The forestry biomass sector came under scrutiny once more at the seventh annual natural resources forum in British Columbia, Canada. One of its key speakers, forestry analyst Don Roberts for CIBC (a North American Investment institution) stated that bio nenergy is likely to play a pivotal role in the future of the forestry investment industry.
Recent studies of traditional and emerging forest industries and their technologies in British Columbia, Ontario and Quebec showed that timber could generate good returns despite market volatility but significantly, the forestry investment returns from the pulp and paper sector are not attractive enough, observed Mr Roberts. The forestry sector has to find alternative ways of obtaining more products from the timber it harvests. The trend has been flagged by The United Nations European Economic Commission in its ” Forest products annual review” of 2009, stating that a “structural change” was occurring within the forestry sector. From the UNECE report …“The wood energy sector seems to have been immune to the global economic crisis. Demand for renewable energy sources, including wood biomass, continues to grow steadily due to Governments’ incentive policies fostering climate change mitigation efforts and energy security.”
So a similar theme seems to be emerging from all the analysis tht is being put out from within the forestry industry. Getting back to the Canadian forum and forestry investments forum, specifically in Canada, it was stated that some potential in bio-refining and attractive returns in producing wood pellets existed . The study revealed that integrating traditional and emerging sectors could prove beneficial, both in delivering adequate returns on forestry investment and creating employment.
The pulp sector has been producing power from wood waste for years, yet there is only one stand-alone biomass power plant in British Columbia. The bioenergy plant, which uses wood waste from sawmills, has been in operation in Williams Lake for 16 years. However there are other projects in the pipeline, including a $250-million bio energy plant in Mackenzie. This had been delayed by the general economic downturn which inevitably affected forestry investments along with all other investment decisions at the time. The general downturn, particularly in the construction industry had closed sawmills and a pulp mill in the community. A $50-million plant earmarked for Prince George was announced eight months ago. The plant is intended to produce power, bio-oil and charcoal from logging and milling waste fed by a log sort yard.
Still, according to Mr Roberts, the Canadian bioenergy sector is facing challenges from the financial downturn. Competition from the United States, where the U.S. Government has set aggressive production targets for renewable fuels and is providing subsidies to industry. For example the American Biomass Crop Assistance Program which provide up to $45 per tonne of dry biomass. Subsidies such as these 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 Mr Roberts remains unconvinced that they 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.
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