Canada has a major economic opportunity in the global low-carbon economy, if it gets its climate and energy policies right. Those policies should be informed by principles like leveraging the ingenuity of markets and free enterprise, limited government, and respect for provincial jurisdiction. The following article is the latest installment of The Hub’s series sponsored by Clean Prosperity exploring the why, what, and how of conservative climate policy.
Too often, Canadians who live in rural and resource communities are left out of conversations on future competitiveness in a world that is seeking to reduce greenhouse gas emissions. Canada must provide the members of these communities a place of pride in the future economy that ensures they can benefit from value-added production. Indeed, Canada can increase the prosperity of rural Canadians through a collaborative approach to the development of the bioeconomy and contribute to global efforts to combat climate change at the same time.
Mass timber and sustainable aviation fuel, for example, offer the potential to employ Canada’s natural resource wealth in innovative, forward-looking industries that benefit communities like Prince George, B.C., Yorkton, Saskatchewan, Wawa, Ontario, and Eeyou Istchee territory in Québec. To seize the opportunities, firms, educational institutions, and governments at multiple levels will need to work together to combine natural resources and technology in innovative clusters that develop forestry, agricultural, and fisheries communities.
The “bioeconomy” encompasses the use of biological resources for value-added food products, energy, advanced materials, specialty chemicals, and industrial goods. Canada’s strengths in agriculture, forestry, aquaculture, fisheries, and biotechnology position it well in the new bioeconomy.
Long-term prosperity in Canada’s traditional bioeconomy regions cannot be achieved with a business-as-usual resource policy. Scientific and technological advances in agri-food systems, biochemistry, and fuel production are disrupting traditional bioeconomies. Upstream, the use of AI and data is now needed to optimize production and new downstream processes create opportunities to go beyond resource extraction toward value-added processing.
Federal, provincial, and municipal governments must collaborate with industry and indigenous communities to increase the productivity of rural economies in Canada, bringing innovation, new skills, and new technologies to resource communities. Two forward-looking opportunities to create low-carbon industries are mass timber and sustainable aviation fuel.
Mass timber is manufactured wood, often in the form of large panels or long structural beams. It is made by gluing wood in crosswise or overlapping patterns. There are many benefits of mass timber, including the aesthetic appeal and the ability to build low-carbon mid-rise buildings quickly without steel and concrete. This is exactly the kind of technology that can make a “technology not taxes” pledge real.
But one critical advantage over traditional construction materials is that mass timber panels can be customized with Computer Numerical Control (CNC) machines in which pre-programmed computer software dictates the manufacturing process, automating a critical step in the building sector. This means that mass timber works great in modular applications that can reduce housing costs. Mass timber buildings can also be built very quickly because all the panels arrive on site ready to be connected. This reduces construction time and turnkey costs.
Mass timber could scale enormously while adding value to our precious forestry resources. But more importantly, it can create a nexus of technology and resource economy in rural communities that draws in workers, firms, and educational institutions.
Sustainable aviation fuel (SAF) is a drop-in fuel that existing planes can use to reach net-zero goals. The SAF market is growing with EU regulations and a new Chinese blending rule. SAF can be made through a number of pathways. The leading pathway converts oils like canola into fuel through hydrogenation. But a critical emerging pathway involves converting wood and agricultural waste to renewable diesel.
SAF then also creates a potential hub that brings together Canada’s bioeconomy and its tech leadership. Making rural Canada the heart of this emerging global industry would enhance the value of wood and agriculture waste while providing good engineering and processing jobs in forestry and agriculture communities.
Logs are off loaded from a transport truck at the Spray Lake Sawmills in Cochrane, Alta., Thursday, May 20, 2021. Jeff McIntosh/The Canadian Press.
Both opportunities can be used to create a nexus of technology, education, and new forms of production that will allow resource communities to go beyond resource extraction to value-added manufacturing and processing.
Economically and geopolitically, pursuing opportunities in biomass is a critical need for Canada. The global natural resource base is expanding as the global economy shifts from a predominantly fossil-fuel energy system to a more diverse one over the long term. Canada will matter more in this new world and be more financially stable if it also diversifies its energy economy to include a major role for biomass.
Politically, Canadian leaders need a plan for delivering economic gains to rural voters over the long term. Any short-term political gains will evaporate without successful economic development in Northern B.C., rural Saskatchewan, Northern Ontario, New Brunswick, and other places with big natural resource economies. In these places, the resource extraction sector dominates, and there’s no reason to change that. These sectors often have higher productivity than many of the other sectors of the economy, including manufacturing. Indeed, there are opportunities to increase productivity by investing in human capital and new technology. If we want workers to get powerful paycheques, it’s these sectors that we should lean into.
If Canada can’t capitalize on the opportunities to help build these industries, then other countries will. Finland and Sweden have bioeconomy strategies and are supporting commercialization. Oregon’s mass timber coalition is investing in manufacturing and innovation assets. The U.S. is already building SAF plants to compete with Chinese and other Asian production that is coming online as part of China’s drive to reduce oil imports.
Canada needs a systematic approach that brings together next-generation technologies with its natural resource base. The first step in such an approach is valuing the country’s natural resources as assets to be leveraged rather than as commodities to be sold. Adding value to natural resources before shipping them abroad should be a national priority.
Second, to figure out how we can deliver on this national priority together, we need collaboration between governments, the private sector, and other partners to understand the whole value chain from forest and soil management through manufacturing and processing capacity to downstream markets. Mapping the value chain in this way gives a clear perspective on exactly where the opportunities and barriers are so that the government can enable innovation along the whole pathway.
What this will show, for example, is that there are real challenges facing Canadian forestry, from wildfires to pests that are reducing fibre production. The reduction in fibre can be offset by strategies that maximize the value from fibre by optimizing the use of the whole tree. Ontario’s forestry industry has begun this work with a biomass action plan. Other efforts aim to bolster the use of lignin, the “glue” in trees, to make polymers and fine chemicals.
Third, once problems and solutions have been identified, a variety of policy initiatives will be needed to backstop the value of our natural resource base. Research and development will need targeted investment. Canadian firms need help scaling their innovative ideas in a competitive global environment. Regulations and standards need to be modernized. For example, de-risking insurance portfolios and making fire codes performance-based so they do not penalize wood structures will have a major impact.
One critical action will be investing in and collaborating to build a skilled workforce in rural communities. Community and technical colleges need support to scale up modernization programs and prepare a future-oriented workforce. Such programs can bring computer programming and technological development to Canada’s highly skilled and capable rural communities. This will create jobs that young people are excited about having, jobs that combine technology and Canada’s natural resources.
Such initiatives are more about coordinating and organizing the multiple levels of government through effective leadership than they are about writing big cheques. Federal dollars can be combined with provincial support, private funds, and municipal concessions.
The provinces and communities themselves have already begun the work. They just need the support to scale up their ideas and help make these efforts more than the sum of their parts. Indeed, collaboration with provincial governments must be the main conduit for a pan-Canadian approach to the bioeconomy. But there is no substitute for a truly national approach.
Building economic development around new industries like mass timber and sustainable aviation fuel within the context of a systematic approach to the bioeconomy is a winning strategy for Canada. Taking this approach can ensure that workers in Canada’s forestry, agricultural, and fisheries communities will not be left behind in a new, quickly emerging global competitive landscape driven by global efforts to reduce emissions. Canada has a chance to come out on top by producing sustainable, innovative, world-leading products.
