Details on Transfer Payment Programs (Exceeding $5 million during the reporting year)

Name of transfer payment program: Investing in Canada’s Forest Sector –Forest Innovation Program (FIP) and Expanding Market Opportunities Program (EMO) (Voted)

Start date: March 12, 2009

End date: March 31, 2017

Description:

1. FIP – aimed at supporting the goal of sustainable natural resource development by enhancing the long-term economic opportunities for Canada's forest sector through increased investment in forest innovation.

2. EMO – aimed at maintaining and growing international wood product markets, expanding wood use in the North American non-residential and mid-rise construction market, and promoting the strong environmental credentials of Canadian forest products.

Strategic outcome: 1) Canada’s Natural Resources are Globally Competitive

Results achieved:

Expanding Market Opportunities
The EMO program continued to increase the use of wood in various construction categories (e.g., residential, commercial, and non-residential) both at home and abroad. Under the offshore component of the Program, exports of Canadian wood products to offshore markets increased by 69% between 2009 and 2012. In 2012-13, proponents continued to build on their successes and have now established a strong presence and a recognized Canadian brand in markets such as Japan, China and Korea. Some specific achievements during 2012-13 include:

• Japan: NRCan and the governments of British Columbia and Alberta, in collaboration with Canada’s forest industry, helped to rebuild some of the Japanese public structures that were destroyed following the March 2011 earthquake and tsunami. In 2012-13, two public structures—the Donguri Anne Public Library and the Yuriage Public Market, both landmark buildings in Natori, Japan—were rebuilt using Canadian wood products and construction technologies.
• China: The Canada Wood College trained 634 designers, builders, building inspectors, students, and college teachers. Customized training was introduced to address individual companies’ construction issues.
• Korea: Through the efforts of Canada Wood, the Korean Institute of Construction Technology granted three certificates of accreditation for acoustical tests for party wall assemblies in South Korea. These certificates, granted in Korea, will open up a new market niche enabling the use of wood-frame systems and technologies in party wall applications in multi-family housings.
• India: To further diversify Canadian wood sales to a broader spectrum of end markets, the BC government, with funding support from NRCan, opened an office in Mumbai, India, to promote the attributes and benefits of Canadian forest products in this emerging market.

Domestically in North America, during 2012-13, EMO helped support the conversions of 109 projects to using more wood its in structural and interior designs, representing $85 million of new wood product sales. Some specific achievements during 2012-13 include:

• Canada: The activities of the Quebec Wood WORKS! Program, Cecobois, were instrumental in influencing the Quebec government to make changes to its building code to facilitate the construction of five- and six-storey wood buildings in residential applications. These changes were announced on May 1, 2013.
• United States: NRCan provided training to 13,787 architects, engineers, code officials and others in the form of webinars, workshops, Wood Solutions Fairs, lunch and learn sessions—all designed to promote the use of wood in non-residential and mid rise applications.

Forest Innovation Program
The Forest Innovation Program continued to help develop and commercialize new technologies for Canada’s forest sector and assist in its ongoing transformation by providing funding support to FPInnovations to facilitate the forest industry’s adoption and deployment of these emerging technologies and processes.

Specific achievements in 2012-13 include:

• Further development of Cellulose Fibrils (CF). CF can be used as an additive in paper-making to increase strength, softness and brightness, as well as in the production of thin films and biocomposites, and offers new and innovative product and market opportunities to Canadian pulp manufacturers.
• Improvements to lignin extraction and conversion process. Lignin is a complex molecule derived from wood fibre that is extracted from black liquor during the pulping process and holds potential for replacing many chemicals currently derived from petroleum-based sources.
• During 2012-13, large quantities of high-quality lignin were tested in pre-commercial trials at FPInnovations’ pilot plant in Thunder Bay for adhesive applications.
• Initially developed for the automotive industry, smart coatings are structured to react to outside conditions, such as temperature, stress or strain. Research during 2012-13 was successful in adapting and developing smart coatings for the wood industry that will enable higher quality appearance (gloss) and more durable (scratch resistant) products to be developed.
• A North American product standard for cross laminated timber was developed and adopted using draft standards from FPInnovations and Canadian and American cross laminated timber handbooks.
• Industry advisors from FPInnovations continued to provide hands-on support to small and medium-sized enterprises in the value-added wood products manufacturing sector. In 2012-13, FPInnovations industry advisors conducted more than 1600 mill visits and technical assessments to help enterprises identify, understand and propose solutions to specific challenges. Some of these visits and assessments resulted in much more in-depth technical interventions and industrial projects resulting in competitive improvements to their operations. Based on a survey of industry participants, the typical technical intervention or project resulted in production improvements or cost reductions worth some $40,000 to the participating enterprise.

Comments on variances: 2012-13 Planned Spending is shown as $0 because these funds were not identified in the 2012-13 RPP. The funding for the FIP and EMO was received through the 2012-13 Supplementary Estimates (B). The $44M variance can be explained as follows: $43.8 million received in the 2012-13 Supplementary Estimates (B) and $0.2 million in-year cash management between G&C programs to be repaid in 2013-14.

Audits completed or planned:

EMO: In 2012-13, 9 recipient audits were completed. In 2013-14, 10 recipient audits will be undertaken at a cost of approximately $96,750.

FIP: A recipient financial and compliance audit is planned in 2013-14.

Evaluations planned: FIP is to be evaluated as part of the evaluation of the Forest Innovation sub-program in 2013-14.

Engagement of applicants and recipients: A conference call was held with EMO program proponents for 2013-14; a call for proposals was issued by email on November 1, 2012, to all eligible organizations registered in the EMO online application system, and a webinar was held on November 16, 2012, with all those registered in the online system. Under the FIP, as there is only one primary recipient (FPInnovations), officials meet with the proponent on a regular basis, including the Assistant Deputy Minister of NRCan’s Canadian Forest Service, who is an observer on the FPInnovations Board of Directors.