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Helping China with its energy challenges--

When it comes to criticizing trade with China these days, I know that taking this position is like a spawning salmon trying to swim up Niagara Falls. In a world hit by recession and with thousands of forest industry workers losing their jobs, any market growth for Canadian wood products is good news.

While there has been some progress in more solid wood sales, with 552 million board feet of Canadian lumber shipped to China during the first nine months of 2008, perhaps another market opportunity lies in wood pellets or biomass. That's because China is developing a very serious environmental image problem with its preference for building dirty, coal-fired power plants, whose CO2 emissions contribute to global warming.

While India has also experienced considerable economic growth recently, it has a program to increase nuclear electrical production by nine per cent a year till 2050, making it less of a global pariah on the global warming issue.

A few months ago, Canadian companies who participated in a forestry trade delegation to China announced 83 million board feet of new orders, or potentially enough wood to keep four B.C. sawmills open for 2009.

Before anyone breaks out the champagne, however, keep in mind that most of China's lumber demand was for very low grades used for concrete forming. According to business reports, China only built 500 wood-framed houses in all of 2008.

While Canada has played a major role in helping China update its building code--making it easier for citizens to build wood-frame structures based on North American standards--current indications show that the country's cultural preference for concrete is still strong.

The fact of the matter is that Canada, China and the world have a problem because of China's preference for coal, but perhaps it is a situation where we can help China improve its image and expand our wood biomass sector at the same time.

The economic growth experienced recently in what is the world's most populous country has definitely fueled a housing shortage and there is an opportunity for more Canadian solid wood usage in that area. But growth has also fueled energy demand.

China's reliance on coal is troubling and should be an alarm bell for anyone concerned with global warming. According to one writer for the New York Times, China is already the world's largest producer of carbon dioxide. Its emissions doubled between 1996 and 2006, and it plans to increase coal production by 30 per cent by 2015. This decision alone is expected to negate the benefit of any emission reductions elsewhere. The aggressive North American programs to curb greenhouse gas emissions are called into question when countries like China simply behave like it is business as usual, which means burning of a lot more fossil fuels.

In my view, Canada's forest industry and government leaders need to stand up, take notice, and raise our concerns about China's energy expansion plans. No doubt, China's growth is attractive. It makes sense for Canadian forest companies to want to establish themselves in this market, especially because of a growing middle class and demand for consumer products. But at what price? Are we prepared to pay the price globally for a fast buck today?

Never being one to simply criticize, I believe that as Canadians we need to not only voice our objections to China's plans to expand its energy production using coal-fired power plants, but provide it with solutions and alternatives, such as conversion of existing plants or building greenfield plants based on biomass--wood biomass being an obvious choice. Using a package deal approach, it may even encourage more solid wood usage in building construction.

Global trade of woody biomass was just over 11 million tons in 2007, up from 5.6 million tons in 2003. What's quite amazing is that the largest exporter of biomass in 2007 was Germany, which exported 1.4 million tons to neighboring Austria, the Netherlands, Belgium, and Italy. Germany's leadership in wood products has always fascinated me, considering that the country's forest resource is miniscule compared to countries like Canada. In 2007, Canada exported 1.3 million tons, consisting of about 600,000 tons of wood pellets for the European market.

When it comes to supplying the Chinese market, we have a definite advantage over many competitors because that market is only one boat ride away. Looking for ways to transport wood chips from the mountain pine beetle-ravaged B.C. forests could help the Chinese get started with a guaranteed wood supply. Then, perhaps we could suggest that they consider using their vast landmass to plant fast growing and sustainable wood fibre crops to help support power plants that consume cleaner burning wood biomass instead of coal.

Not only would this be positive for the environment, but it could also put a lot of people in China's less affluent interior regions to work in a much healthier environment.

The bottom line is that if Canada helps China convert to biomass power production, we help ourselves and our forest sector in many positive ways as well.

Untitled Document

July/August 2009


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