Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 8 - Evidence - September 28, 2010
OTTAWA, Tuesday, September 28, 2010
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.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: I see that we have quorum. I declare the meeting in session.
Welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry.
[English]
I am Senator Percy Mockler from New Brunswick, and I am chair of the committee.
Today, honourable senators, we welcome three witnesses. First, we have from the National Research Council of Canada Ms. Patricia Mortimer, Vice-President, Technology and Industry Support, Industrial Research Assistance Program; and Dr. Roman Szumski, Vice-President, Life Sciences, National Bioproducts Program.
[Translation]
To the left of Mr. Szumski, we have Roger Gaudreault, Director General of Research and Development at Cascades. Welcome everyone.
The committee is continuing its study of the current state and future of Canada's forest sector —
[English]
— and the future of Canada's forest sector, looking more particularly at efforts in research and development.
Before I ask the witnesses to make their presentation, I would like to start by asking the senators to introduce themselves.
[Translation]
Senator Robichaud: I am Senator Fernand Robichaud, from New Brunswick.
[English]
Senator Fairbairn: Joyce Fairbairn from Lethbridge, Alberta.
Senator Mahovlich: Frank Mahovlich from Timmins, Ontario.
Senator Plett: Don Plett, Landmark, Manitoba.
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
Senator Eaton: Nicole Eaton, Toronto, Ontario.
The Chair: Honourable senators, I would like to inform you that our witnesses today have handed to our clerk copies of their presentation in one of the official languages. That said, is it agreed that the presentation be distributed now and that the translated presentation be sent to committee members once it is available?
Hon. Senators: Agreed.
[Translation]
The Chair: Thank you, honourable senators.
Witnesses, we would like to thank you once again for accepting our invitation to appear.
[English]
I would now invite you to make your presentation. I have been informed by our clerk that the first presentation will be made by Dr. Szumski, which will be followed by a question and answer session.
Dr. Roman Szumski, Vice-President, Life Sciences (National Bioproducts Program), National Research Council of Canada: Thank you for inviting me to present to the committee today.
The NRC is an agency of the Government of Canada, and our mandate is set out under the National Research Council Act. Under the act we are responsible, amongst other things, to undertake, assist or promote scientific and industrial research in different fields of importance to Canada. The NRC is comprised of 20 research institutes and national programs, spanning a spectrum of disciplines from aerospace and agriculture to ocean engineering and photonics. We also offer an array of technology development and commercialization services to our partners and clients. Later this evening you will hear from NRC's vice-president of technology and industry support, Patricia Mortimer, who will tell you about the Industrial Research Assistance Program, IRAP, and how it intersects with and supports Canada's forest industry.
I am here to talk to you about how collaborative research and development initiatives between industry and government can create new opportunities for Canada's forest industry. I will tell you how we are adding value to existing forestry operations, discovering eco-products with rapid commercialization potential, and contributing to sustainable energy and opening up new markets in Canada and overseas.
I note that in your report on phase one of this study, it says that ``the committee will look at how to improve R&D efforts in the forest sector in Canada with a particular emphasis on how to speed up the commercialization of products resulting from R&D initiatives.''
I am therefore certain that you will be interested in our experience with the National Bioproducts Program, NBP. Not only does this program work with the forest industry to develop sustainable and valuable products, but rapid transfer to industry has always been top-of-mind for this collaborative program.
NBP is a joint initiative between the NRC, Natural Resources Canada and Agriculture and Agri-Food Canada. It is a national program launched by the NRC in 2007 that contributes to two Canadian priorities — sustainable energy and the environment. Our specific research projects have been designed with the NRC's competencies and the Canadian landscape in mind.
Scaling-up our research from the national laboratories to the private sector is a critical part of the program. We have a three-to-five-year target within which to begin transfer of these new technologies to Canadian industry. That is why our collaborative model, working with a variety of partners including government departments and innovative Canadian SMEs, is critical to the program's success. This program structure allows us to transfer new technologies to end users fast.
The NBP has an overall budget of $21 million in the 2008 to 2011 time frame, and our partners make approximately equal contributions to the program.
Before I tell you about the project to produce novel chemicals from forestry by-products, I would like to introduce you to three other NBP projects that are also achieving measurable results.
The NBP consists of four projects. Number one is the forestry project.
Project number two is developing biomaterials for the automotive, aerospace, construction and plastics industries. With this project, we aim to develop sustainable technologies and processes, using primarily agricultural fibre to produce lightweight, cost-competitive biomaterials for automobile panels and aerospace and aircraft parts.
We also work to produce environmentally friendly versions of a class of chemicals called urethanes that includes foams, adhesives, sealants and coatings. Using biomass from otherwise waste agricultural material — from flax, for example — biomaterials are being developed as an alternative to traditional petroleum-derived products for automotive, aerospace and construction companies.
Project number 3 is developing clean energy and fine chemicals from landfill, where we work in a similar manner, starting with municipal waste, to develop sustainable energy resources including biogas and chemicals that go into plastics and other components.
NBP project number four is developing biofuel from algae. You may be seeing a pattern in these projects. Each one is focused on creating value from what is otherwise viewed as waste. Creating biofuel from algae is no exception. Algae are like plants; they take up carbon dioxide and use sunlight. Through the process of photosynthesis, they can create oils, proteins and other useful compounds that can be converted into automotive fuel or even jet fuel. The importance of this project is that it does not compete with human food stock and does not require arable land. The CO2 required to grow the algae can be sourced from CO2-emitting power plants or industrial processes — CO2 that would otherwise be wasted.
You can see that we seek to add value to every step along the production process. Using a system like this, nothing can be called ``waste.''
Our first NBP project, which investigates new ways to produce value from Canadian forest biomass, also does just that. In this project we are working on lignocellulosic materials derived from forestry, and we work with Agriculture and Agri-Food Canada and FPInnovations on the project. I am sure you have already heard of lignocellulosic biomass from other witnesses, probably in the context of ethanol production. This scientific term refers to non-lumber by- products from the forest industry, such as wood chips, and this by-product can be used to make valuable products beyond ethanol.
We are working in collaboration with FPInnovations to use forestry-derived lignin from kraft pulp mills as a substitute for petroleum-derived phenol in certain types of resins called phenol-formaldehyde resins. The technical objective of this project is to achieve a 50 per cent substitution of lignin for phenol in resins for plywood and oriented strand board while still maintaining the bond strength required by CSA plywood adhesive standards.
The work will also include integrating single-walled carbon nanotubes, modified resins, into wood products and testing it. I should note that the application of carbon nanotubes to forestry really is at the frontiers of science. The use of carbon nanotubes improves the mechanical and physical properties of oriented strand board. It is an exciting innovation. We are the first to be using carbon nanotubes in forestry, and a joint NRC-FPInnovations U.S. patent application has been filed.
The research is linked via our collaborator, FPInnovations, to a lignin technology centre in Thunder Bay, which was recently established with funding shared equally by NRCan and the Government of Ontario Centre for Research and Innovation in the Bio-Economy, known as CRIBE. This initiative includes a pilot plant that by January 2011 will be able to produce kraft lignin at a scale of 100 kilograms per day.
In addition to providing sufficient lignin for commercial-scale trials, the pilot plant will also provide preliminary data and operating data that will be used to finalize the design of a full-scale 50-tonne-per-day demonstration plant that is being proposed for the AbitibiBowater mill in Thunder Bay. NBP project number one — substitution of lignin in pf- resins for plywood oriented strand board — is a near-term application to exploit the volume of lignin that will come out of these plants when they are finished being constructed and are up and operating.
The chemical furfural can also be derived from biomass from forests. Furfural is used as a solvent in the refinement of petrochemicals, to extract dienes, which are then used to make synthetic rubber and other plastics. They can be used to make solid resins that are used in fibreglass manufacturing, aircraft components and automotive brakes.
We are working to improve the overall yield and economies of furfural production from hardwood forestry sources. Our work not only includes conversion of forestry biomass of target chemicals, but the integration of the process into pulp mill operations.
Delivering on our promise for short-term impact, this multi-faceted NBP project, currently in its third year, has already produced two patent applications — one for the preparation of furfural and the other for the carbon nanotube application that I mentioned — and these innovations will be piloted in the Thunder Bay operation.
In conclusion, the National Bioproducts Program is demonstrating how, in the research community when working together, we can have an impact for the forest industry in a short time frame. Building value from existing Canadian forest biomass is a promising pathway to follow because Canada is blessed with an abundance of natural resources. This is our natural competitive advantage that we would like to build upon to create a new generation of prosperity.
It has been a pleasure to share with you an overview of some of the initiatives that the NRC is involved in to support the Canadian forest industry.
The Chair: Now we will hear from Ms. Mortimer.
Patricia Mortimer, Vice-President, Technology and Industry Support (Industrial Research Assistance Program), National Research Council of Canada: As you heard from my colleague, NRC has a number of research institutes and programs, of which the Industrial Research Assistance Program, or IRAP, is one. I would like to give you an overview of our IRAP program, how it works, and specifically look at how IRAP has been supporting and interacting with the forest industry.
IRAP has existed for 60 years. Throughout that time, the program has focused on helping small- and medium-sized Canadian firms with their own research and development programs and related activities. There are some 19,000 firms in Canada that are doing some form of R&D activity and have less than 500 employees. These companies make up IRAP's client base.
The program has a two-pronged approach to how it delivers direct support to firms. The first is through the provision of technological or business advice, and the second is with possible funding for the labour costs associated with specific technology development projects.
Advisory services are delivered by a team of technological and business-experienced professionals located in 135 offices across the country. Many of these 240 field staff are co-located in business or technological centres such as university technology transfer offices, incubator facilities or other innovation and R&D organizations.
The adviser, known as an ITA, is typically in a third or fourth career and has experience in running businesses or entrepreneurial-type R&D. They are hired from various industrial backgrounds, but they can also call on their colleagues from across the country so they can expand a client's access to networks and expertise. ITAs work directly with firms where they live, forming a close, trusted and long-term relationship, providing advice, support and sometimes financial assistance.
The financial support provided by IRAP is in the form of a legal ``contribution agreement.'' This type of arrangement allows IRAP to more closely manage the client's R&D projects and track deliverables, thus allowing IRAP to reimburse the firm for labour costs only after the costs have been incurred and the deliverables have been met. These contributions are in amounts anywhere from a few thousand dollars to $1 million, depending on the size and the complexity of the research project.
This funding is only part of the cost of the research, and the company must share in the risk. Typically, a firm will contribute 60 per cent of the overall project costs. This approach allows IRAP to either help the company stretch their R&D budget, or it may encourage new or increased investment in R&D by the firm.
With our historic A-base budget, IRAP works with about 8,500 firms a year. Most of the firms have received only advisory service as part of their relationship with IRAP. In some cases, an ITA will work with a qualifying firm for several years before they are at the point where they are ready to apply for a funded project. It is the program's philosophy that when firms receive advisory services along with financial assistance, they will be better prepared and more likely to succeed in achieving their technical and commercial goals.
In addition to this direct firm support, IRAP also indirectly supports firms through arrangements with organizations that provide support to these smaller firms in Canada.
With these organizations, IRAP may have identified where they can provide complementary services that will assist with their delivery either in funding or with expertise. Some examples are the University of New Brunswick Wood Science & Technology Centre and the Prince George Regional Forest Exhibition Society where we have arrangements and projects under way.
Regardless of whether IRAP support is direct or indirect, the program provides services to all industrial sectors and does not target one sector over another. It might be said with all the industrial sectors that IRAP is both reactive and proactive. We listen to the needs of today within the community and bring our strengths and resources to the table to make a difference and, we hope, to influence the chances for success for firms for the future.
In addition, the ITAs remain active in their sectors, so they are constantly monitoring for new trends and emerging technologies that will assist their clients for future projects by making suggestions as part of their regular counselling engagements.
With respect to IRAP programs and activities with the forest sector, of the previously mentioned 240 ITAs across Canada, 56 are working in communities with forestry sector firms. We have ITAs embedded in organizations, such as FPInnovations in Vancouver in their Forintek division, as well as the forestry faculty at the University of Moncton in New Brunswick.
As our program is not sector specific, our definition of forestry industry may differ slightly from the definition used by others who have presented here. We look at this activity from end to end — the full value chain. We consider not just the harvesting and managing of our forests but also what we do with the end product, where we sell it and how we modify it. We may also look at the manufacturers creating the products that feed into this industry. We look at the overall health of the company and take a holistic approach to its development. It could include things like LEAN manufacturing mechanisms that can be applied, for example, to improve the heating efficiencies of a mill.
Over the last five years, IRAP has provided advisory services to 203 forestry firms and funded an additional 109 forestry firms, for a total of 169 funded projects. The difference is some companies may have multiple projects. IRAP has provided a total of $10.2 million in funding to these projects over those five years.
When I was preparing this presentation, I did what many of our clients do. I decided to seek the advice and guidance of ITAs across the country and asked them what the key trends are and where the research is happening these days. Given the enthusiasm of our staff members who work in the sector, I received many responses. There were a number of common themes that show the sector has similar issues regardless of where you live in Canada. Biomass and biofuels, chemical extraction and new fibre composites and wood products were dominant topics. The efficiency of harvesting and the transferability of other machinery to accommodate this sector were also cited. Of course, the investment in R&D with an end view of developing higher margin forest products was the primary issue.
With the recent economic downturn, a common activity on both the advisory and the funded sides has been improving the efficiency of traditional operations and decreasing overall costs. LEAN manufacturing advice and consultants supported by IRAP to review existing operations were extended to a number of firms.
Another common area where IRAP has been supporting the forest industry is in their acquisition of global knowledge. As such, we have supported firms in the past that needed to travel to international trade or learning conferences to develop their contacts or networks or identify new technologies that could be adopted to improve their productivity.
Canada continues to have dominant SME players in the forest industry. Nexterra, an IRAP client on Deloitte's 2010 list of Canada's 50 fastest growing technology companies, is considered a leader in biomass heat and power systems. Another successful firm is Xylon Biotechnologies in B.C. in the area of extraction of chemicals for commercial application with pharmaceuticals, cosmetics and pest repellents. Another example of a successful firm is Équipement Comact in Chicoutimi, which is manufacturing machinery for the pellet industry through a technology transfer project with France. This project, which is currently in progress, is already generating sales for the firms.
With respect to the budget, normally IRAP's A-base budget for firms is close to $86 million. We are currently operating at more than double that funding capacity for firms as a result of supplemental funding received through Canada's Economic Action Plan. IRAP has been collaborating for the last two years with FedDev Ontario for communities affected in Southern Ontario to deliver additional funding. Details of our budget for the current fiscal year as well as comparative figures over the last several years are provided in the briefing materials that I am leaving behind for your review.
Canada has many strengths and opportunities, and certainly IRAP remains committed to working with SMEs in the forest sector where we possibly can.
In closing, I would like to thank the committee for this opportunity to present these perspectives from NRC-IRAP, and we welcome your questions.
[Translation]
The Chair: I will now ask Roger Gaudreault from Cascades to make his remarks, and then we will move on to questions.
Roger Gaudreault, Director General, Research and Development, Cascades: Mr. Chair, first I will spend a few minutes talking about Cascades, and then I will make some recommendations.
Cascades' strategic vision is to promote a culture of entrepreneurship and innovation, and to continue our efforts in the backward integration of the recovery and conversion sectors. Cascades was founded in 1964, and this photo shows the three Lemaire brothers during the inauguration of the Bixi system in Montreal, as well as the introduction of Cascades tissue, in 2005.
Cascades currently employs 12,500 people in approximately one hundred production units around the world. In the packaging sector, we have boxboard, containerboard, specialty products and tissue paper. We also have a hand in energy with Boralex.
Cascades is a pioneer when it comes to sustainable development and the environment. Consider these statistics: 2.1 million short tons of fibre are recycled and 73 per cent of our raw material is made from recycled products.
Cascades uses 9.7 m3 of water per metric tonne of paper, which is six times less than the Canadian average of 60 m3 of water per tonne, and that includes the cooling water.
As far as sales and profitability go, Cascades has posted $4 billion in sales for the past five years, and perhaps a bit more. You have the different sectors we are involved in. Our operating income before depreciation and amortization (EBITDA) totalled $465 million in 2009. So Cascades has proven itself to be very profitable in recent years, despite the difficulties faced by the pulp and paper industry.
In terms of R&D, we have approximately 45 employees working out of Kingsey Falls. Cascades has the only privately owned pulp and paper research centre in Canada; all the others have closed down over the past two decades. There is FPInnovations-Paprican, a non-private research centre serving the Canadian industry as a whole. We are the only ones that have continued to grow over the past 20 years.
Since 2006, we have spent between $35 million and $47 million on R&D, so an average of $40 million a year. As for top 100 positioning in Canada, we rank somewhere between 50th and 55th place, and that includes industries of every type.
Cascades has developed an innovation management system. We first defined what innovation was. We see innovation as a new product, process or method —in terms of marketing, operating procedures or financial activities —that gives Cascades a competitive edge. By our definition, an innovation must be the first of its kind in a given country or continent, or in the world. It is important to distinguish between an invention, a technical success, and an innovation, a commercial success.
Here, you have the innovation management system we developed. It was well received by Cascades' employees and management. In 2008, one year after launching our innovation management system, we incorporated a sustainable development filter, which is a filter guideline to ensure that our innovations are sustainable.
There are 60 good ideas that filter down into 7 good projects that lead to one innovation. That means we need to generate a lot of ideas in order to innovate.
At Cascades, we keep track of our innovations. Here, you have a graph showing our innovations, those that respect the definition I gave earlier. These are solely marketing and product innovations; this is not a complete list. The graph shows that, in recent decades, Cascades has increased its innovative capacity exponentially.
I will now give a few examples of sustainable innovations. First, you have the functional barriers. In 1994, we developed an innovation for the humidity barrier for paper roll packaging. And in 2009, we launched NorShield, a waxless box, wax being a pulp and paper contaminant. We have also implemented a marketing innovation for our line of tissue paper products, as well as an innovation in fine paper, which is made of 100 per cent recycled content. Note the Biogas logo; we use biogas that comes from 13 kilometres away from the mill. Biogas is used to produce 85 per cent of the energy we currently use at our Saint-Jérôme mill.
We launched a new product this year, our intelligent paper. For the time being, we see it as an invention because it must post strong sales over a number of months before it can be considered an innovation.
This is a quote proving that our innovation management system is at the forefront of North America's pulp and paper industry. You can also see that our innovations have been recognized a number of times.
As for Cascades' recommendations, one thing is certain. Despite a consensus that R&D and innovation are the key to the future, unfortunately public companies such as Cascades are judged based on short-term results. An institution such as the Senate can intervene to correct that inconsistency by making it more appealing for companies to pursue R&D activities that lead to new products and innovations.
At Cascades, we believe in R&D, and that is why we can continue to invest approximately $40 million a year in the short term when we received, for example, just $8 million in tax credits in 2009 — $6.3 million from the federal government and $1.9 million from the province — through a program that, in our view, does not do enough to encourage innovation. We recommend increasing the funding for existing programs, which are both appreciated and proven.
It is the scope of the funding that does not do enough to really promote R&D and innovation. Therefore, we recommend adding two layers of incentives based on the features of the target projects. That is to say that the normal level of R&D spending should in the future give rise to a tax credit rate of 35 per cent — which is the case for small to medium-size businesses but not large ones. So that is our first recommendation.
Our second recommendation has to do with spending on high-tech projects. That type of spending should entitle businesses to a tax credit rate of 50 per cent. Spending on sustainable R&D and innovation projects should entitle businesses to a tax credit rate of 75 per cent. Why 75 per cent for sustainable innovations? Our recommendation is justified by the fact that even if the technology ensures competitiveness in the short term, it is not an end in and of itself. However, a business's ability to survive in the long term, which is tied to sustainable development, must be made a priority and further enhanced.
For example, such a program would encourage Cascades to:
develop new biotech processes and products
promote material applications that use recycled paperboard to make renewable billboards and furniture, for example — there are tremendous opportunities in that area;
develop sounder, more efficient recycling processes in areas such as recovery, bleaching and cleaning, which would lead to new products with adequate and stable features, in an environment where raw materials are increasingly variable and complex;
develop food packaging made of recycled papers — we do that already, but more focus is needed;
address issues related to the potential migration of nanomolecules and nanoparticles in food — in other words, nanotechnology, an area with incredible promise for the future but very little consensus and numerous concerns regarding the migration of these molecules to food. There are a great many questions that need to be answered;
develop new technologies aimed at reducing the water used by paper manufacturers. Cascades is ahead of the pack, using six times less than the Canadian and American average, but obviously we must continue to make progress to that end in order to achieve further energy savings; and
implement training programs to develop certain skills, such as radical innovation and ideation, so as to ensure true competitiveness on the world stage.
In our view, innovation equals profitability, but sustainable innovation equals sustainable profitability.
[English]
Senator Eaton: Thank you for your presentations.
We are very interested in the innovations in this report and what we can do to help the forestry industry reinvent itself in Canada away from pulp and paper and into other things.
In the course of doing this report we have heard from quite a few universities. What is your tie-in to research with universities? For instance, I think of Guelph University which is doing a lot of research.
Dr. Szumski: The project I described in Thunder Bay engages the university there as well. There are academic links in the projects that we undertake. We are trying to create research threads with this national program that link work that could be going on in a university with what goes on in the government and ultimately link a source of biomass to end users. We also work with the construction industry, for example, or the automotive or aerospace industry so that we can begin with the engineering specifications in mind and ensure that the entire research thread works and connects the value chain that could exist between the biomass producer and an ultimate user. There is very active collaboration. I did not specifically mention it in my presentation, but engagement with universities is a common feature in all of our programs.
Senator Eaton: Do you actively go into the universities where you know they are doing research, or do they come to you looking for grants, support and help?
Dr. Szumski: We do not provide grants. We are an R&D organization that does R&D, so we find each other as collaborators. The scientific networks tend to know who the experts are and where they are, and they tend to form naturally around a project. There is an opportunity where a program — for example, the NBP within the NRC — is known to the academic community because it is relevant to that community. The community will be aware of it and connect to it.
Senator Eaton: Through the scientific networks in universities and you people, is there a time frame where you start working together — thinking about the hockey stick — where you go from research and development into commercialization? Is that too much to ask? Are they so different for each product that you cannot or is there an average time?
Dr. Szumski: The time frame depends on the technology and the industry. As you know, the drug development industry takes about 15 years to go from research to a commercial product. Agricultural biotech, new varieties of plants, take 10 to 11 years. The technologies we are talking about here we anticipate somewhere in the range of a three- to five-year time frame from the research to the point where the technology is ready to transfer to industry. Commercialization happens, obviously, at the industry phase. Industry does the scale-up, the ramp-up and the marketing, and all the pieces that go into innovation are separate from invention. However, depending on the technology area, the shortest time frames are measured in one year and the longer time frames, depending on the industry, can be up to fifteen years.
Ms. Mortimer: The IRAP program uses university researchers quite a bit as advisers, sources of technology for small businesses. We have become aware of the technology because we have ITAs actually located in the technology transfer offices of universities so that we become aware of what is there. Given that the ITAs are also connected by a network, you do not just have to deal with the research being done, say, in New Brunswick. You would have access to what is being done in other universities with the same sort of research focus. Therefore, IRAP is a lot closer to market. This is with actual companies that are trying to develop products. The research is very near term, sometimes contracting-type research as opposed to some in the biotech program that is a little further down the line.
Senator Mercer: Thank you for your presentations.
Mr. Gaudreault, I would compliment you on the quality of your presentation. I have a couple of simple questions.
In the page of your presentation where you showed your R&D team, on the next page you talk about the numbers, the amount of money spent on R&D, Canada's top 100 corporate R&D spenders. I am curious about the final part of that slide where in 2009 there is a zero dollar amount.
Mr. Gaudreault: It is just that the number is not out yet, but it is about $35 million.
Senator Mercer: That is down from $55 million in 2008.
Mr. Gaudreault: We had $47.2 million in 2006.
Sorry. On this graph you see the rank. The caption shows that between 2006 and 2009, we spent $40 million per year on average. That is clear. In other words, we are ranked between number 50 and number 55 in relation to the top 100 Canadian R&D spenders.
Yes, we have less spending in a sense. The number in 2006 is $47.2 million, 2007 is $44.5 million and 2008 is $37.6 million. For 2009 we do not know the exact number yet, but it is about $35 million. I am waiting for the final number.
Senator Mercer: Can we assume that the decrease is a reflection of the current economic situation? Is it because we are in an economic downturn or recession? Is that why the number is not as high as it has been?
Mr. Gaudreault: Yes. We have closed a couple of mills, but 2008 has also been a more difficult year. Even though Cascades has been able to — as you have seen — get good results, yes, 2008 and thereafter have been challenging.
Senator Mercer: That leads me to my final question. You closed one mill.
Mr. Gaudreault: A couple of mills.
Senator Mercer: Where were they? You can get back to us and tell us.
Mr. Gaudreault: Yes.
Senator Mercer: Based on your current operation, how many total employees does Cascades have across Canada?
Mr. Gaudreault: In Canada, we have 8,000 employees.
Senator Mercer: Is there no business in South America?
Mr. Gaudreault: South America, no, not us.
Senator Segal: I have one brief question for each of our guests.
With respect to the National Bioproducts Program, I was not clear, Dr. Szumski, on the numbers. Your document and your statement said that $21 million was related to that program; there were partners, the National Resources Canada and Agriculture and Agri-Food Canada; and they contributed equally. Does that mean they each contributed seven or twenty-one?
Dr. Szumski: That is down at the project level and you consider the contribution from either the other government departments or from industry or from universities engaging with us. It approximately doubles the investment that we are making as the NRC.
Senator Segal: The 21 becomes 42, if I understand correctly. I am trying to get a sense of quantity.
Dr. Szumski: That is right.
Senator Segal: That is helpful.
[Translation]
Senator Segal: Mr. Gaudreault, one of your recommendations would be to increase tax credits. If the government were to do that one day, do you think that would increase the amount that Cascades and other companies could invest? I would think that your current investment decisions are based on your company's economic needs: profitability, importance, shareholders and so forth.
If the government does as you suggest, are you saying that would create the conditions needed to increase R&D investment by the private sector? If I understand correctly, that is what you are saying.
Mr. Gaudreault: Yes, it is.
Senator Segal: You have no hesitation about that.
Mr. Gaudreault: Given the discussions we are having, it is clear that innovation is part of our future, it is vital for us. As things stand now, we focus on innovation because we believe in it and we have no choice. But we are sure that access to any additional funding would give us even more incentive, allowing us to improve and expand our development.
Certain products are becoming more and more sophisticated. There are problems with respect to nanotechnologies, which are much more complex and require much more research and development. We recently launched a product. We are in the process of developing the new generations, and not only are these products increasingly sophisticated, complex and so on, but they also affect human health. More money is needed to produce innovations. For the people I have spoken with internally, that is definitely something that would serve as an additional incentive for us. But we do already invest a fair bit in research and development.
Senator Segal: Are you saying that the amount of investment is now limited by the rate of tax credits? Are you able to tell us that?
Mr. Gaudreault: We have $4 billion in sales. We invest $40 million in research and development, and we were supposed to receive $8.2 million for 2009. Of that $8.2 million, $1.9 million comes from the province. It is a reimbursement that we receive and that we can reinvest in R&D, among other things. But at the federal level, it is an amount that would serve to reduce the taxes payable when applicable. Right now, Cascades could use some $26 million in federal money if certain conditions were met. But that is not money that can be reinvested to further contribute to innovation. You have the adjustment of the amount and perhaps the formula, as well. The money from the province comes to us more directly.
[English]
Senator Segal: Ms. Mortimer, the first committee I had the privilege of sitting on some five years ago was the Standing Senate Committee on Agriculture and Forestry under the distinguished chairmanship of Senator Fairbairn. We lamented the disappearance of the ag. rep. that had gone from farm to farm in the past on behalf of provincial and federal governments to ask questions about the application of technology and whatever.
It strikes me that your ITAs are a remarkable resource, independent of the job they do as a support mechanism for the IRAP program, which is important enough. They possess a reservoir of wisdom with respect to what is really happening out there. You were good enough to say that you took advice from them before coming to give us advice today.
Do you gather them as a group? How do they choose the projects they end up working on? Do you have a peer review process? I do not mean to overdo it, but I am trying to get a sense because it strikes me as a remarkable, constructive and important resource. Many people around this table may know about that, but I have just found out about it and I am deeply impressed.
Ms. Mortimer: You spoke to two particular aspects. One was the collective wisdom and how we draw on it and pull it together. The other one was about the project approval process.
The ITAs themselves, when they are working with clients, will draw on their colleagues. We do have what we call sector teams. In certain areas we have formalized that relationship. There are formal contacts in every province in the manufacturing sector, the construction sector. They meet regularly. They will pull together reports and market studies for their sector and share them. We use them as a resource to help inform the research side of NRC by having them pull together their collective wisdom in a particular area of research. We have used them in workshops along that way. I use them all the time.
With respect to choosing projects, it is not a call for proposals and a submission. Often people come forward looking for funding and we realize they do not really need funding; they are nowhere close to that. It is a very personalized service, but in order for that project to make it through and be funded, it has to have a technology assessment, which may be done by other ITAs. It is never just a one-on-one process unless it is a very simple thing like hiring a student. If it is a complex R&D project, they will call on other ITAs, put together a little team, use researchers from universities, from NRC, in order to assess it from a technology basis.
However, we also assess the business side of it. For us, if they cannot actually get this product and have the wherewithal to get it into the market, there is no point in us investing money in research. We must be convinced that they have the management capability and the business plan, marketing plan and the ability and resources to get it into the market. That is all part of the assessment before a project goes forward.
Senator Ogilvie: I would like to pick up on the nature of the questions asked by Senator Eaton and Senator Segal. I think it is really important for us to understand the uniqueness of NRC and the enormous value it brings to Canadian industrial and economic development. If the term ``peer review'' were applied in these circumstances, we would never get a business off the ground using the IRAP program. It is a situation in which companies or individuals that have a process, an idea, a concept or a product need help, from business planning to the applied research aspect of developing the product and bringing it through to the point of being a successful product and a successful business as well. This is a fundamental part of the NRC mandate, which is very different from a university environment, which it is often the complete opposite of, where an application falls out by good luck, timing and other kinds of progress of a fundamental research program.
Furthermore, if we look the general aspect of life sciences as an example, where they look at the development of fundamental research but with regard to a direction that they see or they and industry see coming down the road to develop a base research capability for Canada, we can actually develop products and lead in this industrial activity. Universities are potential allies with them, where fundamental research coincides with the potential to assist in the application of research to the development of a long-term strategy, fundamental products right now, and move the company forward in a quick way.
NRC is not always heard in the discussion of Canada's R&D capability. We tend to think of the universities in a general context, but it is my view that this sector and other federal research laboratories have historically been enormously important for the development of the economy in Canada. While they went through a decade of declining and underfunding, it is my opinion that this is an area we must look at, re-strengthen, and move forward with NRC as a star component with a clear focus and mandate.
I want to get the point across that the university sector is an enormously important part of intellectual development and of a society. However, NRC has a role that was envisaged by its founder and that has been developed over a long period of time. I think the sector is sometimes under-appreciated with regard to the impact it makes in the development of business based on knowledge and innovation.
The Chair: Are there any comments?
Dr. Szumski: I would underline one unique feature of an organization like the NRC. The research is mandate driven. We often start with the question: Who needs this research? The connection to industry often happens early in the research process, where you are working with an industry collaborator to develop a program together. That is a unique feature and it is not competitive, really, to the university setting; it is complementary. You do need the knowledge generation happening in a free-for-all setting where people can pursue their interests, but for industry, an organization like the NRC is an extremely valuable tool.
[Translation]
Senator Robichaud: Ms. Mortimer, in response to one of Senator Segal's questions, you said you look at the capacity of the industry as well as the people in it, when they come to you, to determine whether they have the management capability, the necessary funding and whatever else is required to get a product into the market. How hard is it for small businesses to be eligible for this program? Oftentimes, small businesses do not have the same resources or time that a medium-sized or large business might have to develop a product.
[English]
Ms. Mortimer: I appreciate the question. To clarify, our people in the field are not just assessing whether they have a good plan or not; they are going to help them build it. If they come with an idea and we see that they do not have a business plan, we will teach them how to prepare one. If they do not know anything about IP protection, we will help them to find a patent agent, help them do feasibility studies and pay for marketability studies.
Some of these are not just small companies but very small companies, and they do not have the capacity. We can connect them and fund the necessary resources to build that business expertise, competence and confidence to move forward. That is an important part of the mandate, and it is why sometimes people come in and say that it took a long time to get their funding. This is because they were not ready. We will help them write the proposal for the funding. If, later on, they are ready for venture capital, we will prepare them to meet with the venture capitalists whenever they need. The ITA is basically working for them and will stay with them throughout the life of their company, not just throughout the project. As the company's needs change and the resources that are needed change, they will stay with them as they grow and become successful.
[Translation]
Senator Robichaud: I am asking because in my neck of the woods, New Brunswick, people tried to develop new technologies and, in one particular case, they received funding through a research program. It was for a machine that it seemed was going to make the industry more profitable, as it was difficult to find people to do that kind of work. The machine did not end up producing the same quality of product as the one previously on the market. Buyers did not want the product because they wanted something raw for the market — it was a mollusc product. Now the company is stuck with the machine, and it has an impact on its working capital.
Do the projects have provisions for cases like that, so the company is not stuck with something that does not work? And I am not trying to say that all the projects are bad; the vast majority are good and should continue, but in certain cases, you have small businesses that end up in trouble.
[English]
Ms. Mortimer: One of the criteria for IRAP projects is that there has to be some risk involved. If it is a straight development and there is no R&D or technological risk involved, that is not part of our mandate; they can go to an economic development bank. There is a risk involved in the technology; some of them succeed and some do not. Some of our companies fail in the middle of the projects. Economic conditions change.
I would not say we have 100 per cent success. My hope is that we help the companies improve their chances of actually succeeding.
[Translation]
Senator Robichaud: At some point, other small businesses wanting to pursue new technologies will see that, and it will make them stop and think before undertaking any new projects.
Dr. Szumski, you talked about the national bioproducts program, and you gave four examples. Those examples are joint initiatives by three departments, are they not? They were not initiated by the industry per se.
[English]
Dr. Szumski: It is a program that is driven by three departments. The governance of the program has me as the chair, and the science ADM from Agriculture Canada and from NRCan as the co-chairs. The engagement with industry comes at the project level, where we find industrial partners that we could likely transfer the technology to. That is the level at which we engage the industry directly.
However, we also manage the program through an advisory board that meets twice a year, and that has industry representation on it. We have people on the board that I know you have seen around this table before, such as the gentlemen from the Ontario BioAuto Council, from FPInnovations, from universities, and from some of our major industrial players in the country as well.
[Translation]
Senator Robichaud: What stage are you at? At a certain point, the industry needs new ways of moving products or by-products. Will something come out of it soon? We always hear about new technologies, nanotechnologies, new chemicals that will be extracted from fibres; where do we stand on that? How do we compare to the research done in other countries?
[English]
Dr. Szumski: With respect to where we stand in this research compared to other countries at this point, I do not have a solid gauge on that. However, I can tell you that we have been hearing that these technologies will start to play a role. It is a complex process getting an invention through to an innovation. The complexities faced by the forest industry and the pulp mills are complex. There will not be a magic bullet of technology invented that suddenly changes the game for them. These processes get really complex when you move from the lab bench. We can do great things in a test tube, but when you start to have to scale that up, that is where it becomes complex.
The particular example that I gave you, where we have a couple of technologies that we will be piloting at the pilot plant being built in Thunder Bay, gets exciting because it is a rapid transfer of technology into a useful application. In a two-and-a-half year time frame, we are going from a test tube invention to scaling it up to a pilot plant. That is the point at which you can start to see the technology being taken up and applied in a pulp mill. Ultimately, the goal is to assist the pulp mills by having some value-added products that can go into other Canadian industries like oriented strand board or plywood manufacturing, or even car parts.
[Translation]
Senator Robichaud: You said the process was complex. Is there no way to simplify it?
[English]
Dr. Szumski: No, it is not a simple question. The complexity really starts to happen in the industry's hands when they have to make the large investments to take the risk to scale up an industrial process. There is a big challenge generally in industrial biotechnology in that the step of scaling up is full of risk. This is where an organization like the NRC is valuable. In addition to test tube work, we actually have bioprocessing centres where we can try a new industrial process at a 1-litre scale, a 50-litre scale and a 1,500-litre scale. At some point, however, you must hand it off to industry, which must do the pilot plants, demonstrations and so on.
Senator Robichaud: Would you agree with the recommendations Mr. Gaudreault made with relation to credits at 50 or 75? Would that accelerate the process for industry to get into this area?
Dr. Szumski: I feel like I am not qualified to answer that question.
Senator Robichaud: You may try, though.
Dr. Szumski: It is impressive to see a private company spending $40 million-plus a year in R&D.
Senator Robichaud: That is why I am asking you.
Dr. Szumski: I do plan to exchange business cards at the end of this meeting.
Senator Robichaud: So you agree, then.
Mr. Gaudreault, would you like to add to that?
Mr. Gaudreault: I apologize that I did not react when Senator Mercer mentioned this, but we closed two big mills in our company a few years ago: Red Rock, one of our biggest kraft mills at 1,200 tonnes per day, and also Fjordcell in Jonquière, Quebec. We closed those two kraft mills in the time frame of the spending that we did. That explains the decline that Senator Mercer was talking about.
Domtar in Windsor will be implementing the NCC — nano-crystalline cellulose — process. There are two types of NCC. In 2011, they will start with one tonne per day. I do not know if that is the number that you have, but I worked for Domtar and I have friends there. They are supposed to produce one tonne per day in 2011. They will have a start- up that will take a few years. That is a big ramp-up. Originally, they announced $22 million for the project — that was the first number that I heard last year — and now they are at $40 million. This is what they are going to spend on one project to produce one tonne per day in 2011. The start-up may take a few months to a few years. It is a lot of money and it is a risk.
To answer your second question, North America is the NCC — not for the pulp and paper industry, but for painting, for airplanes and aerospace, and so on. However, the Swedes have been developing NCC since 1982. They started in the lab in 1982 and they are progressing on their side. However, I think FPInnovations is further ahead in terms of scaling up the process. The Swedes are producing NCC in an effort to reuse cellulose nano-fibres in the pulp and paper industry. That is the difference between Canada and other countries.
I would like to give you an example with respect to what you were discussing before. A few years ago, we spent $26 million at our tissue mill to install an STT, or structure tissue towel process. After less than four years, we had to replace it because it was too expensive. We are now spending somewhere between $30 million and $40 million for a new technology. The start-up was two weeks ago. We are spending a lot and we are a big company, but no small company, as in the example you gave, would be able to support this. We had to erase what we did four years ago and start over again with a new process. Our initial attempt was the world's first; this is the second application in the world. The first machine was in Chile, so we will be the second in the world to start this new process. There is always a risk.
[Translation]
Senator Robichaud: I understand there are risks involved. But your presentation talked about what it meant to be a green leader. You mentioned recovery and conversion.
Mr. Gaudreault: Yes.
Senator Robichaud: You did not talk about the products that would come from the forest, but rather the waste.
[English]
Mr. Gaudreault: That is a good question. At Cascades, about 73 per cent of our input material is recycled. The Lemaire brothers were collecting garbage to survive in 1964. They started with recycling, recovering everything they could to survive. That is how they started the company. That is in our genes, in a sense, and that is why we recycle.
On the opposite side, about 65 per cent of our entire business involves converting folding cardboard. We are on both ends of the spectrum. We recover the paper, recycle the fibres and also make the end product. Cascades is that type of company. Of course, we have paper machines, board machines, moulding cartons, and so on. We are a recycling company first, but we buy 27 per cent of virgin fibres. As I said, we had two big kraft mills but we had to close them. We now have to buy virgin fibres. That is how we work.
[Translation]
Senator Robichaud: Do you have a hard time finding those recycled materials? Do you have to ship them over long distances?
[English]
Mr. Gaudreault: We had a tremendous amount of available recycled fibres after the Olympic Games in China. However, a year later, China started to recollect fibres and send them back to their country. Consequently, it is more and more difficult.
We have a few problems, but the biggest problem is contamination. Sorting fibres here costs roughly $40 or $50, but it costs 50 cents in China. The Chinese company says, ``Do not sort anything, just send it to me.'' They pay an extra cost for the raw material. In North America, that means laying off people and we are left with poor quality paper, which we have to live with. That means we sometimes have contaminants in our raw materials. In my research lab, I have counted it up to 20 per cent and 10 per cent recently. We had 6.7 per cent; three years later, it is now at 13.9 per cent.
Because of all these problems, we have a lot more contaminants in the paper. We need a better process, and one of our recommendations is to do research to sort more and more contaminated paper. On top of that, we are using recycled fibres for food contact. That means we must have a very effective barrier to protect against the migration of contaminants, preventing them from going into the food.
Since March of this year, there has been a big crisis in Germany regarding concerns about migration of mineral oil in food. This is the type of thing we must address; not only us but also companies that produce virgin fibres.
Yes, it is tougher to get clean raw material, but we have to do much more research to screen them and to keep the same quality, because whether one company produces virgin fibre and another recycled fibre, the clients ask for the same quality and the same standards.
[Translation]
Senator Robichaud: I encourage you to continue your recovery efforts because it does a lot for small communities.
[English]
Mr. Gaudreault: We believe in it.
Senator Fairbairn: This has been a very interesting discussion.
Dr. Szumski, you were talking about biomass and waste agricultural material. There is a great interest now in putting these things together.
At page 8 of your brief, you write:
Another aspect if this work is to discover ways to transform woody waste (from landfill, construction, demolition, forestry or agriculture) into chemicals and fuels.
Where in Canada is your particular focus? Where I am from, all of this seems to be going on. I wonder if there is useful activity? Could you give us an idea of how you are pulling this together and how it will provide an exclusive change?
Dr. Szumski: You are referring to one part of the National Bioproducts Program that uses municipal waste as a starting material, and that can include construction materials or deconstruction materials, if you will, from facilities that are taken apart. Rather than put them into landfills, can we extract value and energy from them? We know that we can. We can get gas out of them and convert some of them to fine chemicals. We are doing research to find the most efficient way to make that conversion.
One of the methodologies that we are working on is a process called pyrolysis, where waste is turned very rapidly from a solid material to a gas. It is condensed again and again, and we end up with an oil. That oil has a lot of interesting things in it. It has elements that you can pull out that could become a source of fuel. It has elements that you can pull out that could become a chemical as a starting point for a plastic. There is a similar theme in all of the projects.
I would like to provide an example that is not related directly to forestry. Within the last year, we have set up an advanced composites facility in concord with Magna. One of the sub-projects within that facility will be the introduction of flax fibre. Once the farmer has harvested the seed for the oil, the fibre that is left goes to waste. That flax fibre could be introduced into the composite materials to turn them into car parts. If this is process is successful, imagine what could be created within Canada, building on the advantages we have with our natural resources and the fact that we have a lot of agricultural activity that creates waste materials — a link between car parts manufacturing and farmers out West. We could do that through technology.
The reason the car parts manufacturers are interested in this technology is that they want materials that are lighter and cheaper than what they are currently using. The materials need to be lighter to meet fuel standards. There is an interesting web of needs.
Senator Mahovlich: They also have to be stronger.
Dr. Szumski: That depends on what the material is used for. It is tough to make a car bumper, but you can certainly start with the foam in the seats and the dashboard components.
I think that is the real opportunity we have in Canada. We should not be looking at the sources of biomass and our heavier industries as separate entities but rather thinking of them as interconnected. We should actually view that biomass as feedstock for our aerospace industry, our automotive industry and our construction industry. R&D programs that create those links have value that must be retained in Canada. You cannot recreate this in Taiwan because Taiwan does not have the biomass. It is advanced technology that has a lot of staying power for the country.
Ms. Mortimer: Some small companies in Western Canada are looking at small-scale systems to convert either agricultural waste or wood into the power needed for a farm or a ranch or something in a rural area. They do not need a lot of it. This is not a big operation, but a small-scale, independent, autonomous system. Once successful, these systems can be sold to places like Malaysia or Indonesia where there is a need for independent power produced from local agricultural or forestry materials. We have companies doing that now in Canada on a very small scale with some very sophisticated technology.
Senator Fairbairn: Thank you very much for that.
Senator Mahovlich: Forestry is a major industry in four provinces: New Brunswick, Quebec, Ontario and British Columbia. What university is the most innovative as far as wood products are concerned? When you are dealing with universities, which do you approach or which one would you approach?
Mr. Gaudreault: If you take the West, from Ontario to B.C., there is one university that is working on paper- making, and it is the University of British Columbia. They are very strong at engineering. This is definitely their strength. I was there two weeks ago as part of a review committee. They have developed a new rotor with AFT that saves 52 per cent of the energy used, the electric power. This is a significant improvement. They claim that they have sold somewhere between 100 and 200. In the world at the moment, they are really strong in the area of engineering. That is number one.
Number two, chemistry-wise, is McMaster University in terms of creativity. I know the leader of the Sentinel Bioactive Paper Network. Chemistry, the chemical mechanism, is the strength at McGill.
At the Université du Québec at Trois-Rivières, their strength is more in recycling.
At the University of Toronto, their strengths are in printing and also in the kraft recovery process.
If you look at bleaching, the Limerick research centre at the University of New Brunswick is strong in this area.
In a sense, this is a short story, which is good, by the way. Many years ago, all of these university research centres were most likely doing similar things. Today, because of the way things are and what industry is doing, each of these centres has a niche. That is roughly how the new picture looks today. I think this is the correct way of financing research. They can still challenge each other while maintaining their niche and their scientific expertise.
Dr. Szumski: Not to make a comprehensive list, but I would add Lakehead University in Thunder Bay for looking at the pulp mills and finding the extra value-added from pulp.
Senator Duffy: In our hearings last spring, we met many people in the wood industry who were involved in heating. I am talking about wood chips, pellets, switch grass, and so on. Is Cascades or the NRC looking at these alternatives? You mentioned that it is difficult to get feedstock. Should we be looking at alternative crops in addition to the interesting development on flax, a grow-your-own car, which would be fantastic?
Mr. Gaudreault: That is a good question. In 1996-97 we did a lot of work with flax. There was a research centre in Vulcan, Alberta. I was there. We spent about $200,000 to make it work. We sent the pulp to our mill for bleaching and then to St. Jerome, Quebec, to make the paper. We did the whole cycle using flax fibre.
Trois-Rivières has a lamellar process for corn.
All of these alternative fibres become very popular when the cost of raw material doubles or triples. Every time there is a peak in cost, you hear about alternative fibres.
Senator Duffy: Some of these crops — corn for fuel, for example — can be used for other things, but there is a huge cost in terms of developing them. The producers of switch grass are saying that there are fields unsuitable for other kinds of agriculture where there is not a cash crop available to them, so they are not diverting resources that should be going to another area.
Mr. Gaudreault: I have one other example. In 2003-04 we were working on an interesting fibre from sorgo. The biggest producers of sorgo in the world are the United States and India. It is like sugar cane but is a different species. Its strength compares to that of hardwood fibres, as shown on a tear-tensile curve. It is a good fibre. Cascades developed the cooking process.
I had a discussion last week with the agriculture people. There is a challenge because four groups are involved. There is the agriculture group, the ethanol group, the energy group and then the paper makers. The challenge was to link the four fields together and make everyone happy. The fibres have some potential. We are discussing this again with the agriculture people at the moment.
I have heard about switch grass, as I am sure you have heard too. I would not invest too much in that, unless you convince me that we should.
Dr. Szumski: As far as industrial crops are concerned, we are engaged in some of the conversion process regarding switch grass and the conversion of biomass to other useful materials and fine chemicals. Switch grass is a feed stock that we are working with in partnership with Agriculture and Agri-Food Canada.
There is another crop that can grow in Canada called camelina, or false flax, which can be an interesting source for the production of lubricants.
Senator Duffy: I believe it is used in cosmetics.
Dr. Szumski: I believe it has a variety of uses.
Senator Duffy: Prince Edward Island has just started a project on that.
Dr. Szumski: Sometimes these bio-oils are not just a greener version of the petroleum products but also have better performance characteristics. For example, they might operate better at higher temperatures, which you find in some engine environments.
Senator Duffy: In P.E.I. we are hoping it will be the fountain of youth.
Ms. Mortimer: You mentioned wood pellets. I believe you asked whether we are there in some of these alternate energies. In the package I left with you there is a description of a conference that we helped to sponsor in British Columbia a year or so ago on bio-energy alternatives — in particular the pellet industry. At this moment, we can make them but the markets are in Europe. There is not as much of a developed market here. The point of that conference, besides sharing information about the technology side, was to open the markets to Europe for some of the Canadian companies. There is a bit more information about that conference in your material. It might be of interest.
[Translation]
Senator Robichaud: The fourth project you mentioned, Dr. Szumski, had to do with producing energy using algae. Where does that project stand? Because certain kinds of algae in some of our lakes and rivers are pollutants. So it would serve a dual purpose if those algae could be used for something beneficial.
[English]
Dr. Szumski: Yes, the program is actually reaching an advanced enough stage that we now have significant industrial collaboration and interest, in particular jet fuel from algae. However, we are not harvesting the algae from rivers or lake; we are growing it in reactors, in tanks. It is not a process of harvesting algae from the wild but rather one of using it in an industrial setting where light is put through a tank and the algae grows in the tank. We are talking about microscopic algae.
The goal of the program is to establish a Canadian capacity to produce fuel from algae. It is interesting that in Canada, which is frozen for a good part of the year and has generally cold water temperatures, we are finding species of algae that thrive in this environment. They grow rapidly. One of our scientists who presents on this subject has a wonderful photograph showing a Polar bear crawling onto an ice floe and the bear is stained green with algae. We know it can grow in our environment.
We have reached the state with that project where one of our key collaborators is the U.S. Department of Energy. It views Canada as an equivalent partner in terms of the level of technology and development that we have reached in producing fuel from algae.
The aerospace industry has a very significant interest because they will always be flying on liquid fuel; you are not likely to see an electric airplane any time soon.
The Chair: Are there any other questions?
On behalf of the committee, I would like to thank the witnesses for accepting our invitation and for their presentations. It has been very informative. The committee may be writing you to obtain answers to other questions.
Mr. Gaudreault, thank you very much for coming. Dr. Szumski and Ms. Mortimer, thank you for accepting our invitation.
Senators, we will not be meeting this coming Thursday; the next meeting will be on Tuesday, October 5.
(The committee adjourned.)