Addressing Economic Sustainability Challenges With New Forest Products

1. Addressing Economic Sustainability Challenges With New Forest Products Overview of Canada’s approach Glenn Mason Director General – Policy, Economics and Industry Branch Canadian Forest Service

2. Presentation Overview • Economic context • Forest Sector economic importance in Canada • Changes and challenges • Focus on innovation • Diversified forest products for the Green Economy • The biorefinery model: Increasing the efficiency of the sector • New products: • Emerging and breakthrough technologies • Supporting increased use of wood in buildings • Market Access and Acceptance

3. Canadian Forest ServiceStrategic Priorities • Support Forest Sector Competitiveness • Driving sector transformation through innovation and market expansion • Optimize Forest Value • Optimizing the socio-economic benefits from forests to industry and communities • Advance Environmental Leadership • Creating competitive advantage through strong environmental performance

4. Healthy Economics Needed • Sustainable forest management is an interplay between three realms: • Environment • Society • Economy

5. Economic Context – Importance of Forest Sector in Canada • Economy • Contribution to GDP: 1.9% • Exports: $26.4B (+$17.2B to balance of trade) • Exports • Three of Canada’s top 15 exports are forest products: • Softwood Lumber: $5.2 B • Pulp: $7.5 B • Newsprint: $2.8 B • Other paper: >$7.0 B • Employment • 234,000 forest industry jobs in all regions of Canada • Major aboriginal employer • About 200 communities are highly dependant on forest sector

6. Economic Context – Change and Challenges • Structural changes • Canadian dollar appreciation • Decline in North American newsprint demand • Increased competition internationally • Short term challenges • Collapse of the US housing market • Slow recovery from the global recession • Impacts • major forest firms in financial difficulty • large number of mill closures • Important jobs losses

7. Focus on Innovation – Forest products for the Green Economy • High value products • A “Green” alternative

8. Focus on Innovation – Increasing economic efficiency: The Biorefinery Model “Future” “Primary” “Secondary” Products Paper Processes GWD/TMP Market Pulp Lignin & cellulose Bark Kraft Biomass Boiler Energy Black liquor Forest Bark Steam Forest Biomass By- & 2°-products burning Biorefining Bark Biofuels Residuals Bio-ethanol, bio-diesel Sawmill Sawdust Biochemicals Biochemicals & Lignin Lumber Boards • Integration of new processes within existing traditional mills Chips • Diversification including chemicals and energy from residues • Result in greater efficiency, new revenue streams

9. Focus on Innovation – Emerging and Breakthrough technologies: Nanocrystalline Cellulose

10. Focus on Innovation – Increasing the use of wood in buildings: Cross-Laminated Timber

11. Market Access and Acceptance • Proactive approach toward appropriate recognition of forest products in: • Laws and regulations • Codes and standards • Environmental rating systems • Ecolabels • Green building initiatives • Procurement policies • Renewable energy initiatives

12. A vibrant forest industry is able to take its rightful place in the Green Economy Comments and Questions Welcome!