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Wood biomass — a potential goldmine

By Tony Kryzanowski

Designing plants to only produce lumber, panelboard, and wood chips may not be the best way to operate a profitable forest company in today’s world. While this focus may have served the industry well in the past, it may be the major reason why the Canadian wood products industry is at such a low point right now.

The eye opener for me was during a recent tour of a hardwood flooring plant in Virginia. Hardwood flooring has lost market share to carpet and linoleum for decades—until recently when allergists discovered all the molds, dust, and insects that collect over time in carpet and the impact it is having on our health.

That partially explains why hardwood flooring has made a comeback. What has also helped the industry is development of a pre-finished, low maintenance, more durable product. But any honest hardwood flooring producer will tell you that it’s still a tough market. In fact, the Virginia plant was shut down for almost two years before being purchased by new owners.

One of the smartest investments they made was purchasing a sawdust pelletizing plant. The hardwood plant produces about five tractor trailer loads of sawdust per day, and with the closure of several furniture and particleboard plants in the area, it was having a difficult time disposing of this wood biomass resource. The pelletizing plant has been operating for two years now and currently represents 25 to 30 per cent of the plant’s annual income.

It appears to me that the Canadian industry is looking at the wrong end of the value chain. The future seems to be in green energy and the forest industry is sitting on what is potentially a gold mine. Wood residual resources can be used to generate power, produce wood pellets and can also be converted into ethanol fuel. With the bad rap that corn-based ethanol is getting because of the impact it is having on food prices, wood-based ethanol is a much easier sell.

Wood biomass is often touted as a way for individual plants to save money by generating their own power and heat. However, why not take the next step?

Why not create additional profit centres at the plant level to supply power for public consumption, or to use the wood biomass to produce pellets or ethanol? Just imagine how many Canadian forestry operations would still be operating right now if with a flip of a switch, they could focus more on producing wood pellets, ethanol or electricity—all of which are in demand—instead of softwood lumber.

It’s a fact that the softwood lumber market may not reach high profitability for a long time. There is a lot more to it than the sub-prime mortgage crisis in the US and the devaluation of the US dollar.

The trend is toward fewer housing starts throughout North America because the baby boomers are starting to retire. Many have a lot of their retirement incomes tied up in the equity of their homes and are looking to unload those monster houses they purchased to raise a family, to pad their bank accounts.

Unfortunately, there are fewer consumers in the generations to follow, meaning there will be less demand for new housing. Many Generation Xers will be able to purchase affordable housing from boomers eager to unload. You can bank on this trend. Just look at how baby boomers have influenced trends in the past. They are probably the reason why Chrysler Corporation, though it may be struggling right now, exists at all today because of the demand boomers created for the minivan 30 years ago.

So rather than waiting for government handouts to support an industry with limited future prospects, it is definitely crucial for the forest industry to work harder to help itself by creating more profit centres from the existing resource.

The amount of non-merchantable wood fibre that’s available in the BC Interior as a result of the mountain pine beetle infestation demonstrates just how much biomass is available from that area alone. The BC Ministry of Forests and Range estimates that the potential 20-year tenure opportunity for bioenergy from the BC Interior is between four and 4.4 million cubic metres per year.

Obviously the infested wood will run out eventually, but the time to plan for that eventuality is now, by investigating what other jurisdictions are doing with fast growing willow and other species that produce massive amounts of wood fibre over a short period of time. This will ensure that new profit centres are sustainable over the long term.

Is there a future in this sector of the industry? Wood Resources International reports that global trade in woody biomass has almost doubled in five years. Furthermore, worldwide trade of wood pellets reached a record three million tons in 2007.

As the world’s second largest country with a surplus of underdeveloped arable land, Canada has a natural advantage over many other smaller countries: We have the landmass to support a viable wood biomass industry.

Canada is a global leader with our wood framing systems. Now we can show leadership by demonstrating what is possible using woody biomass as an alternative and renewable energy resource.