05 June 2007

bioenergy may save BC forest industry

The Canadian forest products industry provides 30+% of the US lumber supply. Admittedly much of this additional supply is not needed in the near term given current closures and curtailments in the industry due to the housing market freefall.

It will be interesting to see how industry on both sides of the border responds to rising energy costs. Four or five years from now when housing recovers we may be looking at a significantly restructured industry.

Will the declining US dollar and increasing transportation costs create de facto protections for US industry? Or will the AF&PA call for a tarrif on imported megawatt hours...

Forest industry faces major changes:
Much of B.C.'s wood supply will be used for bioenergy instead of pulp and lumber, expert says
Gordon Hamilton, Vancouver Sun
Published: Friday, May 11, 2007

Natural Resources: The B.C. forest industry turned in one of the world's worst performances in 2006, but a transformation of historic proportions is just over the horizon, one of the province's leading industry consultants said Thursday.

PricewaterhouseCoopers partner Craig Campbell said traditional pulp and lumber production, particularly in the pine beetle-ravaged Interior, is going to give way to bioenergy, smoothing over the boom-and-bust cycles that characterize the industry today.

Campbell's forecast of a prosperous future comes at a time when the industry is the world's basket case. He said mountains of logs are piling up alongside forest roads today because companies cannot economically convert them to lumber.

The industry tumbled from the world's top performing region two years ago, when it had $1.5 billion in profits, to the bottom of the heap in 2006, losing $500 million, according to findings released Thursday by PricewaterhouseCoopers.

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