whole, recognize that there is currently a shortage of quality hardwood. Let me emphasize the word ``quality.'' There is no shortage of hardwood; there is a shortage of quality hardwood and this quality is what determines the possibility of going through the first, second and third transformations.
The forest industry also recognizes that we do not have a qualitative inventory available today. We know what volumes of wood are available, for instance the volumes of yellow birch or of sugar maple, but we do not know the different qualities that exist today in the forest environment.
Another observation of the forest industry has to do with hardwood silviculture. This is a very complex and very little known kind of silviculture. Hardwood silviculture has only been practiced for a short time in Canada.
The two final observations I will make regarding the forest industry have to do with a clear lack of knowledge of silvicultural treatments.
As I said, the interest in hardwood is something new and, up to now, we have developed very little knowledge about the various treatments that must be applied in the forest to obtain the quality I mentioned earlier.
Finally, the forestry companies say that there is great uncertainty about their ongoing economic activities because there is absolutely no guarantee of a supply of quality wood.
I am a forestry producer and I used a few photos to illustrate the first phase of the wood production chain, which takes place in the forest. At the outset, we have seedlings that become young trees that grow into mature trees. It is extremely important for the forester to nurture those trees even while they are young. Here we are talking about a time horizon of 80 to 200 years. It is important for the forester to apply in the forest treatments that provide a harvest of high quality trees that the forest industry needs. Once we have the quality trees, we will be able to diversify the wood production chain. Here I am talking about the paper industry, the housebuilding industry and also the furniture industry.
As far as quality is concerned, all trees are not created equal. We can obtain quality trees like the one shown here on the left. This tree has a straight trunk and few branches, it is of high quality. In the forest, we often come across trees like the one on the right; their trunks are often bent, not straight, and these trees have low branches, which the forest industry does not want in any way in a quality product, let me repeat.
Thus, let us come back to our diagram of the wood production chain. We can see that if the first phase is not properly done, if we cannot bring quality wood out of the forest, all the remaining parts of the chain are jeopardized. The first transformations will be possible, but not the second or the third transformations. The latter stages generate the most revenue, what we call value added.
I have noted the five main needs identified by forestry companies. First, we must develop a better knowledge of the hardwood resource quality. Let me repeat once again that we know the volume of wood in various Canadian provinces, the volume of yellow birch, the volume of sugar maple, the volume of ash, et cetera. However, today we have not developed the methods for assessing the quality of yellow birch. There are various levels of quality, but we know nothing about the quality of the yellow birch that is produced or available in the forest.
Another important element as I said earlier is the fact that the silviculture of hardwood trees is very young. The first selection work in Quebec was begun only 25 years ago. This is an extremely young industry. Today, we have very fragmented information that needs to be put together so that the users of the resources will know how to manage the forest adequately.
The third point is an extremely important element, it is a need identified by forestry companies, namely the implementation of research programs that would generate the missing knowledge. Let me give you a few examples. The forest industry wants to us to deliver quality wood. Today, as we speak, there is an extreme scarcity of knowledge about the regeneration mechanisms of northern hardwood trees. People were often content with cutting what was in the forest without any concern for the continuity or the maintenance of the species and of the level of quality.
Moreover, we have very little knowledge of suitable regeneration cut methods for hardwood trees. You know about the clearcutting methods that are applied to conifers, and these methods are very controversial in certain environmental conditions. Regarding hardwood, we know practically nothing about this. We are at the first stages and very little research has been done about these things.
Finally, an important element is what we call the nurturing treatments; in other words, ensuring the regeneration of a stand is not sufficient. The forester must, periodically, every 10 or 15 years, go into the forest and apply treatments that are called thinning and formative pruning. This is an important element and today it is clearly the weak link in the chain.
Forestry companies have also identified a need for making knowledge accessible to users. The information developed by university research centres or by others must be presented to the users in a way that is easily accessible to them.
The recommendations are as follows: it is important to support the Canadian forest industry. The industry is currently in a weak position because it has to make important choices regarding treatments and investments, and lacks the information it needs to make informed decisions.
It is also important to take advantage of those strengths and structures that already exist. In various Canadian provinces, there are universities, research centres, and so on. It is essential that all these resources come together and work in the same direction.
The New Brunswick forestry companies have strongly supported the establishment of a northern hardwood regional research centre that would serve New Brunswick, Prince Edward Island and Nova Scotia. These are highly forested regions. Eighty per cent of New Brunswick is covered with productive forest. It is important to work as a network and to ensure that strengths and skills are used together.
Ever since we, at the university and provincial levels, have been considering a hardwood centre, we have engaged in discussions with FPInnovations representatives, and we believe that it is important that the northern hardwood centre and FPInnovations collaborate very closely with each other. We both have approaches, resources and ecological sites that are very complementary, and I think it would be very interesting to work together.
Some work is already being done in New Brunswick. For example, the Roche report focused on the entire forestry situation in New Brunswick and it calls for, strongly encourages, and recommends the establishment of a northern hardwood centre. The main hardwood species are yellow birch, sugar maple and red maple.
In New Brunswick, we have the committee for the sustainable management of northwestern New Brunswick private forest lots. This committee was established approximately two or three years ago and receives funding from the New Brunswick Natural Resources Ministry, in order to do something special. This is a forum where the forestry industry, government, researchers as well as users and private woodlot owners sit together around the table.
Northern New Brunswick is a region that has been profoundly affected by the closing of forestry operations and a working group on the integrated management of public forests in Madawasca-Restigouche was established. It developed a vision that is called ``Toward Ecological and Economic Management of Public Forests.''
Finally, the University of Moncton developed, along with the forestry industry in other centres, a plan for a northern hardwood research centre for eastern Canada. We already have a business plan available that was developed a year and a half ago.
I have with me today reports that can provide you with further details related to what I spoke about today. Some of these reports are in English and some are in French. After my presentation, I will give you all a copy. These are reference works that I used to develop my presentation today. Thank you very much. If you have any questions, I would be happy to respond.
[English]
Pierre Lapointe, President and CEO, FPInnovations: When we received your invitation we had a major challenge, if we were to convince you of the future of the bio-economy in Canada, because the presentation would have lasted at least an hour. You have a paper copy of the presentation, but we decided instead to send you three messages. First, the bio-economy era is coming, and it will be here tomorrow. It will be Canada's future. We are talking now about green gold. Green gold is Canadian forest products.
What I decided to do is to invite two of my champions of the evolution that we will see. They will introduce you to those new products and new ways of doing things, and why we think the future is there.
Your package has a lot of information and pictures, which I ask you to look at, because a picture is worth a thousand words. In this case it is really something else.
FPInnovations is one of the world's largest RD organizations as far as forest products are concerned. There are 650 people working in Vancouver, Ottawa, Montreal, Quebec City and throughout Canada. It is an organization supported by federal, provincial and industry partners. I will return to this later.
One of the first evolutions and new products will be discussed by Mr. Berry.
Richard Berry, Program Manager, Chemical Pulping, FPInnovations: Mr. Lapointe has said that what we are dealing with is green gold. If you look at what has been happening over the last century or so, we have different ways of making that green gold. In the 19th century we were just grinding up wood to make paper products. In the 20th century we separated out components and made all of the materials you have in front of you; lighting papers, packaging used on a daily basis, and tissue and towel products that are a critical part of ongoing life.
What is happening in the 21st century? What we will be doing is re-engineering the components that we have. Just looking at paper and packaging will not be enough. We will be looking at renewable fuels, chemicals and plastics, and these will change the matrix that we start with. Rather than petroleum products, we will be looking at wood as the base.
Another part of it is the nano-material we have in wood. I want to give you a little more information about that unique material and its unique properties. Nanotechnology is making use of materials at the nano-scale. As I have said, we have something in wood that is at that scale, and we can extract it.
Just to give you a sense of what that means, an ant is about one millimetre in length. Bacteria, a thousand times smaller in scale, is about one micron, and a glucose molecule is one nanometre. What you are putting in your tea and coffee and stirring around is about a nanometre, the basic chemical that is there. That is the material at the nano-scale.
In wood we have a crystalline material, 200 nanometres in length and 10 nanometres wide. This has unique properties. It can reinforce and strengthen materials. It has remarkable optical properties. It is electromagnetic at that scale. It has self-assembly properties. You can make barriers with this material. You have a high surface area, so you can use it as a catalytic substrate, and it has optical activity.
To give you an example of what we can do with nano-material, nano-crystalline cellulose. What you have in front of you is cellulose, the paper you are writing on. What we have here is cellulose. It only has 10 per cent of a plasticizer in it. With nano-crystal material we can make films that are coloured. I will pass this screen around. We can change the colour of this material by changing the way we make it. Something we normally consider as just white is something we can convert into this remarkable film product.
How can we use this? We can use it for scratch- and impact-resistant coatings. This is one example where we can see it, but you can also take it into the UV or infrared field and produce UV and infrared barriers with this kind of material. We can make light-weight composites by doing this. For the transportation industry we can use this to strengthen materials. We can improve recyclability of packaging by using this material. We can develop new catalyst systems by working with this cellulosic product.
We will be seeing a transformation of the forest sector. We will not just be supplying material to the old, traditional places. We will be giving the material to the aeronautic, automobile, even the aerospace sectors. There are medical applications for this material. If we have time later I can show you other samples of what we can do with it and go into new consumer products.
All of this can be done with a much lower environmental footprint than we normally consider for any kind of nano- material. We have found this is sustainable, biodegradable and non-toxic. We have a wonderful opportunity with a new nano-material to develop a new economy with materials coming from the forest sector.
[Translation]
Mr. Lapointe: Our next presenter will be Richard Desjardins and Senator Rivard will be very pleased. We are going to give you an idea of what we expect Canadian cities to look like in a few years.
Richard Desjardins, Manager, Building Systems, FPInnovations: The primary purpose is to transform our forestry industry and our construction industry. Traditionally, we in Canada and North America have worked for many years on developing an industry that is mainly focused on supplying components for the residential sector and low rise rental construction, traditionally called 2x4 construction. This has been a very good and profitable market for several years.
However, the geopolitical and economic situation is forcing us to rethink our industry, to move a step ahead and to draw upon the ecological attributes of wood construction which are an inherent part of construction and the development of new materials.
Wood construction has a major ecological advantage when considered as a substitute for the materials involved. For example, currently in North America, the residential construction market is mainly made up of wood construction, whereas the market potential that we can easily foresee is that of multistoried multi-rental non- residential construction. These are six- to ten-storey-buildings that make up the vast majority of Canadian construction.
Introducing wood materials into this system will lead to the development of a series of second and third generation industrial products, components, and construction industries using direct substitutes.
The photographs show you four examples of landmark buildings in Canada. At the bottom, you can see the Richmond Olympic oval, the star of the Vancouver Winter Olympics. At the top left, you can see the building which is of most interest to the global wood construction industry. It is on Charest Boulevard in Quebec City, and to date, it is the highest multistoried contemporary wood building in the world, built in the heart of Quebec City with products derived from the forestry sector.
On the right, we stake our claim for building stadiums, public buildings, and sports complexes. For example, two sports complexes were built in Quebec, one in Laval, in the Montreal area, and another is being built in the Quebec City area which is called the Chauvreau stadium.
When these materials are derived from well-managed forests, they have the ecological characteristic of allowing us to substitute one material for another, in this case steel or concrete, thereby decreasing the ecological and environmental footprint of that material. Obviously, the challenge is to sustain the industry based on these materials. Furthermore, from the perspective of the safety and use of these buildings, there must be rigorous scientific analyses.
The goal is to create an entire industry. Whether that be components, manufacturing or engineering, we must be able to build at home and export our expertise.
[English]
Mr. Lapointe: Just as an example to show you the future and the evolution, you have quite a bit of information in the package on biorefinery, new products like lignen, methanol, green chemistry. Those technologies are pretty well at the stage of being demonstrated with the commercialization plan, so we are concerned to do it as quickly as possible to save some of our colleagues in the field.
It is important to understand that not even a year ago, it was possible to construct those buildings, and with the support from the B.C. and Quebec governments, and especially Natural Resources Canada, those technologies are now on the market and ready to be tested. We will entertain any questions that you may have.
The Deputy Chair: Thank you. It is exciting to hear about this.
Senator Eaton: I loved all your presentations. I am fascinated by what you all have to say. Being a gardener, my first question, Mr. Binot, is: In how much of Canada can we grow hardwood forests? Do you have horticulture zones in the forest industry the way we have in gardens?
Mr. Binot: Yes. I expected this question.
[Translation]
Senator Eaton: You can respond in French. It is simply easier for me to speak in English than in French.
Mr. Binot: A few months ago, I was doing a presentation on the Tolerant Hardwood Centre here in Ottawa. To reply directly to your question, I would say that these days, there is much talk about global warming, carbon capture, and the changes that global warming will lead to. I will give you a general answer to your question.
These are two maps that were developed for France. You can see the map with its current vegetation on the right, and then there is the map with projected vegetation as a result of climate change.
You can see that within a century, the ecoclimate of the forestry regions will have completely changed. At this very moment, the French government has already adopted forestry programs that take these maps into account. In Canada, particularly in New Brunswick, 40 per cent of the forest is hardwood and 60 per cent is softwood.
Senator Eaton: Throughout Canada?
Mr. Binot: Throughout New Brunswick. In Canada, there is somewhat more softwood and somewhat less hardwood. What we do know is that with climate change, growth conditions will favour hardwood.
[English]
Senator Eaton: Are we doing anything about it? Are provinces generally taking that into account, and are provinces reforesting with hardwoods?
[Translation]
Mr. Binot: Currently, not much. Hardwood reforestation efforts have begun in Ontario and research has been undertaken by Professor Von Alten. In Quebec, research is being done on quality hardwood but to date there has not really been an overall hardwood program.
[English]
Senator Eaton: Is this something that the federal government should take on?
[Translation]
Mr. Binot: I think that where transformation is occurring in Canada's ecological facies, measures must be taken that will meet the needs of the industry. I think that we need a global approach.
[English]
Senator Eaton: According to what you are saying and from what I understand from looking at trees, we are looking at a 100- to 150-year project; is that right?
Mr. Binot: Yes.
Senator Eaton: Are there enough trees in this country to undertake some of FP's innovations? If car plants came to you tomorrow and said they wanted to produce some dashboards in cellulose, would we have the trees to do it?
Mr. Berry: Absolutely, because the amount of material we are looking at is relatively small. For example, to improve the strength of that material, you are putting 2 per cent of this material into that composite. We are actually looking at taking the craft pulp that we are already making and converting a small amount of it into this kind of material. It will not have a major impact on the amount of wood that we are using presently.
Mr. Desjardins: It is important to realize that Canada has been a big exporter of wood for a number of years. We are proposing, especially for the use of wood in construction, to use more locally and be less dependent on export markets. That is a combination of both. The hardwood situation is one thing, and the softwood situation is something else. The softwood forest has been managed over the years, and there is quite a bit of sustainability behind that. Of course, it has to be maintained and kept up to date, but yes, we have enough wood to do it.
Senator Eaton: For the construction you are talking about, are you talking about hardwood trees?
Mr. Desjardins: No, I am talking about softwood mostly.
Senator Eaton: Should we have codes in this country that regulate the amount of wood you would like to see used in buildings?
I think they have such codes in France that require a certain percentage of wood?
Mr. Desjardins: It is not a code that requires it. The code will explain where and how to use it. That is something we have. I think you are suggesting a wood use policy. If you ask us what we think about a wood use policy, of course we strongly support it.
Mr. Lapointe: On that subject, Minister Bell in B.C. has introduced a wood-first policy, which is in first reading, to the B.C. legislature Tuesday.
Mr. Desjardins: Also, a year ago, the Quebec government did the same with their wood use policy for non- residential buildings that are Quebec-government funded. Therefore, yes, it is something we strongly support.
Senator Eaton: Would there be a percentage of wood in public buildings?
Mr. Desjardins: They have not put in a number. They strongly ask for wood alternatives for buildings being built. We know wood cannot be used everywhere, for every single building. However, we are asking for a wood solution to be analyzed and, at least, first considered at the design stage of the construction.
Mr. Lapointe: The B.C. proposal is to look at wood first with every publicly-funded building and to prove that it is the best model. If not, then go to cement or metal. However, you will really have to prove your case, in each case.
Senator Mercer: Thank you, gentlemen, for your presentations. Like Senator Eaton, I am fascinated because we have talked in this committee about research innovation for months and, finally, we have some people who can tell us some actual innovations.
However, the investment in silviculture, reforestation and the yield coming 100 to 150 years from now is a long time for a return on your investment. Therefore, it is sometimes hard to get people to focus on that. That is part of our job. We will get there.
Mr. Berry, what do governments need to do to help bring the innovations to market? I also want you to focus on the positive — I am assuming positive — effects that will have on employment. Can the people who are losing their jobs now be easily moved over to these new products and harvesting for the new products?
Mr. Berry: I will take the first stab at that answer. The government is already presently helping us significantly in the process. As Mr. Lapointe mentioned, we are working through demonstrations of this technology.
A fund has been put together in one of the more recent budgets. It is about $40 million for demonstration plants, and about $10 million of that will be made available to at least one nano-crystalline cellulose, NCC, plant. That will be matched, as we see, from provincial money in the province we would put the particular demonstration plant.
That is a demonstration; it shows whether the technology we are using for the extraction will work. The next stage of that is commercialization. Presently, we are building the marketplaces for that product. That bridge between what we can do in a demonstration plant — showing the principle of what we can do — and taking that to commercial operation is where there will be a need for money into the future.
We have designs already for ten-ton-per-day plants for this material. The value will not simply be in the forest sector. It will develop secondary industry. It may be that, at a present site of a craft mill, one of these plants will be added onto the mill. Then there will be a secondary industry developed. That is where we view the potential for further employment from the application of this kind of system.
Senator Mercer: In talking about the innovations, we are talking about leaving behind some of our normal wood production use in this country, such as pulp and paper. In my province, pulp and paper is a major issue. It seems to me that we have sort of forgotten that.
Are there new innovations in pulp and paper that we should be thinking about? The Brazilians, for example, have come up with new and innovative ways to use it. In fact, we are losing business because they are doing it bigger and cheaper.
Mr. Berry: The idea is not to replace the present industry with what we are doing but to supplement it. Mr. Lapointe will tell you more about what we are doing for the present industry sector.
Mr. Lapointe: I would like to correct you. You have to understand that the NCC that Mr. Berry is talking about comes from pulp. We are not canning pulp.
Senator Mercer: You are changing the use of pulp.
Mr. Lapointe: We are changing its use.
Senator Mercer: You are changing the paper I hold in my hand to something else.
Mr. Lapointe: That is what it is all about. I am saying that the pulp will be used for some new products and in new fields. For example, what you have on the screen is a new type of paper that will be able to detect, capture and deactivate pathogens. Therefore, you could have a mask made from it. We can also have new Kleenex, which will contain an antiviral agent. We are not forgetting about the pulp.
Obviously, the paper side will diminish, but we hope to replace it with those new technologies.
Senator Mercer: What is a typical timeframe between the completion of research activities and the commercial implementation of research innovations? Is it realistic to expect that some of this research happening now could help with the current crisis?
Mr. Berry: I will give you the timeline that we are working with presently. We are putting the design for this plant together. That will take us six months. It will takes 18 months to actually construct it. Our intent is to have this material in the marketplace in two years. That is about as fast as we will be able to deliver this particular part of our innovation program.
[Translation]
Senator Poulin: I agree with my colleagues, Senators Eaton and Mercer. Your enthusiasm for the industry, for research and innovation is extremely refreshing for us. We have met with several witnesses who have analyzed the current crisis in depth. It is my impression that you are opening doors towards the future in order to see what the possibilities are for this natural resource that is unique to our country and that is such a treasure. I like hearing you call it ``green gold.''
My first question is for Mr. Binot. I would like to give you the opportunity to blow your own horn a little. I would like you to talk to us about the Forestry Faculty at the University of Moncton. As my colleagues already stated, research is so important. Who are your students? Where do they come from? Where will they work? How many professors do you have? Can you tell us a little about your institution?
Mr. Binot: First, the Forestry Faculty at the University of Moncton was established in 1985. It is the second faculty in the country to offer this program in French. When we decided to create a forestry faculty in New Brunswick, there was a debate as to where it should be located. In the end, it was established in the northwestern part of the province, an area that has an important industrial hub. The Irving Company, the Fraser Company and the Groupe Savoie are there. Groupe Savoie and Irving are two businesses that use hardwood.
There are currently a dozen professors in the faculty. When it was created, all the professors who were hired were researchers as well and therefore there is active research going on in various areas, whether that be in the area of wood technology, wildlife management, softwood and hardwood silviculture, non-ligneous forestry products, or NTFPs.
Our university clientele comes from New Brunswick and Quebec. We have agreements with various countries such as France, Belgium, Benin, Peru, Romania, Italy, Haiti and others. We have developed an excellent international reputation. Three months ago, I went to Italy and Hungary with a group of students. I am a university professor and the word ``university'' contains the prefix ``universe''. It is important that young university students develop a mind that is open to the world.
For a long time now, Canada has had a traditional pulp and paper industry. Today there is very strong competition throughout the world. We need to move towards innovating and innovative products; towards value-added products. My colleagues to my right work mainly with coniferous trees.
The message I wanted to give you earlier related to the hardwood forestry. Beautiful furniture, pieces made out of turned wood, beautiful beams in homes are all made out of oak or maple, hardwood.
In answer to Senator Eaton's question, yes, we have a considerable amount of hardwood in Canada. Overall we comply with annual cut allowances, but the problem is the availability of quality wood.
In my presentation, I mentioned the Shermag Company, that produces furniture. Shermag used to be in northwestern New Brunswick but it shut down. Canada had to import yellow birch and maple from the United States because we did not have that quality wood. That is an unacceptable situation. It is important that Canada be able to produce these quality stems in order to keep these businesses operating, to create new products as well as new markets. The traditional pulp and paper sector is undergoing an unprecedented crisis due to international competition.
Canada — which has wood that grows less quickly than its competitors' wood — must not necessarily focus on the traditional pulp and paper industry but rather on value-added products. Canada must use its brains to create new markets and new products. However, the entire chain of production starts with availability in the forest. Do we have the quality products that are being asked for by businesses here or by businesses that want to come here?
Senator Poulin: How many forestry faculties are there including the two francophone faculties in Canada?
Mr. Binot: There are nine forestry faculties.
Senator Poulin: How long is the program?
Mr. Binot: At first it was a five-year program. Some universities have reduced the length of their program. The University of New Brunswick, Laval University and we ourselves have decreased the length of our program and currently we offer a four-year program.
Senator Poulin: Where do these program graduates end up in the industry?
Mr. Binot: We follow that closely and the percentage of graduates that find a job is approximately 96 per cent. Despite the crisis in the forestry industry that you have heard about, there are many job opportunities for forestry engineers. Irving has been looking for 14 forestry engineers for a year and a half and has not managed to find any.
Our graduates end up working in the major industries: pulp and paper, lumber. We have people in Quebec who have training in more than one field. They have done their forestry engineering degree with us and have done an MBA elsewhere. They are the ones at the head of businesses in Quebec. We have graduates in British Columbia and Manitoba.
Our faculty is the second youngest in Canada and our accreditation has always been recognized nationally; this is a label of quality that is granted by a neutral and international entity.
Senator Poulin: You have talked up your university very well. Mr. Lapointe, your business model interests me. You mentioned partnership. Could you go into that in some more depth?
Mr. Lapointe: This is a model based on membership. Various companies throughout Canada become members of FPInnovations. They have annual membership fees that are based on their production whether that be in pulp and paper, lumber, and so on. We have an agreement with Natural Resources Canada that funds two programs for technology transformation and accelerated technology transfer, as well as pilot projects. We also have agreements with the majority of provincial governments, mainly Quebec, British Columbia and Alberta.
Senator Poulin: What services do you provide?
Mr. Lapointe: They have direct access to all of our intellectual property or the technology that we have developed and to our champions who go into the plants to see what kind of problems have been encountered and come back to our laboratories, create the technology and establish it in the plant.
Senator Poulin: There are doctors without borders and you are researchers without borders.
Mr. Lapointe: Exactly.
Senator Poulin: Just before the beginning of our meeting, you explained to me that you were establishing a new alliance with a company in Thunder Bay. Could you tell us a little bit more about this?
Mr. Lapointe: It is a new partnership with the Government of Ontario which has invested $25 million in an organization called CRIBE headquartered in Thunder Bay. CRIBE is responsible for developing the concept of biorefinery in Northern Ontario and the research component of CRIBE will be the FPInnovations. Our staff has already begun establishing FPInnovations. We already have a preliminary agreement with the Ontario Ministry of Research and Innovation and we invest a certain amount. With our investment and that of the Ontario government, we are currently working on all aspects of the various stages of biorefinery, lignin, methanol, methane, et cetera. for the industry in northern Ontario.
[English]
Mr. Berry: I focused on the material that I have shown you here but I also described that there are other pieces of that — renewable fuels, chemicals and plastics. That is the other aspect of this; we can convert the material and re- engineer it still further than we have here into these new opportunities. Basically, that is what we are intending to assist with the Northern Ontario mills.
Mr. Lapointe: For example, in Northern Ontario, we would look at lignin extraction. The lignin extraction could replace the black carbon in our tires. You end up producing quite a bit of hydrocarbon used in the tires and replacing it with something which is environmentally friendly. This is the type of new product that we are putting on the market for the industry.
[Translation]
Senator Poulin: Mr. Lapointe, it was accurate for you to say that you would need one hour to share all of the information you have. Thank you very much.
Senator Rivard: My question is for the professor; I would like you to use non-technical language to explain a few points for my benefit and that of our listeners, although there may be some forest engineers among our listeners.
At the beginning of your presentation, you referred to high and low quality hardwoods. I would like to have a brief description of the difference between the two and of how we can, with the support of government or through training, get better quality hardwoods.
Mr. Binot: I would like to use the diagram. First of all, when we refer to northern hardwoods, we are mainly referring, as I mentioned, to sugar maple, yellow birch and red maple. Those are the main species. In referring to quality hardwoods, I am not referring to the species; I am referring to the characteristics of the tree, of the stem.
On the diagram, you can see a high-quality tree to the left. It is straight. Quite simply, as an example, imagine that you want to produce boards, it is easier to do so with a straight tree than a twisted one. Although I do know that there are ways to do so either way.
Now, let's look at wood without nodes. New Zealand is the one country in the world that has developed its own niche market for moldings, which you find on the lower part of walls, that have no nodes. Why is that? Because they regularly prune their trees.
A quality stem, be it from a sugar maple, a yellow birch or an ash or an oak tree, is a stem which, during its growth and maturation phase, was treated so that the stem would be straight, and would not have many low branches. If there are no branches, there are no nodes in the wood, and if there are no nodes in the wood, it has added value. It is sort of like raising children. Children grow; they can be well-raised or not. If they are well-raised, they have added value. The same thing applies to trees.
So to reiterate, I was not referring to the species. We are talking about quality hardwoods, northern hardwoods. Hence, you can have two maple trees, one that is straight, has fine branches, few or no nodes, is not damaged, not rotten, or you can have a tree that is twisted and has low branches. That would mean many nodes, a tree that is structurally weakened from rot, fungus, et cetera.
Senator Rivard: Thank you very much. I have one final question. Early on we saw the Chauveau Stadium which is about to open in Quebec City. It is magnificent, almost entirely made of wood. Do we have statistics, an approximate percentage as to how much more this type of wooden structure would cost? I am trying to compare it with the traditional steel or concrete building or a mix of building materials. Is there a significant difference?
Because in the case of Chauveau, it was a political choice. Quebec City made a call for tenders to get a wooden structure. If it had been an open call, for any type of building material, would wood still have won out?
Mr. Desjardins: The Laval Stadium was privately funded and for financial and logistical reasons, it turned out to be less expensive and was built out of wood; in fact it was the first.
It depends what we are aiming for from an economic standpoint. If we only think about the structure, the finished building is rather typical because our industry, for this type of structure, is still in a restarting phase.
Historically, our industry used to do this fifty years ago; you must know that in your region there are arenas and a number of churches that were built in this way; but that ended in the 1960s.
From an economic standpoint, at this point we can say that there is a 5 to 15 per cent higher cost for structural materials; but not for the building. For the building, that amount can be recovered quickly. In the case of the Fondaction Building, for the structure, there is a difference of about $100,000 out of a total of $15 million.
Given the trend towards unfinished product and the lack of requirement for finishing products, we should be thinking about the financial aspect towards the end of the building process. That is why it is economically profitable to do this over time. We are actually reinventing an industry. I would like to take this opportunity to thank government for its support, specifically Enercan which allowed us to support the professionals that needed our guidelines and directions.
With respect to the Fondaction Building, the industrial side was supported by FPInnovation researchers; the industrial side was for the development of the product. The designer received support from various programs to make the additional intellectual effort of going back to wood building methods rather than what are known as traditional building methods.
Mr. Lapointe: If I may, Mr. Brière was telling me last week that the Krueger Pavillon in Quebec City, which is made entirely out of wood, led to savings of 30 per cent annually in terms of operational budgets, including 20 per cent from an energy savings standpoint. Capitalization is one thing, but we must also include and calculate all operational costs. So that is a significant reduction.
Senator Rivard: I can only hope, if we were going to be building a new sport centre in Quebec City, that it would be made of wood. Although it may cost a little more to build, as you pointed out, we would be saving on operational costs.
Mr. Lapointe: The developers sent us a letter this morning, in fact.
[English]
Senator Cordy: I have been to the spectacular Olympic Oval skating track in Richmond, British Columbia. I believe it was constructed with killed pine beetle wood, which is quite amazing.
What is the industry doing to promote building with wood? Although wood is a natural product, it is not necessarily the first material to come to the mind of an architect or builder. You mentioned that Quebec and British Columbia have brought forth legislation to encourage the use of wood in structures to be built. Should we do that at the federal level? Legislation is one way to do that but we could also look at the use of wood in the construction of federal government buildings. What is the industry doing and what should we be doing?
Mr. Desjardins: The industry has been expanding its promotion of the use of wood in the non-residential market through a number of programs. British Columbia, Alberta and Ontario have a program called Wood Works!, which is geared to the promotion of wood non-residential building. The industry approaches the various decision makers in municipalities, as well as architects and engineers who are at the very seed of the creation of the building. Once a building is designed, it is too late to change the material. It will be made out of whatever product was chosen at the outset. Wood Works! programs have shown great success. The Richmond Olympic Oval is a tribute to Wood Works! and is a showcase of the use of killed mountain pine beetle wood. It is possible to build with it and it has alternate uses as well.
The Quebec government and industry have also created an equivalent program, which has the same mandate to develop tools, promotion, implementation and technical guides that will be required to help support the engineers. Also, the industry has been creating a number of products and materials that will be introduced into the marketplace. The industry has been traditionally geared to the lumber and paneling industry. We need to create a secondary and tertiary segment of the industry for the construction industry and materials to be used in that market. The industry has been active on that side.
Senator Cordy: Senator Carstairs is a colleague in the Senate. She is very strong on palliative care and worked extremely hard to bring a program into medical schools so that palliative care would be part of the program as people are learning about medicine. Are you going into engineering and architectural schools to talk about this new industry?
Mr. Desjardins: Absolutely. Ontario has some of the best examples of hospitals that used treated wood right from the architectural environment. We know the environment is critical for the well-being of the patients. The Wood Works! program and the Quebec program have the mandate to go into schools and various communities.
Senator Cordy: That is good news.
Mr. Binot, were your main observations from your study of the forest industry from New Brunswick, Nova Scotia and Prince Edward Island or was it Canada?
Mr. Binot: I am sorry; I missed your question.
Senator Cordy: Was your study specifically related to only New Brunswick?
Mr. Binot: I gave my expertise mainly for Eastern Canada.
Senator Cordy: That is for Prince Edward Island, Nova Scotia and New Brunswick.
Mr. Binot: Yes.
Senator Cordy: Many of the recommendations that you made or the things that you learned would be applicable to other parts of Canada. We do not really know the quality of the lumber. We do not know how good it is. You discussed setting up a research program to generate the information that is lacking. Has that research been started?
Mr. Binot: No. Consider the first point about the quality of the wood. About five years ago, I was involved in such a committee in New Brunswick. Nearly nothing is done now. We are pursuing the elementary surveys as it was done traditionally. It is not yet integrated in a manner to do this in the forest world and the forestry industries to have a good understanding of quality in the field.
Senator Cordy: We do not really know?
Mr. Binot: We have to do this, but we do not know exactly how to do it. We have only scattered information on the subject.
Senator Cordy: It seems like it is a rather important thing to know.
Mr. Binot: It is very important. Some industries are now completely limited because they are not ready to make investments. They do not have a good understanding of whether you have enough quality wood to fuel our industry in the province. It is a very difficult situation.
Senator Cordy: That is true. You need that information in order to do research on starting programs to make better quality wood.
Mr. Binot: There are two aspects. I believe the industry has a good understanding of available wood quality. On the other hand, we know a lot of research must be done. For example, I started a project on pruning softwood. My project is the oldest in Eastern Canada, except for the one in Petawawa, Ontario.
This kind of research has not been done for hardwood. Traditionally, our industry has been mainly devoted to producing pulp and paper and selling wood to make houses. It was not of a good quality and the wood was hidden. Now, we are taking the wood and have timber-framed houses where it is possible to see the wood. It has an aesthetic value, but the problem is that we do not have enough quality wood to do this.
The industry is not ready to produce these kinds of treatments because they do not know how to do it in the forest. That is why we need to do research on formative pruning, on how you must cut the branches during the life of the tree so that you do not cut too much. Otherwise, you will decrease the productivity level of the tree. For example, what size of branch must be cut to alleviate the problem of knots? The industry has identified some subjects such as commercial thinning, pruning and formative pruning. We have done almost nothing on this subject.
Senator Cordy: Therefore, much work must be done?
Mr. Binot: Yes. As I said before, hardwood silviculture to grow big trees ready to be cut can take 100 to 150 years. That means we must do this as soon as possible to be ready to face the rapidly changing world. We are facing the problem of global warming. We know that climate conditions will be better for hardwood growth, but we must take this opportunity to promote the growth of good, healthy trees.
Senator Mahovlich: Should we privatize all of our forests to solve some of these problems? They need good management. Should we have more tree farms across Canada privately owned?
Mr. Binot: That is a tough question, but an important one.
We have different models. I am of Belgian origin where we have a lot of productive forests. The same is true of France.
Senator Mahovlich: Finland, too? Finland has a lot of forests.
Mr. Binot: No. I am trying to answer your question with the background of hardwood silviculture. Finland is mainly softwood.
Senator Mahovlich: It is more like Canada.
Mr. Binot: More like Northern Canada.
Senator Mahovlich: Yes.
Mr. Binot: If you are considering hardwood, Europe has a long tradition of many public forests that are well managed by foresters of the ministry. It is a different approach. It is not necessarily certain that private forests would be better managed.
We are now facing a situation in New Brunswick where we have a lot of private forest landowners. They are not always aware of how to best manage their forests for the industry. Big companies like Irving have been proactive because it is a question of money for them. They need high quality wood to be able to open new markets.
Senator Mahovlich: Do Europeans use wood in their home building more than we do in Canada?
Mr. Binot: I believe Europe has a new tendency to do so. Some years ago, I was in Luxembourg near the borders of Belgium and Germany. They are building some schools and public buildings completely with wood, and their energy efficiency is high. Therefore, it is done.
Mr. Desjardins: The residential market in Europe generally and in the U.K. builds about 15 per cent of its residential houses in wood. The rest are steel, concrete, brick and masonry. France is about 4 or 5 per cent; Finland is about 20 per cent or 25 per cent. North America is at about 95 per cent.
We do not want to pretend the numbers are higher, but to give you the balance. Mr. Binot was talking about non- residential markets. We are very weak there. We are at about 5 per cent to 15 per cent, depending on where we are in the country, B.C. obviously being higher, Alberta being a bit higher, Ontario and going down. Right now, Quebec itself is at about 15 per cent for the non-residential sector. Growth for us will be in the non-residential. We are inspired by what the Europeans are doing because some of their non-residential buildings, for energy efficiency reasons mostly — and that is the driving force — are going back to mostly wood. That is what is pushing them.
Senator Mahovlich: It is warmer.
Mr. Desjardins: It is warmer, it holds energy and there are fewer thermal bridges through the envelope. I was in Europe last week, and all the buildings I toured involved passive energy concepts, lower energy and energy efficiency, and they use wood for that attribute.
Senator Grafstein: I thank all the speakers for their excellent presentations. I have spent a lot of time on the softwood lumber battle, and it goes on. I was in the United States last week, and governors are starting the softwood lumber battle again. It occurred to me how ironic it was that Canada had spent in excess of $1.4 billion for legal fees over the years, yet your research budget is $100 million a year. There seems to be a disconnect between the two.
I want to talk to you about your fundamental funding and follow the money. In every project, I always like to follow the money. You get approximately $100 million in an operating budget. Where exactly does it come from?
Mr. Lapointe: Can I go back a few years?
Senator Grafstein: Sure.
Mr. Lapointe: In 2005, the industrial membership money was almost 50 per cent, at the $45 million level. Because of the crisis, it is now down to 8 per cent or 9 per cent. This year and next year, the major funding will come from NRCan, Natural Resources Canada, at a level of about $50 million. The industrial component will be around $10 million. The Quebec and the B.C. governments share the rest. There are smaller components from Manitoba and Alberta. That is the breakdown of the money.
Senator Grafstein: What was the size of industry sales last year, including all sources of wood?
Mr. Lapointe: I would have to get back to you on that. I can tell you, for example, that in the month of January alone, the newspaper machine market was down 30 per cent.
Senator Grafstein: I know the markets are down and that pulp is down.
Mr. Lapointe: I will get back to you with the number.
Senator Grafstein: I ask that because I think it is important, as we move into the new economies, that we take a harder look at how money is being spent and how it is being allocated essentially for research and applied applications. The key to the new knowledge industry, the new technology industry and the new green industry, is the transition from the old to the new. Then it goes to research and then it goes to chain supplies. There is nothing new here, quite frankly. You have articulated it very well.
It struck me that we are being dingy and mingy. This is a major industry in Canada . I think it is the largest industry in Ontario by size. It outstrips the automobile industry, yet the amount of money being invested by the governments in comparison is pathetic.
How can we help you deal with this question of funding? For example, we just had a debate in the Senate today about joblessness and the economic action plan. How much money have you received from the economic action plan?
Mr. Lapointe: We received for two years about $140 million.
Senator Grafstein: From the federal government's action plan?
Mr. Lapointe: From the federal government, for this year and next year.
Senator Grafstein: When you talk about your operating budget of $100 million a year —
Mr. Lapointe: Fifty per cent came from the federal government this year.
Senator Grafstein: What will be your operating budget this year, then?
Mr. Lapointe: The problem is that with the action plan money, there is capital money for a major plant, which flows through FPInnovations. That is why there is a difference in numbers.
In the operating front, $50 million comes from the federal government. There are other small flow-through projects.
Senator Grafstein: I think it would be helpful for the committee to have an analysis of the capital funding that you received, the source and application of those funds, broken down in terms of basic research, applied research and supply chains. I am a big supply chain man. It would be helpful for us to see how we can re-orient some of the thinking here with respect to allocating funds to your projects.
Mr. Binot, how much funding have you received this year for your research from the federal and provincial governments?
Mr. Binot: Only for research?
Senator Grafstein: Yes, research. How much?
Mr. Binot: It could be around $150,000.
Senator Grafstein: I rest my case.
Senator Finley: I will try to ask some non-political questions. I am interested in some of the more esoteric applications that you have briefly described, such as the commercial applications for nano-crystalline cellulose. Canada has a number of primary manufacturers in aerospace and automotive that are heavy users of composites and coatings. Could you tell us what kind of collaboration you have had with some of these primary manufacturers and some of the applications that may be underway?
Mr. Berry: We have just developed an application network. This is a business-led network, centres of excellence that are actually being provided by the government again. For example, it includes Bell helicopter and the BioAuto Council, which represent two of the primary industries. Medical companies are also involved in this particular network. That is one route by which we are building the ability to develop applications.
However, the best route we have is developing partnerships. Within FPInnovations, we have a pilot facility such that we can produce this material in relatively large quantities. This is allowing us to give material to our partners under material transfer agreements. They are then able to begin developing the application and see what it can do.
For example, we are working with some of the individuals in the varnish sector, a basic coating application that is close to our hearts because it is used on wood products. Working with the partners, we have been able to see changes in the properties, changes in strengths and reductions in abrasiveness. We are taking that kind of information and promoting it up the value chain into the automobile and aeronautical centre. We are working on two levels, developing these applications and partnerships.
Senator Finley: You are getting a good level of cooperation from a number of primary manufacturers who are already the recipients of fairly sizeable amounts of federal government money, at least, in research and develop.
Mr. Berry: Absolutely. We are ensuring that we develop what we call ``a value proposition'' around the change in the properties and the cost points versus the price points. We have a marketing team working on that presently, to get a sense of what the critical parameters are in making improvements with this material.
They would like us to open the door as wide as possible when talking about this material. They are really interested in trying it out and seeing how it can be used. We are seeing that with plastic suppliers, and are working with a couple of companies presently. They want to get this material as quickly as possible.
Senator Finley: I have a fairly simple question. Perhaps it is more cosmetic than anything. When we saw good hardwood described vis-à-vis bad hardwood, it seemed to be the shape of the stand. Does that really matter? In other words, does the quality of the hardwood that is described to us here affect the quality of the nano-crystalline cellulose?
Mr. Berry: No, not at all.
Senator Finley: So you can use poor hardwood?
Mr. Berry: Yes. We are presently working with our pulp, but we reckon we can use fines material from the process; we can improve the paper product — that may answer another question that was asked — as well as make this material. We can actually improve the value out of a complex to a greater degree than we have done in the past. To answer your question, no, it is not critical in relation to the quality of the material we produce.
Senator Finley: I have one last question. I am really excited about everything you have said. I am particularly interested in these particular applications, obviously because of the way it can be woven into many other things that Canada does.
Where, in the world stage, is Canada in silviculture and this nano-crystalline technology?
Mr. Berry: I can tell you, in regard to the nano-crystalline cellulose, we are number one in the world. We have a lead. We are the only ones in the world making the kinds of material we are talking about. We are making different grades of material. Some of the critical aspects of putting it into the system are its dispersibility and heat stability. We are developing ways to improve those two properties of the material. I would say, both in intellectual property and in terms of demonstration, we are ahead of the world in regard to this technology.
Senator Finley: Great.
Mr. Lapointe: We are months in advance of the competition, and we are four years in advance of the United States.
Senator Finley: Congratulations. It is nice to see Canada leading the world.
Senator Grafstein: There was another question I wanted to raise that was not in your material, but you raised it, Mr. Berry, an important question dealing with carbon.
We have heard all about the ethanol problem as it applies to agricultural lands and the cost-benefit analysis that has been done there. In the United States, many of the ethanol plants are going bankrupt and closing down because the footprint is much greater than the output.
Mr. Berry: Yes.
Senator Grafstein: When I was in New Mexico, we spoke to the top experts in the research branch of the department of energy there, and for the first time I heard — this was a year ago — that forest biomass was going to be an increasingly large source of carbon-sensitive ethanol.
Could you tell us what you have been doing on this particular front and where it stands now?
Mr. Berry: Definitely one of the aspects of what is intended with the CRIBE project is to look at the ability to convert biomass into ethanol. One of the by-products of an NCC plant that is using, we hope, a waste material, is a secondary sugar stream that can be converted to ethanol. We are looking at actually producing several products in one small complex that will produce ethanol, as they call it second-generation ethanol, rather than doing it from agricultural residues.
We believe that with these plants we will demonstrate the potential to produce ethanol and have that in the marketplace.
Senator Grafstein: Are you the only people doing this in Canada?
Mr. Berry: That particular aspect of it, yes, but there are others who are looking at ethanol production from cellulosic materials. There is a company looking at corn stovers, for example. It is more an agricultural waste. It does not use the corn itself but the residue from that. That is one example of a company that is doing it. Lignol would be another example. There are a number of companies looking at separating out the components in the wood.
In my introduction, I explained that we try to separate out the components. There are those that are trying to do that, and one of them is converting the cellulose into ethanol. The problem is that the economics are questionable because, surprisingly, pulp, although it is much maligned, is actually a relatively good product in terms of profitability and the margin it can generate.
Senator Grafstein: Someone mentioned to me biomass coming from seaweed. There was the suggestion that someone should go into the Atlantic regions adjacent to Canada, within 200 miles, build an island made of seaweed, and that would concentrate the source and you could then produce it from that particular source. There are things we can do if we are creative. I commend you on this particular work because this part is quite important to us in terms of energy sustainability.
Mr. Berry: Thank you very much.
Senator Mercer: There is a plant in Nova Scotia that does harvest seaweed on an ongoing basis. If you are interested in that, the products they produce are exported all over the world. There is one country in the world where it is not used, though: Canada.
The Deputy Chair: On that note, I thank our witnesses for coming here, giving of your time and being so open with what you had to say. This has been a very good meeting.
(The committee adjourned.)