Building a Resilient National Forest Sector: FPAC’s Recommendations for Canada’s Future

In August, the Forest Products Association of Canada (FPAC) submitted pivotal recommendations to Finance Canada for the upcoming 2025 pre-budget consultation. The document lays out a compelling vision for revitalizing Canada’s forest industry through three foundational pillars: competitiveness, investment attraction, and trade and market access. These pillars aim to not only enhance the industry’s growth but also ensure its sustainability in a rapidly changing global landscape.

Pillar #1: Competitiveness

Removing Regulatory Barriers

One of the most pressing challenges faced by Canada’s forest sector is its intricate regulatory environment, characterized by overlapping federal statutes and varying provincial regulations. This complexity leads to a series of negative outcomes:

• Regulatory conflict and confusion among jurisdictions.
• Delays in securing necessary permits and access to resources.
• Investment uncertainty that hampers modernization and expansion efforts.
• Misalignment between policy intent and real-world operational implementation, particularly regarding wildfire fuel management.

To rectify these issues, FPAC suggests strategies to streamline regulatory processes. One significant recommendation is to enable greater use of bilateral equivalency agreements under the Species at Risk Act, ensuring that provincial measures that meet or exceed federal standards are recognized. Additionally, creating a Prescribed Works and Waters regulation under the Fisheries Act for low-risk forestry activities could simplify routine operations, minimizing the need for case-by-case permits.

The Way Forward

By implementing these recommendations, the government can pave the way for a more competitive forest sector that can better withstand global challenges. Coordinated efforts between federal and provincial bodies will also help reduce duplicative environmental reviews and accelerate decision-making timelines.

Pillar #2: Investment Attraction

Rebuilding Investor Confidence

Canada’s forest sector has been grappling with years of deferred capital investments and policy uncertainties, particularly concerning clean energy initiatives. As a result, the sector risks entering a prolonged period of decline, which hampers the achievement of national goals in housing and clean technology.

The consequences are profound:

• Delays in housing developments that are crucial for meeting the federal government’s target of 500,000 new housing starts.
• Missed opportunities for emissions reductions that are vital for combating climate change.
• Underutilized innovations in bioenergy and mass timber.
• Increased wildfire risks due to unmanaged fuel loads.

Encouraging Sustainable Growth

FPAC outlines several key government actions to restore investor confidence. These include:

• Accelerating the Clean Technology Investment Tax Credit (ITC) specifically for biomass projects to unlock substantial renewable energy investments.
• Streamlining housing approval processes through a harmonized regulatory framework, improving the efficiency of provincial and federal permitting.
• Designating domestic wood as a strategic resource in federal housing initiatives, thereby prioritizing Canadian materials that align with sustainability goals.

These actions will not only strengthen investor confidence but also foster innovations in wood-based products that can play a significant role in Canada’s climate strategy.

Pillar #3: Trade and Market Access

Strengthening Market Access

The vulnerability of Canada’s forest industry is underscored by its reliance on U.S. exports, accounting for approximately 78% of its market. Trade challenges, such as the softwood lumber dispute and evolving global trade regulations, heighten the need to diversify markets and enhance Canada’s export competitiveness.

Emerging regulations—like the European Union’s Deforestation-free Product Regulation (EUDR)—present additional challenges. Without proactive responses, Canada risks losing critical market shares despite its environmentally sustainable practices.

Government Strategies for Success

To strengthen market access, FPAC proposes several crucial initiatives:

1. Prioritizing the elimination of U.S. softwood lumber duties in trade negotiations.
2. Restoring forest product market development funding to support export diversification.
3. Modifying the Canada Transportation Act to enhance the freight transportation network, which is essential for maintaining competitive trade advantages.

These measures will help mitigate vulnerabilities within the Canadian forest industry, enabling more robust participation in global markets while fortifying domestic economic stability.

Conclusion

As Canada charts its course toward a sustainable and resilient forest sector, the recommendations put forth by FPAC in its pre-budget consultation are vital. By focusing on enhancing competitiveness, fostering investment attraction, and ensuring market access, Canada can not only protect its forests but also secure economic growth, create jobs, and promote environmental stewardship. The path forward requires collective collaboration between government, industry stakeholders, and local communities, ensuring a cooperative approach to achieving these ambitious yet attainable goals. The time to act is now, for the health of Canada’s forests—and indeed, its future—rests upon these decisions.