February 5, 2007

Energy, forestry sectors need major changes for continued sustainability, competitiveness

Significant, forward-thinking changes are needed to ensure sustainable development and continued competitiveness of Canada's energy and forest products sectors, says the Conference Board's Mission Possible: A Canadian Resources Strategy for the Boom and Beyond

The report discusses the futures of four key Canadian resource sectors: forest products, agri-food, mining and energy. Its is the second of four volumes in a series titled Mission Possible: Sustainable Prosperity for Canada. These four reports, in turn are the culmination of The Canada Project, a three-year program of research and facilitated dialogue that seeks to help improve our standard of living and position in North America and the world. The Conference Board says The Canada Project is perhaps the most comprehensive attempt in the past two decades to reimagine the Canadian economy.

The Mission Possible report on the energy sector says Canada's self-declared billing as a global energy superpower is missing one word: "clean."

"Canada's vast energy resources create a conundrum. Global demand for oil and gas resources can make us a global energy superpower, but it could also damage air quality, strain water use and add to greenhouse gas emissions," says Gilles Rhéaume, the Conference Board's vice-president, public policy. "To achieve sustainable prosperity, Canada must invest in renewable energy, concentrate on conservation and energy efficiency and take advantage of new technologies to reduce air pollution and greenhouse gas emissions."

For Canada to become a clean energy superpower, the report says:

*Industry must invest in new energy supplies, pipelines and power lines, as well as technologies and processes that minimize environmental effects;

*Governments must provide financial incentives to develop and implement new technologies and processes that have fewer environmental impacts, such as carbon sequestration or clean coal technology;

*Governments must create an emissions trading system that provides flexibility in achieving environmental goals;

*Governments need to implement regulatory reforms that make approvals more efficient; and

*Governments need to introduce new regulations that reduce the impact of energy production and consumption on climate change.

Mission Possible: A Canadian Resources Strategy for the Boom and Beyond This research was funded in part by the Social Sciences and Humanities Research Council (SSHRC), an independent federal government agency that funds university-based research in key areas of Canada's social, cultural and economic life.

Addressing Canada's forest products sector, the Mission Possible (Resources Strategy) report says the industry needs to close uncompetitive mills and invest in research and development (R&D), new products, and more modern facilities to compete globally.

"Canada's forest products sector needs renewal. This is especially the case in pulp and paper, where older, smaller mills are losing ground to newer, larger global rivals," says Rhéaume. "Scale matters in this industry, and to compete, Canadian companies must be able to build larger mills. Governments should change timber allocation processes and eliminate interprovincial trade barriers to make "super-mills" possible.

"This will mean that older, smaller mills may have to close, and provincial governments should not step in to save them. But governments need to work with industry to anticipate mill closures and help affected communities make transitions to new economic opportunities," RhÈaume adds.

To support industry renewal, the report says a number of specific actions are required.

*Provincial governments need to reform the timber tenure system and eliminate interprovincial barriers to trade in logs.

*Governments must modify taxation and competition policy to support investment in much larger mills than currently exist in Canada.

*Governments and industry must increase investments in R&D to develop new products, including biofuels and biochemicals.

*Governments should provide incentives to expand biomass energy, similar to that already provided for wind power, and reform energy policies to allow excess electricity generation from biomass to be sold to power grids.

*Governments and industry must continue the work they have initiated to improve air quality in mill towns.

More information is available on the Conference Board Web site, www.conferenceboard.ca.

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