Mr. Chair, thank you very much for inviting us to this committee, and thank you to all the committee members.
You have our written submission, but I will speak more broadly than that submission, leaving that submission as one example of a broader theme.
The Canadian Federation of Apartment Associations, CFAA, represents the owners and managers of close to one million rental homes across Canada, through 14 provincial and municipal associations and also direct landlord memberships.
The rental housing sector as a whole consists of four million homes, housing four million households, or about nine or ten million Canadians. We heat; we light; we use water. We use a lot of energy.
In building new rental properties, developers often go with a LEED standard. But most residential rental buildings are old, often 40 or 50 years old. In a technical sense, they have lots of inefficiencies. In other words, most rental buildings are not very energy efficient. The building envelopes leak air. They have older equipment. They are not set up properly to use more modern equipment or techniques, and certainly not cutting-edge or new innovations. It is important to address our sector correctly because it is a big sector, because we use a lot of energy.
In addition, we disproportionately serve lower income people. Most people who can afford to buy a home do so. We provide housing for people who cannot afford to buy their own home and for some people who rent by choice.
The industry is also very competitive. There are many suppliers in every community. We are constantly forced to keep costs down. We as a sector need to use proven technologies. We are not in a position to go out on a limb and adopt technologies that are new, revolutionary, which are unproven over the long term.
What I'd like to turn to are some barriers that our sector faces in adopting improved technology for the use of energy.
One barrier I'll mention is with respect to submetering. You may be familiar with the notion of submetering for electricity. In other words, the power company puts the electricity into a building, and then the technology exists to measure what goes to each suite.
When people are paying for their power, they tend to conserve it. Those of you who are parents can think of your teenage children leaving the lights on all around the house. They're not paying for it. We go around turning off all the lights because we are paying for it.
Mr. Blaine Calkins: I hear you, sir.
Mr. John Dickie: Yes.
Now, our tenants are not all teenagers—some of them are 18, 19, and 20 years old—but by the same token, any of us, if we are faced with a free good, will tend to waste it.
We want to use submetering. We want to use it for electricity. We also want to use it for heat. But under the Weights and Measures Act, it is illegal for us to submeter for heat. Section 8 provides that no one in Canada can submeter for anything, including heat, unless they use an approved meter. However, Industry Canada and the government have not approved any meters. The EU has approved meters. The U.S. has approved meters. But in Canada, we do not have approved meters. This is a barrier to an improvement in energy usage and technology.
We also face barriers in terms of the tax system. The paper I provided sets out an illustration where it makes economic sense for a landlord to replace mid-efficiency boilers with mid-efficiency boilers. The tax treatment is such that the landlords are worse off, even though they save more energy down the line, because it costs more up front. And because of the way the tax system treats that, they are better off financially to go mid-efficiency to mid-efficiency, rather than mid-efficiency to high-efficiency. This is a barrier that could be overcome, although I realize that is primarily a matter for the finance committee to address.
We would like those barriers to be fixed. There are other similar barriers, but let me focus on those two. Let me refer to a third element.
A third thing that concerns us significantly is there is a tendency by government to regulate, to impose higher conditions, to require people to use, say, high-efficiency boilers rather than mid-efficiency boilers. For our sector, that is a serious problem because our buildings are not built to take high-efficiency boilers. For us to put them in sometimes requires major capital expenditures, and really, it is not economical. It is not sound from a resource utilization point of view to force us to use high-efficiency equipment.
That is one of the examples within the regulatory field in which matters have come forward in the past. They were turned down, the regulatory changes I'm thinking of. I'm glad, but I'm concerned that they may come forward again. Within our sector, we need to see value in improvements, value to the bottom line, value to the services given to tenants, and we want to keep housing affordable.
Because of all those factors, we would ask the government to pay close attention, when it is bringing in mandatory regulations, to what those impacts are, to make sure they don't in fact raise costs to the sector. We also need government either to get out of the way in the case of these heat meters or at least to approve some heat meters so we can go down that path. Certainly, we would appreciate incentives. We would appreciate the tax system and the other systems being structured so that they reinforce our desire to use higher efficiency equipment rather than making us choose between whether we do the environmentally sound thing or whether we do the economically sound thing. Do we do the thing that will let us continue to provide low-cost housing, or lower cost housing, I should say, for people.
Those are basically my three pitches for you today. Thank you very much.
Thank you, Mr. Chair, and honourable members of the committee.
I would like to thank the standing committee for inviting us to contribute to the study on innovation in Canada's energy sector.
My name is Bradley Young and I am the executive director of NAFA, the National Aboriginal Forestry Association. I come from the Opaskwayak Cree Nation and Swampy Cree Tribal Council in northern Manitoba. I would also like to take this time to recognize the traditional territory of the Algonquin Nation, Kichi Sipi Aski, otherwise referred to as Ottawa.
First, I will provide a little background on NAFA. We are a non-governmental, first nation controlled organization focused on research, advocacy, and associated economic development activities in the forest sector. We advocate for policy and initiatives that will address aboriginal rights, values, and interests, and also that will lead to a more equitable creation and sharing of benefits from the vast forest resources of the land we call Canada.
It is on the creation of genuine wealth through world-class business and natural resource management that our 300-plus members and over 1,400 aboriginal forest sector businesses are increasingly focusing.
In Canada 80% of over 630 first nations communities overwhelmingly call the forest home. Coupled with the aforementioned businesses, this is the energy that NAFA is working hard to help unleash. In no other natural resource sector do we find the confluence of geography, population, history, culture, experience, and increasingly the successes, that we find in the forest.
The other natural resource sectors in Canada are critical. However, let us remember that 24 Sussex Drive, the 's official residence, was built by Joseph Merrill Currier, timber businessman and member of Parliament.
In 1994 the people of Oujé-Bougamou, under the expert advice of their elders and leadership, together with the national treasure, architect Douglas Cardinal, in partnership with the Government of Canada, realized the dream of a sustainable village.
At its heart is a biomass energy regional heating system. Here is a 20-year-old example of Canadian community vision, technological innovation, and northern stick-to-it-iveness—that's a hockey term. The remote geography of the community was turned on its head and used as a complementary strength, where stagnant waste from regional sawmills is diverted and continues to be harnessed for community needs.
Now we have provincial biomass innovation centres updating this forerunning example and templating one-megawatt biomass power and heat units for installation in remote communities, building complexes, and regional heating grids in urban scenarios. What an opportunity.
This is what I mean. At the core of most of these bioenergy scenarios, wood fibre is the feedstock. The most logical structuring of the supply chain guaranteeing this foundational input is attachment to regional harvesting and forestry operations. Divert, offset storage costs and liabilities, create an additional revenue stream, provide energy for heat and electrical generation to maximize the utility of our resources. That is the mix that has been put together.
This basic infrastructure logic, as l've stated, is in a high state of readiness with numerous projects up and running, showcasing the potential. As for the feedstock, first nations now hold over 22 million cubic metres of annual allowable cut nationally. To be sure, first nations are yet again on the cutting edge of proving this virtuous circle.
I will share commentary highlighting one such emblematic example of this.
In Meadow Lake, Saskatchewan, the riding of first nations MP , and home of aboriginal hockey player and Stanley Cup champion Dwight King of the L.A. Kings, the Meadow Lake Tribal Council, through its business operating units MLTC Resource Development Incorporated, Mistik Management, and NorSask Forest Products, has connected all the dots. They co-own, with the people of Saskatchewan, but wholly manage the forest through Mistik Management, according to the gold standard of forest certification, FSC.
The member communities supply all the harvesting and subcontracting work to get that fibre out of the bush. They supply Meadow Lake Mechanical Pulp and NorSask Forest Products with the fibre they need. They own 100% of NorSask Forest Products.
Despite the downward pressure on the forest sector, the first nations kept the mill alive out of their belief in the employees, the regional economy, and the hopes and aspirations of first nations and non-first nations people alike.
They manufacture SPF studs and export around the world. Their waste stream goes into the chip supply for the pulp mill, but they have also installed bioenergy heating technology in their facilities to further harness the resource. This is all standard as far as it goes for forest facilities in Canada. But here is where it gets interesting.
Under the chairmanship of tribal Chief Eric Sylvestre, Vice-Chief Dwayne Lasas, and the nine first nations chiefs of the Meadow Lake Tribal Council, Ben Voss, the CEO of Meadow Lake Tribal Council RDI, and Trevor Gladue, the president and CEO of NorSask Forest Products have established a precedent-setting energy generation relationship with the Province of Saskatchewan.
As l've mentioned the first nations side of the table, likewise, Premier Brad Wall and his SaskPower CEO, Robert Watson, deserve credit for their shared vision.
What are they doing? First, MLTC RDI—I apologize for the acronym—holds a long-term contract to generate and produce power for SaskPower. Through the business configuration described above, NorSask Forest Products will divert bioenergy to their own industrial-scale biomass electricity generation facility.
The return is, in the words of Vice-Chief Dwayne Lasas and CEO Ben Voss, and I paraphrase here from public statements, investment, jobs, hundreds of millions of dollars in revenues, jobs, long-term business stability, jobs, expanding business partnerships spearheaded by a first nations power authority, and last but not least, jobs.
On the last point, in terms of the power authority, the partnership circle as I understand it also includes the Government of Canada through Aboriginal Affairs and Northern Development, so additional credit must be given here as well.
Taken as a whole, first nations have a unique opportunity to contribute to Canada's energy innovation in a concrete, proven, and growing way from a solid footing in the forest. I want to remind honourable parliamentarians that in our opinion, Canada's growth agenda is really the first nations growth agenda.
We live in the bush in the midst of all the natural resources. We contribute to the well-being of the supply lines for these resources, and increasingly are managing, co-owning, and developing them. Our population is young, expanding, and ready for constructive nation building. We can't squander these resources. We need to maximize and sustainably manage them. And we need to tell the world about what it is we are doing.
With over 22-million cubic metres of wood under first nations control nationally, now is the time to work in partnership with first nations to support the critical aboriginal forest sector as never before. NAFA is playing a leading role in this discussion, and as we work in partnership with our members and supporters, this is the vision we want to pursue: growth, investment, job creation, world-class management, and genuine wealth generation with our partners regionally, nationally, and internationally in government, in industry, and in society.
I want to take this time to thank our NAFA membership, board of directors, staff, and supporters out there. It's really their vision that l've been given the opportunity to share here today.
I also want to thank our core partners in government, Aboriginal Affairs and Northern Development Canada, in particular, the director of community economic development, Neil Burnett, and program manager, Hugues Landriault. Natural Resources Canada's Canadian Forest Service also merits mention, specifically Trudy Samuel, Anna Bailie, and Trevor Longpre. They have been of assistance to NAFA as we build momentum in the forest sector.
Canada's only a small country and our dedicated civil service is even smaller. So it's only through teamwork that we will continue to build our nation from good to great.
In closing, I do have some words of caution. As I said last year in front of the Standing Committee on Environment and Sustainable Development: Canada, beware.
In the words of our elders, beware of those who would protect the land to death. What I mean is that forest conservation initiatives must be considered carefully and broadly in the context of the forest and first nations. We cannot set aside the responsible development ethic and vision of our first nations working on and communing with their traditional territories as found in the original treaty teachings.
Let us remember that responsible forestry, the everyday practice of it through the symbology of the wooden pipestem, speaks to this.
[Witness speaks in native language]
I very much appreciate the invitation to be here today. I'm here representing the forest products industry. We have members from coast to coast from 200 rural communities, and we represent 230,000 employees in the forest sector.
Given the abundance of forests in Canada, it is very good to see this committee looking at the renewable energy sector as you assess energy use and innovation.
I thought I'd start my remarks with a bit of a global perspective on how Canada is doing vis-à-vis others in attracting investment into this space. According to Bloomberg New Energy Finance—I don't know whether you're following it—investments in biofuels and bioenergy are approximately $200 billion globally.
Leading nations are taking very different approaches to the issue. For example, the U.S. and Brazil, as you're likely aware, are heavily investing in corn-based ethanol, and Europe and China are the dominant players in biomass energy generation. The U.S. is also dominant in a much smaller segment, next-generation biofuels. Canada's share is quite small compared with the rest, but we are attracting 8% of the global investment in biofuels and are attracting 3% of the global investment in biomass energy.
Given our vast forest resource and Canada's large forest sector relative to our global competition, it would seem reasonable to ask ourselves a number of strategic questions: What is the right portfolio mix of bioenergy versus biofuels versus next-gen biofuels versus other products that can be made from Canada's forests? What are the barriers to investment? Are Canada's forests a Canadian advantage in this context?
So, what is the Canadian forest industry perspective specifically on bioenergy? Let me take a minute first of all to describe to you the current context of the industry.
Following years of poor economic conditions and structural change in some of our markets, such as newsprint, FPAC member companies have embraced a multi-faceted transformational agenda, and it is already positioning us in many ways. First, we are one of the most productive sectors in Canada. We're also Canada's leading exporter to China and are Canada's leading exporter to India as well. We are setting a global standard in sustainable forest management and we're an innovations adopter to extract more value from every tree that we harvest in Canada.
Last year we launched vision 2020 to demonstrate the potential of the transformation we feel is before us. We have three goals with vision 2020 that we believe give you a sense of the importance and criticality of our transformation.
First, we want to further improve our environmental footprint. While we've done a lot already, we want to do 35% more reduction in just eight years.
Second, we'd like to see 60,000 new hires in the forest industry, and we hope to work with NAFA and others, because we sure hope that a number of them come from our neighbours, the aboriginal communities.
Third, we believe we have the potential to generate an additional $20 billion in economic activity in the next eight years. We're at $57 billion at the moment, so the trajectory is quite steep.
Bioenergy is an incredibly important part of the mix of our transformation agenda to extract maximum jobs and economic opportunity from every sustainably harvested tree in Canada. To give you a sense of scale, the Canadian forest industry generated 47,000 terajoules of electricity in 2011. That is the equivalent of approximately three nuclear reactors. Some 80% of it was bioenergy-based, utilizing residual forest material from our operations, as previously described. We have completely eliminated energy generation from coal at our facilities—no longer do we use it—and we've reduced our reliance on heavy fuel oil by 91%. This has translated to a greenhouse gas emissions reduction of a whopping 73% since 1990. So as we have followed this trajectory, we've continued to reduce our emissions quite substantially.
I'd like to take a moment to recognize the Government of Canada's pulp and paper green transformation program. This has been a key contributor to our success.
This program recognized the link between our sector's competitiveness position and the adoption of greener technologies and practices. Through the careful selection of projects, the program has bolstered the production of biomass energy and improved our energy efficiency dramatically. It also resulted in greenhouse gas emissions reductions equivalent to approximately 150,000 cars being taken off the road annually.
Incidentally, it also protected and/or created tens of thousands of jobs in our communities across the country. These are rural Canadian jobs, and they're really critical. It also created countless temporary jobs that we have not been able to put a fine print number to.
Where are we going from here? Between 2009 and 2011, FPAC undertook, with a broad base of stakeholders, a groundbreaking and I would say a globally envied study called the bio-pathways study. It analyzed the opportunity to see what more we could do with the forest resource we have in Canada. We asked ourselves the question whether, since we have the trees, we should be making pulp and paper, or whether we should just be doing bioenergy or doing a combination thereof, etc., or should it just be lumber.
When we did the detailed analysis and looked at the emerging technologies and compared them with the existing technologies, we found 36 different innovative technologies that were within our grasp to be adopted by the forest industry. Within our grasp means within a two- to five-year window; they were that far advanced in their technology innovation. Many of them were bioenergy technologies, but I also want to stress that many were actually technologies to produce other bioproducts from wood.
In the interest of time, I thought I would share with you the major conclusions of the study. If any of you haven't looked at it or have an interest in looking at it more, we have a lot of information on our website and I'm happy to follow up.
The major observations were that there are existing opportunities today to extract more value from the trees we're harvesting. We need to take this seriously and we need to take the bio-economy seriously. It's an interesting fact that 30 of the Fortune 100 companies are taking the bio-economy seriously.
Bioenergy and bioproduct production actually performed better and are more job rich when done in an integrated fashion within the existing forest industry. When you're considering the installation of a bioenergy plant, you should be thinking about how to integrate it within the supply chain of the forest industry.
Bioenergy goes hand in glove with the production of other bioproducts, and in some cases production of other bioproducts is equally important or maybe even more important for the long-term survival of the sector.
Bioproducts, a category that includes bioenergy, biochemicals, and biomaterials, can utilize existing residue streams. We don't have to harvest more trees. We don't want to, nor should we hoover up the forest floor; we can do this within the existing residue stream that we have. It's diversion from landfill and diversion away from products that are just not profitable and that no longer have a market. As a final point, a lot more innovation is coming.
There are barriers to this investment: the price of fossil fuels, technology adoption risk, length of runway for developing markets for these new products. They remain our biggest challenges in reaching this potential. Some of these challenges, we believe, can be overcome with smart policy thinking. They can be strategized around and they can certainly be managed.
One suggestion is that, rather than the expensive and technology and/or product specific subsidies we're seeing in China, the U.S., and Europe, FPAC feels it is essential to take a broad technology-neutral perspective that gives companies the freedom and room to make investments and the right business decisions for their own transformation.
We recommend supporting innovation and idea generation through the innovation system. A lot of that work is already being done. Ultimately, we need support for the commercial demonstration of these new innovations. Getting over that valley of death is the hardest part.
And you cannot attract investment from the outside world, meaning from the traditional banks. Even venture capitalists are very tight on this. So we need the ability to partner, to demonstrate that these technologies work commercially. Then the sector takes it from there.
It is then up to the sector to share the risk. We believe the federal and provincial governments are a strong public policy base for this, but that in the long term this is industry's job.
In conclusion, Canada does have a tremendous potential. Vision 2020, the goals I've described to you, the bio-pathways project, and our vast forest resource demonstrate that potential.
Bioenergy is a key part of the mix, and it's an exciting opportunity. We have a lot of opportunity ahead of us. We need to assure ourselves that we will continue to use our forest resource sustainably—that is a no-go place; it has to be and must be sustainably used and managed—and that we support as broadly based an approach as possible, one where bioenergy, biochemical, and other bioproduct production can be produced in concert, not in competition with one another.
With those remarks, I thank you very much for your attention.
Off the top of my head, in terms of a specific response, I'm not sure if we've had a specific response, but I know that in terms of a few forestry-geared programs delivered through Aboriginal Affairs and Northern Development and also Natural Resources Canada and the Canadian Forest Service.... I'm talking in particular about the AFI program, the aboriginal forestry initiative program. Aboriginal Affairs moves a certain amount of funding over to NRCan and they do the forestry thing.
There have been program dollars that we've accessed to look at that complex mix that you bring about and to pull out the best strategy. The best strategy that we've managed to locate is around this idea that for first nations business organizations, first nations in the forest, the communities are ready for innovation.
Because our scale is a little bit different from the FPAC membership, it means that we're being forced to associate and to organize ourselves in a similar but dissimilar and, I think, complementary fashion. I think that's where I would like to push to suggest that this government and also Parliament take a look at, for example, NAFA's funding amount. We have a core of about $244,000 and change.
Take a look. I'm not saying that we're in competition with FPAC or FPInnovations. Their core budget is over $20 million, $30 million, or $40 million, depending on the year. How are we supposed to innovate? How are we supposed to democratize and use the technology on that scale, get it into our mills, and really get and keep first nations in the forest sector moving and driving that investment and job creation cycle?
I'm not saying this in competition, Catherine. I know that your budget—
Ms. Catherine Cobden: My budget is nowhere near that—
Mr. Bradley Young: I know it goes up and down, but relatively speaking we can say that your budget is not $245,000.
Ms. Catherine Cobden: Right. You can. That's fair.
Mr. Bradley Young: Let's be a little fair here in this. Let's hear that there's some responsible players that want to work with the Government of Canada and all the leadership across Canada and build the aboriginal forest sector. That's how we begin to answer that question. I think it has to be done through the support of free enterprise, of entrepreneurship, and of growing first nations business in Canada.