Forest industry sets sights on Biofuels Fund to help pay for sector's transformation

Sector forges ahead with transformation

The Forest Productions Association of Canada (FPAC) has renewed calls for the federal government to loosen the purse strings on a largely untapped $500-million tech fund that could help the sector transform into a more sustainable and globally competitive industry. Launched in 2007, Sustainable Development Technology Canada's (SDTC) NextGen Biofuels Fund has committed only $1 million as of 2013, prompting FPAC to call for a widening of eligibility criteria to give forestry-related firms more opportunities to access the dormant funding.

"We're asking the government to broaden the allowable applications to that fund and allow our companies to address the valley of death (commercialization)," says FPAC president and CEO David Lindsay. "Right now it's specifically for biofuels and that $500 million is not being used. Expand it to allow for forest fibre, agricultural fibre and biochemicals and bioplastics."

Specifically, FPAC's pre-Budget submission is asking that the government redirect all undeployed capital from the NextGen Biofuels Fund to a more broadly focused biorefinery fund that would cover the full spectrum of bio-energy, biochemical and bio-materials opportunities. A similar request was made in its 2013 pre-Budget brief, but was not successful.

Under its current criteria, the NextGen Biofuels Fund focuses on establishing large demonstration-scale facilities for next generation renewable fuels, sourced from non-food renewable feedstocks such as forest and agricultural residues and municipal waste. But the technologies and market have been slower to mature than expected with the majority of activity limited to small-scale demonstration plants (R$, April 3/13 & April 17/12).

FPAC's ask is one of three recommendations designed to strengthen the industry's collaboration with academic research, promote the sector and access existing S&T financing pools to help mitigate risk.

Academic focus to evolve

The past few years in particular have seen the forestry industry aggressively pursuing federal support for long-term objectives contained in its Vision 2020 strategy as it seeks to strengthen ties to academic and government research. Now in recovery mode from the 2008 recession, the industry has pursued cost reduction and process improvement and now wants assistance in exploiting emerging technologies and practices to parlay them into new products, markets and operational practices.

"The industry is committed to doing the "heavy lifting" to transform itself, but government partnership is necessary for success," states FPAC's submission. "While significant progress has been made, industry and government must continue to work together to maintain the momentum."

FPAC is also recommending that government allocate $60 million over five years and establish a dedicated innovation fund to "expand and accelerate university and college research and development". Those funds would be used to renew at least some of the forestry research networks supported by the Natural Sciences and Engineering Research Council (NSERC). But they would also be deployed to facilitate international R&D collaboration and recruit young people into the sector, "particularly through colleges".

FPInnovations (FPI) — the not-for-profit R&D arm of the forestry industry — works closely with the academic sector to ensure that its research focuses on members' needs and priorities. While it's pleased with the contributions being made by NSERC's forestry research networks, its president and CEO says the sector's new strategy could prompt changes in what academic research is required.

"We've redone our strategy since 2013 and we're in discussions with NSERC to revise the seven centres. Not all may survive," says Pierre Lapointe. "You'll see our organization dealing both with universities and colleges so the strategy will change slightly. Colleges are a good tool to link with First Nations. In the next month, our new strategy will become public."

FPAC's third recommendation calls for promotion plans to assist the sector in recruitment, raise its profile and burnish its international reputation in the area of environmental stewardship, which FPAC says is under threat from unnamed organizations. To help with the latter, it is asking for a more modestly funded plan to replace the Leadership in Environmental Advantage in Forestry. Established in 2007, this four-year, $20-million program was designed to protect and enhance the international environmental reputation of Canada's forest industry.

Vision 2020

FPAC's Vision 2020 document — launched in 2010 — underpins the industry's ambitious Forest Sector Transformation Strategy and outlines its three core objectives: generate an additional $20 billion in economic activity, improve the sector's environment footprint by another 35% and recruit 60,000 new workers to the sector.

An update of the Vision 2020 document covering the years 2010 to 2012 was released earlier this year. It reported that modest gains have been made, including a $500-million increase in economic activity, a 6% improvement in environmental performance and 8,000 new recruits.

It also noted that Budget 2014, while silent on FPAC's call for new funding for NSERC's forestry networks, did provide $90.4 million over four years to renew the Investments in Forest Industry Transformation (IFIT) program. Managed by Natural Resources Canada, IFIT has funded about a dozen industry projects ranging in size from $1 million to $15 million.

While the renewal wasn't nearly as large as FPAC was proposing ($500 million over six years), it was viewed as an encouraging demonstration of federal support for the sector's transformation.

"This is the type of program this government wants, protecting jobs and changing the industry. It's in line with their priorities," says Lapointe, pointing to the $10 million provided by IFIT to West Fraser Mills Ltd to build a lignin extraction plant. "In Budget 2014, a lot of money was directed to colleges. It had a more SME (small- and medium-sized enterprises) and local focus."

With the federal deficit slayed, there's growing optimism that forestry could benefit from a loosening of the purse strings, particularly given that 2015 is an election year.

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