New study points to promising bio-future

Feb. 2, 2010, Ottawa – The Forest Products Association of Canada (FPAC) has released
a comprehensive, first-of-its-kind study that shows how the forest products industry can build
on its world-class forest management practices to emerge from the current recession as an
engine of growth in the bioeconomy.

“The study, The Future Bio-pathways Project, focuses on the triple bottom line: clean energy,
high employment, and economic recovery. The results are clear – integrating the production of
bioproducts and bioenergy into the existing industry is a winner on all fronts,” says Avrim
Lazar, president and CEO of FPAC.

The Future Bio-pathways Project is one of the first and most exhaustive studies in the world to
examine a wide range of options for renewal of the Canadian forest products industry. The
project involved more than 65 top Canadian experts in fields as diverse as biotechnology,
investment banking, and carbon pricing.

“This study produced a blueprint for change that is both surprising and welcome,” says Lazar.
“It places traditional products, especially lumber and pulp, at the heart of a new, green business
model that has the potential to make the forest products industry a pivotal force in Canada’s
effort to become a clean energy superpower. If we follow this new model, we will be able to
produce power on the scale of nine nuclear reactors, enough to meet the energy needs of 2.5
million homes, or one out of every five homes across Canada.”

On the employment front, the research shows that an integrated mill – one that produces
wood, pulp, or paper, as well as bioenergy and biomaterials – provides five times as many jobs
as a stand-alone bio-operation. It also shows that the industry’s 270,000 jobs will be best
sustained by following this integrated road to recovery.

“Years of intensive research and development have produced technologies that open up a
world of possibility for the forest products industry in Canada. We can now rapidly convert
wood fibre into a wide variety of high-value products such as biofuels to heat homes or power
vehicles, as well as bio-chemicals to make cosmetics, solvents, food additives, and renewable
plastics,” says Pierre Lapointe, president and CEO of FPInnovations.

FPAC notes that by integrating the production of bioproducts into existing forestry operations,
they will be subject to the same high and increasingly stringent environmental standards that
have made Canada a world leader in sustainable forest management.

With the international community moving aggressively to realize the huge gains that stand to
be made on the biotechnology front in forestry, the Canadian government needs to act quickly
to accelerate progressive change in Canada’s own forest products industry by:

• Developing a made-in-Canada clean energy action plan that will help Canada become a
  clean energy economy and advance the development of Canadian technology;
• Creating a repayable revolving fund that addresses the need for capital investment in
  clean energy;
• Leveraging the tax system (e.g., creating a capital investment tax credit similar to the U.S.
  approach) to encourage private sector investment in a new, integrated forest products
  industry;
• Expanding and extending existing government programs (e.g., commercial adoption and
  pilot demonstration programs) that drive the integration of clean technology in the
  forest products industry;
• Increasing investment in research, development, and innovation.

“This new integrated model will cause investors to take a fresh and more optimistic look at the
economic potential of Canada’s forest products industry. That is why governments should
follow this study’s road map, as it best defines where investors will want to put their money,”
says Don Roberts, managing director, CIBC World Markets, and leader of the FPAC study.

“Our research shows this new bio-pathway is the business model for the future of Canada’s
forest products industry. With 300 Canadian communities depending on the health of the
forest products industry for their survival, we must embrace the opportunities it presents,” says
Lazar.