Fuelling the Future The forest products industry faces radical change to maintain sustain-ability and economic prosperity. BIOMASS CANADIAN Volume 16 Editor -Heather Hager (519) 429-3966 ext 261 [email protected] Group Publisher/Edistorial Director -Scott Jamieson (519) 429-3966 ext 244 [email protected] Contributors -Gordon Murray, Reg Renner T he stage is being set for the biomass, bioenergy, and bioproducts industry to take some giant leaps forward. Dif-ficulties with other sources of energy, e.g., unrest in Middle East oil-producing regions, skyrocketing gasoline prices, and nuclear energy troubles in Japan, are reinforcing that wood can play a role as a reliable, renewable en-ergy source. U.S. President Barack Obama is pushing for an end to oil subsidies; the European Union is looking at a 200–260-million cubic-metre fibre deficit by 2020 under its current renewable energy policies; and China has a growing demand for wood that can’t be met by its own stocks. The increasing need for wood-based heat, power, transportation fuels, chemicals, and other products will result in fierce global com-petition for wood fibre supply, according to a February 2011 PwC report entitled Growing the Future: Exploring New Values and New Direc-tions in the Forest, Paper & Packaging Industry. Although the production and use of traditional paper products is expected to decrease, novel uses of wood fibre will increase, says the re-port. And fibre demand is expected to increase faster than supply. That will increase the value of forests, both for their fibre supply and their conservation value, affecting the way we ac-cess fibre and creating a paradigm shift from the mindset of simply obtaining fibre to that of collecting and using it in the most efficient and effective manner possible. And that will involve changes in three key areas: business models, value chains, and fibre markets. The current forest products industry will need to strengthen its core business performance while exploring opportunities for new partnerships outside the forest in-dustry. Many corporations in the biotech, petroleum refining, and chemical industries have the capital, experience, and expertise to invest in developing complementary bio-based products. An example is Weyer-haeuser and Chevron’s 2008 joint venture to develop renewable trans-portation fuels from wood. The value chain from fibre to end product will expand and become much more complex. Traditional operations will need to con-solidate to remain competi-tive, while expanding into novel products. Fibre use will be designed with its end of life in mind, likely ultimately heat and power, with no waste and no land-fill, predicts PwC. There will be new competi-tors, but also new opportunities for new types of business collaboration and research. Many pulp mills may become biorefineries, produc-ing multiple products such as heat, power, chemicals, fuels, and pulp, allowing product switching based on market demand and price. PwC expects changes not only in the way fibre is used, but also in the way it’s traded in the marketplace. The energy sector will likely set the base demand for biomass, so interna-tional fibre exchanges should emerge to pro-vide determinable pricing mechanisms as for other internationally traded commodities. Bio-mass aggregators might also gain importance in providing customers with a steady, depend-able fibre supply. So there look to be some great opportuni-ties for continued success in the biomass in-dustry for companies that are looking ahead, building the necessary relationships within and outside the forest industry, and adapting their business models accordingly. Heather Hager, Editor [email protected] Market Production Manager Josée Crevier Ph: (514) 425-0025 Fax: (514) 425-0068 [email protected] National Sales Managesr Ross Anderson Ph: (519) 429-5188 Fax: (519) 429-3094 [email protected] Quebec Sales Josée Crevier Ph: (514) 425-0025 Fax: (514) 425-0068 [email protected] Western Sales Manager Tim Shaddick [email protected] Ph: (604) 264-1158 Fax: (604) 264-1367 Production Artist -Emily Sun Canadian Biomass is published six times a year: Februar y, April, June, August, October, and December. Published and printed by Annex Publishing & Printing Inc. Printed in Canada ISSN 0318-4277 Circulation Carol Nixon e-mail: [email protected] P.O. Box 51058 Pincourt, QC J7V 9T3 Subscription Rates: Canada -1 Yr $49.50; 2 Yr $87.50; 3 Yr $118.50 Single Copy -$9.00 (Canadian prices do not include applicable taxes) USA – 1 Yr $60 US; Foreign – 1 Yr $77 US Occasionally, Canadian Biomass magazine will mail information on behalf of industr y-related groups whose products and ser vices we believe may be of interest to you. If you prefer not to receive this information, please contact our circulation depar tment in any of the four ways listed above.. No part of the editorial content of this publica-tion may be reprinted without the publisher’s written permission ©2011 Annex Publishing & Printing Inc. All rights reser ved. Opinions expressed in this magazine are not necessarily those of the editor or publisher. No liability is assumed for errors or omissions. All advertising is subject to the publisher’s approval. Such approval does not imply any endorsement of the products or ser vices advertised. 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