Bioenergy important to forestry’s future
Bioenergy is going to play a central role in the transformation of the forest sector, although the fledgling industry is not by itself sufficient to ensure the sector is attractive to investors, forest industry analyst Don Roberts said Thursday.
The sector will increasingly need to look at how it can produce more products out of the timber it harvests, including bio-chemicals, Roberts told the seventh annual B.C. Natural Resources Forum.
A recent analysis of traditional and emerging forest industries and their technologies in Quesnel, B.C, northwest Ontario and Lac St. Jean, Quebec showed that lumber could generate good returns despite market volatility. However, the financial returns from the pulp and paper sector are simply not good enough, observed Roberts, managing director for CIBC World Markets.
The results for emerging forest sectors and technology was mixed. There was some potential in bio-refining and attractive returns in producing wood pellets.
The study revealed, however, that integrating traditional and emerging sectors could prove beneficial, both in delivering adequate returns on investment and creating jobs, Roberts told the packed luncheon audience at the Civic Centre.
While the pulp sector has been producing power from wood waste for years, there is only one stand-alone biomass power plant in B.C. The bioenergy plant, which uses wood waste from sawmills, has been in operation in Williams Lake for 16 years.
There are other projects on the books now, including a $250-million bioenergy plant in Mackenzie, stalled by a forestry downturn which has closed sawmills and a pulp mill in the community. A $50-million plant earmarked for Prince George was announced eight months ago but has not started construction yet. The plant was planned around an integration model, as it was meant to produce power, bio-oil and charcoal from logging and milling waste fed by a log sort yard.
There are also examples of integration of sawmills and pellet plants in northern B.C.
In Houston, B.C., Canfor Corp., Pinnacle Pellet and the Moricetown Band partnered in a pellet plant at Canfor's sawmill.
In Vanderhoof, a pellet plant was a partnership between two sawmills and another investor. The pellet mill runs on the wood waste from the mills.
The fledgling bioenergy sector is facing challenges from the financial downturn, stressed Roberts. British Columbia is also facing competition from jurisdictions like the United States for investment dollars, where the U.S. government has set aggressive production targets for renewable fuels and is providing subsidies to industry, he said. That includes the American Biomass Crop Assistance Program which provide up to $45 per tonne of dry biomass.
Those kind of subsidies will reduce costs and make capital investments more attractive south of the border, noted Roberts.
China and the European Union have also set aggressive targets for bioenergy production, but Roberts is skeptical those countries, as well as the U.S., will be able to meet their targets.
Canada is well behind other jurisdictions in bioenergy production, accounting for less than two per cent of world biofuel and bioenergy output despite its large forest sector.
Domestic policies will also play a role in fostering the bioenergy sector, added Roberts.