Logging companies are going to be required to leave less waste behind to help build a new bioenergy industry in B.C., Forests Minister Pat Bell said Tuesday.
But Bell said Victoria is looking at incentives, not heavy-handed rules, in this latest remaking of regulations for the troubled B.C. forest sector.
The province is drafting new regulations that will remove many of the barriers to using the whole log, and once that is done, Bell said he expects companies to leave less waste.
He said government, as landlord, is going to have to be involved in ensuring more value is extracted from the forests than is the case today. The motive, he said, is to develop a new bioenergy industry that will transform the way wood is used.
The minister's comments come after the province's own fiscal update shows revenues from the industry are expected to plunge 36 per cent this year.
In an address at the University of B.C.'s Clean Energy Research Centre, Bell compared the move to full log utilization with the transformation that hit the Interior industry 50 years ago when sawmill waste was used to provide fibre for a newly emerging pulp industry.
"We are going to set the right framework to make sure that economics drive that decision and achieve that decision," Bell said in a later interview.
Bell said one of the ways the province can create a better framework is to change the way it charges stumpage on Crown timber.
Now, companies are charged the full stumpage rate on any logs they bring out that may be of lesser quality than initially projected. As a result, companies avoid the risk of being billed too much by leaving any questionable wood behind.
"Once the tree hits the ground we should be utilizing every single piece of the tree we can use within the economics of it. The damage has been done, the tree's on the ground, let's utilize it, so that speaks to a different way of charging."
There are economic limits, however, on how much wood can be taken out, Rick Jeffery, president of the Coast Forest Products Association, said in an interview.
On the coast, for example, it would be difficult to economically justify using a giant grapple-yarder to remove five-centimetre (two-inch) diameter tree tops, he said.
He said coastal companies utilize more wood than is the case in the Interior, where the pine beetle infestation has resulted in huge piles of wood being left behind.
The minister was at UBC to announce $600,000 in research grants for the bioenergy sector. The money is going to:
n Research into issues of wood pellet production, a rapidly growing sector of the forest products industry.
n More accurate data on the amount of biomass being left behind by loggers.
n Development of a financial model for the wood pellet industry that will allow the forest industry to capture more value from the forests.
Bell said he believes there is far more waste wood being left behind than current data shows.
The focus of the day's announcement was on the wood pellet sector, which is growing at a rate of 25 per cent a year. The industry is now exporting one million tonnes of pellets, mostly to Europe. Prices range from $180 US a tonne to $200 US, giving the industry a value of up to $200 million a year.
The growth of the pellet industry is one of the few bright spots in the forest sector, where, according to the province's financial report for the quarter ending June 30, revenues to the province are expected to fall by 36 per cent during the fiscal year 2008-09. The decline is worse than the province anticipated in its spring budget.
Harvest levels then were forecast to drop to 59 million cubic metres, a modest decline from 60.4 million cubic metres the year before. Now the government is forecasting a harvest of 52 million cubic metres with a return to last year's levels not occurring until 2010-11.
Bell said the province is responding to the decline by aiding in creating new markets, such as bioenergy, for B.C. wood products. He also noted lumber shipments to China hit one billion board feet this year, diverting lumber offshore that would otherwise be over-supplying the depressed U.S. housing market. B.C. mills 18 billion board feet of lumber a year.Vancouver Sun
