Working draft for discussion with provinces and territories
Canada’s forest sector has faced crisis after crisis over the past 20 years. The sector is now in a pivotal period marked by the confluence of trade disputes, fibre challenges, low-cost competition and changing consumer demands. This is placing unprecedented pressure on industry, regional economies, and forest-reliant communities.
For decades, governments have delivered programs to promote investment, research, innovation, Indigenous involvement and market diversification in Canada’s forest sector. These programs have had impacts, but they have not focused on large-scale transformation at the level needed to face today’s challenges.
Crucially, 88% of Canada’s forest are owned by the provinces and territories. They make forest use decisions with multiple, and often competing, interests in mind: the important role forests play in biodiversity and climate regulation, forests as the foundation of a major industry that creates jobs and products Canadians need, and to satisfy our need for and love of recreation and relaxation in the great outdoors. Provinces and territories are also responsible for other fundamental roles, including Crown consultation with Indigenous groups with respect to forest management.
While recognizing the critical role that provinces and territories play in the competitiveness and sustainability of the forest sector, the Government of Canada is putting forward a vision and action plan to drive the transformation of the forest sector – in collaboration with provinces, territories and other key partners. This federal action plan is informed by the recommendations of the 2026 Canadian Forest Sector Transformation Task Force.
Working Together to Transform Canada’s Forest Sector
Comprehensive, coordinated and sustained efforts by governments, industry and Indigenous partners will be paramount to achieving a shared vision that positions the forest sector for long-term success.
The Government of Canada will implement a Forest Sector Strategy for Canada through four pillars:
- secure competitive supply to incent increased investment;
- pivot to transform the sector through investments, partnership and innovation;
- pursue new markets and opportunities; and
- support communities and workers.
The Government’s objective is to transform the sector and achieve the following vision --
Vision
Canada is the world leading supplier of traditional and advanced forest products, maximizing the value and sustainability of its forest assets.
How We Get There: Transformation Agenda
Pillar One: Secure Competitive Supply to Incent Increased Investment
The forest sector is a manufacturing sector. Ensuring predictable cost-competitive access to Canadian wood fibre is fundamental. Increasing regulatory burden, including overlap between levels of government, and land use decisions for conservation and environmental outcomes constrain the availability of wood. The Task Force notes that repeated provincial policy reforms in recent years have led to reductions in industry access to fibre, conflict over how forests are managed, and reduced investor confidence.
To secure competitive supply, the federal government proposes the following collaborative actions to drive transformation:
- Make federal investments in regions where there is demonstration of long-term access to cost-competitive fibre.
- Establish a fibre program to pilot new tenure & management models with willing provinces and territories and Indigenous groups, including preferring:
- Testing and adopting new forest stewardship, ownership, and tenure models to reduce fibre costs, increase supply predictability, and incent investment.
- Increased participation of Indigenous communities and local forest owners in fibre management.
- Take action with provinces and territories to improve regulatory efficiency and certainty, within specific timelines.
We must also take into account new climate realities and their impact on fibre supply. Canadian forests are increasingly threatened by more frequent and severe wildfires and insect outbreaks. Proposed collaborative actions:
- Deliver national-scale science, data-sharing, risk mapping, digitalization and improved knowledge mobilization for informed decision-making, including through the WildFireSat Mission.
- Support Firesmart activities to protect communities and critical infrastructure.
Pillar Two: Pivot to Transform the Sector through Investments, Partnership and Innovation
The effort required and the quantum of transformative investment required is considerable. Financial instruments such as contracts for difference and offtake agreements can help de-risk investments in technologies. Potential projects include sustainable aviation fuel production, biocarbon and bioenergy with carbon capture and storage, with investment requirements of up to $1 billion per facility.
Modernizing facilities that are key links in supply chains will also be important – required mill modernization investments include projects ranging in size from $250 million to over $1 billion. Biorefineries that use wood byproducts need an investment ranging from $1 billion to $3 billion each. Several regions in Canada have the potential to attract these facilities – and they in turn would provide those regions with a key anchor for the rest of the forest product supply chain much the way a pulp and paper mill might now. They also bring quality, stable jobs – creating a virtuous circle for workers, communities, and innovation. Proposed collaborative actions:
- Implement a transformation fund with bankable measures, e.g. loans, loan guarantees, and contracts for difference.
- Place emphasis on anchor mills that can support regional industry clusters.
- Ensure that policies send clear and consistent signals to develop domestic value-added production capacity, from solid wood products to advanced forest bioproducts.
As federal, provincial and territorial governments continue to prioritize Buy Canadian policies and invest significant public funds in housing, these investments coupled with clear, supportive and coordinated public policy that favours wood as a low carbon material for building and other consumer and industrial products sends important demand signals. Proposed collaborative actions:
- Enact policies for Canada to be our own best customers for wood products.
- Ensure wood is prioritized in housing investments through Build Canada Homes and the Canadian Forces Housing Agency, as well as the Buy Canadian policy.
- Tackle barriers to building more with wood and use of other wood-based advanced materials, including insurance requirements, building codes and standards, and work with provinces and territories to increase the use of wood construction for all building types.
Pillar Three: Pursue New Markets and Opportunities
Global trade patterns are reorganizing, and while U.S. will remain an important market for Canadian forest products, other countries are looking for sustainably sourced wood-based products. To leverage Canada’s reputation as a strong partner, stable democracy, and a reliable producer to be the supplier of choice of traditional and advanced forest products, the federal government proposes the following collaborative actions to drive transformation:
- Invest in trade and transportation infrastructure, particularly rail and port capacity, to move goods more cost effectively to new markets.
- Expand and extend sector transformation programs – which have significant demand and are heavily oversubscribed. This includes programs focused on market diversification, investments in advanced wood building systems, innovation, and Indigenous participation in the sector so that we continue to:
- Bridge the gap between technology development and commercialization.
- Increase Indigenous and local partnership in the forest sector value chain.
- Secure market access for Canadian products and help companies navigate complex international policies, standards, and regulations.
- Fine tune investment in product diversification by looking at what the world will need between now and 2050.
- Support initiatives that help to develop a unified brand for Canada’s forest sector.
In some cases, consensus approaches among provinces and territories will be needed to address administrative, technical, and logistical barriers that impede our forest products from reaching and accessing new markets. The federal government proposes the following collaborative actions:
- Convene federal, provincial, and territorial dialogue to develop common approaches where helpful for building international relationships with trusted global partners, securing market access, and attracting foreign investment.
- Organize inbound missions that showcase jurisdictions working together to maintain market share and access new markets.
Pillar Four: Support Communities and Workers
Developing and producing advanced forest bioproducts will require new skills. At the same time, significant adjustments and rationalization are expected in the sector which will displace workers, affect livelihoods, and impact the viability of forest-dependent communities. To manage the need for new skills and supporting affected workers, families and communities, the federal government proposes the following collaborative actions:
- Programming for workers and communities to ensure needed skills, while also supporting transition for workers affected by resizing in the sector.
- Estimate supply chain impacts from resizing of the sector to inform proactive support for workers and communities managing transition.
- Support training in wood properties, structural wood products, codes and references for non-residential wood construction, evolving digital skills, and other knowledge gaps in traditional construction curriculum, especially for architects, designers, and engineers.
The federal government works hand in glove with provinces and territories, who, jurisdictionally lead in supporting workers and communities. The federal government proposes the following collaborative actions:
- Continue to invest through Labour Market Development Agreements to be delivered by provinces and territories, as well as to provide timely Employment Insurance for affected workers.
- Ensure availability of job transition supports, and community planning and transition funding where job losses occur.
- Link government investments with mechanisms to support upskilling and training to ensure the right workforce is available as the sector transforms.
- Collaborate to anticipate how communities and workers may need to prepare for new jobs in the sector and to identify opportunities for skills transfer where loss of forest sector jobs is the reality.