Federal Tax Credit Will Help Develop Markets for Low-Grade Fibre
The federal government’s fall economic statement contained good news for the forest economy. The statement included news that it will include forest biomass conversion technologies for heat and electricity generation in its Clean Manufacturing and Clean Electricity Investment Tax Credits (ITCs).
“This decision marks a significant step forward to grow Canada’s forest bioeconomy and will encourage additional market use for low-grade wood in the face of worsening fire patterns.”
FPAC President and CEO Derek Nighbor.
Sector’s Biggest Challenge
Nighbor touches on one of the biggest problems facing the forest economy in Nova Scotia. The closure of Northern Pulp caused the market for low-grade fibre to collapse. The closure of Northern Pulp created a gap in demand for low-grade fibre that amounts to 1.5 million green metric tonnes.
This loss reverberated throughout the province’s forest economy. The loss in markets for low-grade fibre harmed woodlot owners and upset the economics of our sawmills that produce lumber. It also led to a massive reduction in the number of contractors - the men and women who work in the woods and harvest.
In addition to the challenges caused by Northern Pulp’s closure, Canada’s forest economy faced tremendous pressure from the United States and Europe. Until this announcement, Canada did not offer incentives to attract investment that were on par with the US and EU. Giving biomass projects access to this tax credit helps address this competitive imbalance.
Bigger Than Forestry
We know we need to take steps to combat climate change. This announcement helps with that fight, too. More biomass projects mean we will have access to a powerful source of carbon-neutral, renewable energy that converts wood residuals like sawdust, branches, and bark into energy and lower carbon fuels.
Adding new markets for low-grade fibre will also help reduce the chances of wildfires. Removing dead and decaying trees from the forest is harder without these markets. If these trees are left in the forest, they become forest fire fuel.
