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The Biofuel Debate

Minister Day, who is president of the Treasury Board, minister for the Pacific Gateway and minister responsible for British Columbia, made the announcement on behalf of minister of Natural Resources Christian Paradis at a staged event at the Vancouver office and lab of FPInnovations.

Branded as the Investments in Forest Industry Transformation (IFIT) program, the plan is intended “to demonstrate and deploy new and advanced technologies in the forest sector through investments in innovative processes.” At this point, you might say “nice name for the program, but what exactly does it mean?” You wouldn’t be alone. After cutting through the pubic relations jargon, carefully reading some of the “backgrounder” information supplied to media by the government’s communications staff, and reviewing a news release from the Forest Products Association of Canada (FPAC) that supports the initiative, it sounds like our federal politicians and some in the industry would like us to continue on the bioenergy track that has been building for the past few years.

Except for the use of the word “green” in a couple of spots and a cursory mention of pulp and paper mills producing renewable energy, the primary government press release is somewhat vague on what is meant by the “next generation of forest products.” It’s not until pouring over the backgrounders that you find the word “biorefinery,” and that’s really the first clue as to where they are heading.

At least in the FPAC news release, the industry association comes right out and states, “The $100 million IFIT program is expected to facilitate the transformation of the forest products industry into a world bioenergy leader.” FPAC president and CEO Avrim Lazar talks about securing jobs in rural areas, minimizing environmental impacts, and meeting market demand for superior environmentally sustainable products, which are all positive aspects of the program.

It seems that the strategy here is to integrate bioenergy with existing forest products production, which in my opinion is a good thing if we can find a fair and equitable way to divvy up the fibre and keep fibre costs at a price point that traditional wood products processors can afford. As I mentioned in my opening paragraph, this would move us closer to the Scandinavian model. The Scandinavians have been building their bioenergy programs for decades and they work relatively well, so in theory, they should also work here. But note the word “relatively.” Our Scandinavian friends aren’t without their own set of problems, and keeping everyone supplied with reasonably priced fibre is one of them. Some Scandinavian pulp producers will tell you they can’t be cost competitive in the global markets when the energy guys drive up the raw material costs. It’s a real issue and if you look at Sweden as an example, about one third of that country’s domestic power is derived from biomass. It takes a lot of fibre to produce that much energy. And in other parts of Europe and for other types of wood products, it’s the same story. At a panel conference well over a year ago, the head of panel equipment manufacturer Diefenbacher warned the audience that panel producers are suffering due to the increased fibre costs that are being artificially driven up by “government subsidized” energy producers. Basically, governments are willing to subsidize energy producers to get the green vote, but at what cost?

In the United States, some of the same arguments are being played out. When you have companies such as wood products giant Weyerhaeuser and energy conglomerate Chevron teaming up together to form Catchlight Energy LLC (www.catchlightenergy.com), you can see where the U.S. industry is heading. Based in San Ramon, Calif., the joint venture’s vision “is to become a major integrated producer of biofuels derived from non-food sources and to deliver renewable transportation products produced from biomass in a manner that is scalable and sustainable — both environmentally and economically.”

It’s a great vision statement and corporate mandate, but there are others out there, who, like the head of Diefenbacher, have a stake in a viable wood products industry, and they are willing to throw a wrench in the spokes and say, “slow down just a bit here.”

Although the IFIP program looks great on paper and anything to improve the bottom line of Canada’s forest products companies could be welcome by many, we need to take a close hard look at the upside and the downside before we fully embrace this agenda. I’m not saying we shouldn’t go forward with it. I’m just saying we should look at what’s happening in other countries that may be just a bit further down this road than we are and learn from their experiences.

Bill Tice, Editor
btice@annexweb.com