Final Thought: July-August 2014

Recently, I had the pleasure of returning to my home town of Prince George, B.C., to address the Natural Resources Forum, a gathering that provides an opportunity for a cross section of forestry, mining, energy, and pipeline industry officials to liaise with representatives of the Government of British Columbia as well as First Nations Leaders.

Dr. Ralph Sultan, Member of the Legislative Assembly for West Vancouver-Capilano and a PhD (Economics) graduate from Harvard University, asked the question that is central to the future prospects for the British Columbia forest products industry:  “With the mountain pine beetle epidemic leading to forecast declines in B.C.’s sustainable harvest from 70 million cubic metres annually to 40 million, what is our plan?”

My personal view is that too much public discussion in B.C. has been focused on the dwindling sawlog supply resulting from the mountain pine beetle (MPB), and too little on exploring how bioenergy and bioproducts-related harvest increases can offset inevitable decreases in the sawlog harvest.

Our thoughts differ from others because of our belief that, over time, British Columbians as well as other Canadians will find ways to profitably use low-valued wood fibre as feedstock for higher-valued bioenergy and bioproducts production.  Simply put, we believe the emerging wood-based bioenergy and bioproduct businesses presently under commercial development have the potential to provide benefits to forest health, local economies, as well as forest sector employees, suppliers and shareholders.

To date, much of the bioenergy and bioproduct development in B.C. has been in the mass production of lower-valued products such as pellets and cogeneration, but the real opportunity lies in the production of high-valued products, such as biofuels, bio-based pharmaceutical products, plastics, etc. Here are some examples of developments from other regions that may have future application in B.C.:

 Sweden and Finland utilize about 16 million cubic metres of logging residuals annually as feedstock for more than 1,000 heat and power plants in operation in both countries. These two countries operate 10 times the number of heat and power plants we operate in Canada by using  fibre that typically ends up in burn piles in B.C.

A U.S. company is now making commercial shipments of woody biomass-based diesel and gasoline additives.  This company produces 70 gallons of saleable product to a refinery from one ton of wood chips.

Forward-thinking Europeans expect pulp mills to resemble chemical plants in the future. They believe the real value-added in the pulp sector comes from separating wood fibre into its component parts and pursuing biochemical applications. The Finnish pulp and paper industry research scientists believe that by 2030, 50 per cent of pulp mill revenues will be derived from products that currently do not exist.

At last year’s Council of Forest Industries convention, B.C.’s Chief Provincial Forester Dave Peterson presented compelling statistics concluding that the interior region of B.C. has sufficient fibre inventory to host a vibrant pulp sector and a growing bio-economy business. He went on to outline how he and his Ministry colleagues are exploring how the tenure system in B.C. can transition away from its historical focus on sawlogs to one co-dependent on sawlogs, but also providing assured access to lower-quality fibre for utilization as feedstock in the pulp, pellet and bioenergy/bio-product sectors. Tenure modifications may need to be designed and implemented to provide greater certainty of supply for non-sawlog harvesting.

 In the next few years, we expect heightened European and Asian interest to be directed towards B.C.’s sustainably certified and plentiful softwood fibre resources. They see the benefits of using beetle-killed wood for renewable fuel production. Accessing B.C. fibre circumvents food-versus-fuel concerns, complies with their forest certification requirements, and is highly favourable in terms of carbon balance.

 The Interior B.C. forest products sector has an incredible opportunity to co-locate exciting new businesses with robust revenue and cash flow streams alongside traditional forest products facilities. By focusing on these new businesses, we can ensure that the best days of the forest industry in B.C. lie ahead of us, not behind us.

Ken Shields is the CEO and President of Conifex Timber. This column was originally published online by the Forest Product Association of Canada (FPAC) at www.fpac.ca .