Appearance before the Parliamentary committee on natural resources (RNNR)

Before the Standing Committee on Natural Resources (RNNR)

Ottawa, Ontario
Wednesday, March 11

Duration: 4 minutes

Check against delivery.

Thank you Mr. Chair. And thank you Committee members.

Overview of the Quebec Forest Industry

The forest sector is a key economic driver in Quebec’s regions. It is also a wealth generator that contributes to the green economy and our country’s fight against climate change.

In 2018, the forest sector generated 6.6 billion dollars in output, accounting for 1.8% of Quebec’s GDP, and it employed 58,825 workers, accounting for 1.4% of all employment. More than 160 communities in Quebec rely on this industry.

In the past years, the forest sector has been hit hard: commercial softwood lumber disputes, the collapse of the American housing market and the significant worldwide drop on in demand in newsprint have all had negative impacts.

At every step of the way, CED was there with temporary and targeted initiatives to support economic activity in the affected areas. Those initiatives are now complete.

For example:

Between 2009 and 2011, as part of the Community Adjustment Fund, we entered into seven agreements with the Government of Quebec to provide short-term relief for the impacts of the economic downturn through silviculture projects and the restoration of bridges and culverts on multi-use roads.

We invested 119 million dollars in projects that helped create and maintain 8,000 jobs, all while responding to the transition and adjustment challenges faced by communities.  

Also, from 2010 and 2013, the Temporary Initiative for the Strengthening of Quebec’s Forest Economies (TISQFE) allowed us to support 210 diversification and growth projects with a total of 80.5 million dollars in contributions.

Lastly, between 2014 and 2018, I’d like to mention the Strategic Initiative to Combat the Spruce Budworm Outbreak in Quebec, which made it possible to implement intervention measures to control the spread of this parasite to ensure the sustainability of the industry, maintain forest potential and protect jobs.

CED Long-Term Strategy

What CED is currently doing to achieve its mandate is support the long-term economic development of businesses and regions. As such, the value-added role CED plays with the forest industry is strongly tied to support for secondary and tertiary wood processing projects. This is at the heart of our interventions.

Our strategy is based on the approach set by key industry players, which is centred on leveraging innovation, modernisation and diversification for long-term sector development.

At CED, one of our focus areas is projects that promote innovation and green technologies, particularly those in the bioeconomy sector. We believe that this is a growth area because the potential value of biomass - which is abundant in our forests - makes it possible to develop and offer, once processed, a wider range of products that have a positive impact on climate change, among other things. This has significant economic potential on the global market.

Bioeconomy and Forest Bioproducts

We have supported college centres for technology transfer (CCTT) that process biomass for commercial purposes and are very successful with their projects. These are great success stories for us.

For example, CED has supported Agrinova, a CCTT in Mashteuiatsh in Lac St-Jean that is working to revalorize forest residues through the production of biochar.

We also supported Damabois, a company specializing in the manufacturing of handling pallets that wanted to diversify its activities. Damabois now markets energy logs made from aspen bark, one of the wood by-products that the company generates during its operations. Our contribution helped the company acquire the technology needed to put the product into production.

Conclusion

Bioproduct transformation projects, such as those related to wood pellets, are still relatively few. However, CED is well positioned to support them in their initial marketing efforts on foreign markets.

As a regional economic development agency, CED's role is to support the development and diversification of enterprises and regions. To do so, CED is committed to promoting innovation to create economic prosperity. That is what we want for the future of the forestry industry.

Thank you for allowing me to speak about the important work our Agency does. I would be happy to answer your questions.

A sector made up of three industries

According to the most recent annual data available (2018), the forestry sector accounted for:

2,271 businesses, generating production of $6.6B (1.8% of Quebec’s GDP) and 58,825 jobs (1.4% of total employment)

• Logging (NAICS 113)
  • $0.8B (GDP), 8,750 jobs, 1,094 businesses, $71.6M (exports) and $39.6M (capital investments)
• Pulp and paper production (NAICS 322)
  • $2.7B (GDP), 19,570 jobs, 188 businesses, $7.3B (exports) and $205.9M (capital investments)
• Wood product manufacturing (NAICS 321)
  • $2.3B (GDP), 30,505 jobs, 989 businesses, $2.5B (exports) and $275.3M (capital costs)
• The wood product manufacturing industry is one of the 15 CED anchor sectors and has been identified as an anchor sector for the following business offices: Abitibi Temiscamingue–Nord-du-Québec, Bas-St-Laurent, Côte-Nord, Saguenay Lac-St-Jean an Quebec–Chaudières-Appalaches.
• CED is not involved in logging.

Profile of the Quebec forestry sector

• From 2002 to 2017, the forestry sector experienced a major decline. Business was affected by trade disputes with the U.S over softwood lumber, the collapse of the U.S. housing market during the 2009 financial crisis, and the drop in global demand for newsprint.
• Although the forestry sector is not in crisis, its performance remains mixed.
  • Performance varies by sub-sector.
• Over the past two years, the wood manufacturing industry has been doing well thanks to the strong North American real estate market.
• However, financial margins are smaller—revenue is growing but profits are not.
  • The price of softwood lumber fell by about 30% in the summer of 2018. According to the Quebec Forest Industry Council, lumber prices do not allow Quebec companies to generate profits. In 2019, the price of softwood lumber gradually increased, and a continuation of this upward trend has been observed in early 2020.
• The pulp and paper industry continues to decline.
  • Capital investment in the pulp and paper industry dropped by 41% between 2013 and 2018.

A driver of economic growth in the regions

• Approximately 166 communities—towns and villages, some rural—rely on the forestry sector (+10% of total employment)
  • This heavy dependency makes these communities vulnerable to structural changes and economic fluctuations.

A new forest regime

• The Government of Quebec regained control over the management of public forests through the Sustainable Forest Development Act, which came into force on April 1, 2013, and which establishes the current forest regime. The Minister may delegate the management of territories and certain resources to Indigenous communities.
• Central to this regime is the implementation of an auction system to set the best prices for wood harvested in the forest by the Quebec government via the Bureau de la mise en marché des bois (wood marketing bureau). 
  • The idea behind this system was to obtain fair market value for wood, make wood volumes accessible to all, and help Canada in its trade disputes with the United States, particularly in response to U.S. criticism that Canadian companies were not paying a fair price for their wood.
• This forest regime has, however, shed light on some shortcomings:
  • The allocation of short-term wood volumes under the new regime makes it difficult to forecast supply and increases the risk associated with investment and the hiring of workers.
  • This leads to an increase in costs for the forest industry (higher royalties than in the other provinces, and high stumpage fees) and makes it harder to remain competitive.

Continued demand offsets U.S. tariffs

• Despite the U.S. duties imposed on Canadian softwood lumber, Quebec's forestry sector had a better year in 2018 with rising wood prices and very strong production.
  • A number of companies reported significant increases in their sales as a result of the growth in U.S. demand.
    • However, the price of softwood lumber fell by about 30% in the second half of 2018. In 2019, the price of softwood lumber gradually increased, and this upward trend has been continuing in early 2020.
• The majority of Canadian companies that export softwood lumber products to the U.S. are currently subject to a combined duty rate of 20.23%. Canada is currently challenging the U.S. softwood lumber duties, both under Chapter 19 of NAFTA and through the World Trade Organization (WTO). Canada already obtained some favourable rulings in these challenges in 2019, and similar rulings are expected in 2020.

The market outlook for 2020 for the wood manufacturing sector remains very good

• Housing starts in Canada are expected to increase in 2020, given the low mortgage rates and favourable population growth. The same phenomenon is expected to be seen in the U.S. in 2020.
• Since the United States is by far the largest customer for Quebec softwood lumber (about 50% of Quebec’s production), an increase in exports to the U.S. is to be expected. For Quebec softwood lumber producers, 2020 should be a better year than 2019.

Delayed investment is hampering the sector’s competitiveness

• Investment has been lacklustre since the financial crisis of 2008, leaving the industry lagging behind from a technological standpoint.

• To ensure their sustainability, companies in the sector must invest in:
  • the modernization of their facilities
  • the development of bioproducts from cellulose pulp
  • the development of new applications for engineered wood
  • the promotion of the use of wood in construction

The industry has potential sources of growth

• The pulp and paper industry needs to continue to diversify and develop new products. The bio-economy offers significant opportunities in this regard 
  • The bio-economy encompasses all activities relating to the use of biomass from renewable sources, such as trees. The development of fibre for multiple uses in other industries (electricity, fuels, plastics, solvents, packaging, etc.) once again provides the industry with potential new outlets.
• Quebec has made a name for itself in the area of forest bio-energy, and energy production has risen sharply in recent years.
  • Quebec’s forestry innovation ecosystem is well developed, given the presence of a number of research organizations; however, the absence of a national anchor firm is hindering Quebec’s progress, since bioeconomy projects require significant funding.  

Other information about the Quebec forest regime

The established regime led to the achievement of a number of objectives:

• Ensure the sustainability of forest assets and implement sustainable forest development
• Promote the integrated and regionalized management of forests and forest resources
• Support the viability of forest communities
• Ensure the accountability of forest users
• Ensure shared responsibility under the regime among the Government of Quebec, regional organizations, Indigenous communities and other forest users
• Follow up on and monitor public forest activities
• Sell timber on the open market at a price that reflects its market value
• Supply wood processing plants
• Develop private forests
• Govern forest protection activities

Issue/question:

What is Canada Economic Development for Quebec Regions doing to help the forest industry and forestry-dependent communities in Quebec?

Suggested response:

• Canada Economic Development for Quebec Regions assists forestry-sector SMEs and organizations with their growth projects.
• Canada Economic Development for Quebec Regions also helps forestry-dependent communities diversify and become more resilient.
• Since November 2015, Canada Economic Development for Quebec Regions has invested $35.6M to support the forest industry.
• Canada Economic Development for Quebec Regions pays special attention to communities experiencing slow economic growth, either because they depend on a single economic sector, or because they have suffered an economic shock.

Context:

Economic importance

• In 2018, the forest sector generated production worth $6.6 billion (1.8% of Quebec's GDP) and 58,825 jobs (1.4% of total employment):
  • Logging: $0.8B (GDP) and 8,750 jobs
  • Wood product manufacturing: $2.3B (GDP) and 30,505 jobs
  • Pulp and paper: $2.7B (GDP) and 10,570 jobs
• The forestry sector is a key economic driver in Quebec’s regions—166 towns and villages are dependent on the forest industry (10% or more of all jobs in these communities).
  • This heavy dependency makes these communities vulnerable to structural changes and economic fluctuations.

Industry – Recent developments

• In its 2018 statistical portrait of Quebec's forest industry, the Ministère des Forêts, de la Faune et des Parcs published statistics on the state of the industry. Between 2013 and 2018:
  • Over 100 plants shut down
  • The overall number of jobs fell slightly; losses were reported in the pulp and paper and forestry sectors, but gains in the wood products sector
• Fortress Global announced the closure of its cellulose pulp mill in Thurso in the Outaouais region on October 7, 2019. Almost all of the 323 workers were laid off for an indeterminate period of time. The closure was primarily due to the drop in specialty cellulose prices resulting from trade tensions between China and the United States. The Fortress plant produces cellulose for the Chinese rayon market.
  • The closure of the Fortress plant in Thurso put a halt to Lauzon Flooring's logging operations in the Outaouais region. 165 workers were affected by this interruption in operations.
• The price of softwood lumber fell by about 30% in the summer of 2018. According to the Quebec Forest Industry Council, lumber prices do not allow Quebec companies to generate profits. The price of softwood lumber gradually increased in 2019, and continues to do so in early 2020.
• The majority of Canadian companies exporting softwood lumber to the U.S. are currently subject to a combined duty rate of 20.23%

Response – Softwood lumber dispute with the U.S.

• Canada is disappointed that the U.S. Department of Commerce continues to impose anti-dumping and countervailing duties on some Canadian softwood lumber products.
• The U.S. duties on Canadian softwood lumber are unwarranted and harm communities that rely on the forestry sector.
• In the past, U.S. claims have always been found to be without basis. Canada believes that this will once again be the case.
• Canada will continue to vigorously defend the interests of the Canadian softwood lumber industry, both under NAFTA Chapter 19 and through the World Trade Organization (WTO).
• Canada continues to believe that an agreement that brings stability to the softwood lumber industry is in the best interests of both countries.

Response – Why was the softwood lumber conflict not addressed during the Canada-United States-Mexico Agreement (CUSMA) negotiations?

• From the outset of the CUSMA negotiations, both parties indicated a desire to keep the two files separate.
• Canada is committed to pursuing negotiations with a view to reaching a new softwood lumber agreement that is in the interest of all Canadians.

The forest industry has been going through a period of upheaval for some time now. The industry’s transformation involves market diversification and new product development. There is a lot of interest in bioproducts, but this is far from a done deal.

A sector in transformation

The last two decades have been trying times for the Quebec forestry sector. The industry has been facing challenges, both cyclical and structural, that it has never experienced before (e.g., trade disputes with the United States over softwood lumber; the collapse of the US housing market during the 2009 financial crisis; and a drop in demand for paper with the emergence of digital media and increased international competition). As a result, many plants have been forced to shut down. In addition, a new forestry regime was put in place in 2013, which in turn led to major changes in the management of Quebec’s forests (redefinition of forest use; reduction of logging volumes on public land; timber auctions; etc.).

To ensure the industry’s recovery, all sectors of the forest industry, whether it be wood harvesting, forest management, wood product manufacturing or pulp and paper, have had to redefine themselves and strike a new balance. For the time being, the changes undertaken point to better times ahead; however, the industry must continue its efforts to diversify and find new markets if it is to succeed in its transformation.

Part of the bioeconomy, bioproducts provide a great development opportunity for the Quebec forest sector. Wood pellets, which are in high demand worldwide, and the potential to convert cellulose and lignin, two organic compounds in wood, into a variety of value-added products, could help spur new activities. Enhancing the properties of fibre in order to multiply its uses in other industries (electricity, fuels, plastics, solvents, lubricants, food additives, packaging, etc.) provides paper mills and wood producers with other outlets for new products. The industry’s transition to the bioeconomy requires major investments and involves a high level of risk in terms of profitability. A good example of this is the conversion and revival by Fortress, in 2011, of the former Fraser Papers kraft pulp mill in Thurso in the Outaouais region (shut down in June 2009), for the production of cellulose pulp. The project cost more than $300 million and, in October 2019, the company had to temporarily shut down its facilities due to the drop in the price of cellulose.

The bioeconomy

The bioeconomy refers to the various activities associated with the use of biomass from renewable and sustainable sources, such as trees, agricultural products and organic residues, resulting from the harvesting or processing of timber. It consists of biochemicals (e.g., cellulose ester and cellulose acetate, including forest cellulose), biofuels (e.g., cellulosic ethanol – forestry biomass), bioenergy (electrical or thermal energy from forest biomass), biofertilizers (biochar from the pyrolysis of residual forest biomass), biomaterials (e.g., lignin for adhesives/bioplastics) and biofoods (e.g., cellulosic sugars / beverages).

This is a growing field that allows for the provision of a wider range of consumer and industrial products. New products may include food additives, textiles, building materials, automotive parts, bioplastics, biochemicals and fuel for vehicles and aircraft. The bioeconomy has many environmental benefits; notably, it can:

• provide alternatives to fossil fuels;
• help reduce GHG emissions and contribute to the fight against climate change;
• accelerate Canada’s transition to a clean energy future;
• provide development opportunities and jobs; and
• improve the added-value of forest products.

Some figures:

Bioproducts

According to Statistics Canada’s Bioproducts Production and Development Survey 2015, there were 190 bioproduct establishments in Canada that sourced their products from agriculture or forestry biomass. These establishments generated $4.3 billion in revenue, almost two-thirds of which came from biofuel, up considerably from 2009 ($1.3 billion). Ontario and Quebec are by far the leading bioproduct players in Canada, generating 44.4% and 25.5% of the country’s total revenue, respectively.

Bioenergy production from Quebec forests is on the rise. In its Portrait statistique 2018 sur les ressources et industries forestières du Québec,^{Footnote 1} Quebec’s Ministère des Forêts, de la Faune et des Parcs revealed that in 2018, approximately 417 metric tons of anhydrous energy bioproducts (energy pellets and chips and eco-logs) were produced, up 26% from 2009. In terms of energy production, the energy forest is estimated to have generated 7.5 gigawatt hours in 2018, eight times the amount generated in 2009.

Wood pellets

Canada is the world’s second largest exporter of wood pellets, behind the United States. In 2017, the value of Canada’s wood pellet exports stood at almost $400 million, or 11.9% of total global exports. Within Canada itself, British Columbia is by far the largest exporter (78% of the total), followed by Quebec (13%). Wood pellets from Quebec are mainly exported to the U.S, the U.K. and Italy. However, in the realm of bioproducts, wood pellets are among the least innovative and lowest value-added bioproducts when compared with chemical bioproducts generated from cellulose pulp (e.g., bioethylene, biopropylene, biobutylenes and biobenzenes).

Innovation ecosystem

The forest bioeconomy in Quebec can rely on a well-developed public research and R&D capacity innovation ecosystem that includes research organizations such as CanmetENERGY in Varennes; FPInnovations; the Consortium de recherche et innovations en bioprocédés industriels au Québec (CRIBIQ); Agrinova; 12E3 – Innovations Institute in Ecomaterials, Ecoproducts, and Ecoenergies (UQTR); BioChar Boréalis; Laurentian Forestry Centre; the Centre de recherche en pâtes et papiers (UQTR); the Institut de recherche sur les forêts (UQAT); and the Canada Research Chair in Wood Development, Characterization and Processing, to name but a few. In terms of mills, in 2019, 12 of the 31 Quebec establishments that specialize in the production of cellulose pulp were actively involved in bioproduct development.^{Footnote 2}

Issues, trends and opportunities

Innovative bioproducts – key to export market diversification

According to Natural Resources Canada, the global market potential for green chemicals stood at $63 billion in 2015 (5% annual growth rate), and $35 billion for wood fibre composites.^{Footnote 3} More recently, the Smart Prosperity Institute released a report in December 2019 entitled “Eight Reasons for Canada to Build a Clean Economy Now”.^{Footnote 4} The reasons cited by the organization in favour of a shift to a green economy in Canada include opportunities in global markets, environmental performance as a competitive advantage, cost reduction, Canada’s strong position in the forest sector, and improved health and quality of life. The organization estimates that the global market potential for bioproducts will exceed $500 billion in the coming years. Mexico alone represents a potential market for bioproducts of almost $8 billion, mainly for its agricultural sector. Opportunities also exist in a number of South American countries, notably Chile. These markets offer good opportunities for the commercialization of biochar, a carbon-rich material made from sawmill waste such as wood chips and other wood residues.

In Quebec, BioChar Boréalis is also aiming to create and develop a network of companies that will form a continuum for the production and marketing of biochars. A number of existing sawmills could be retrofitted to make products such as biochar, which has many potential applications, including air filters, fertilization and decontamination.

The market outlook for biochar is excellent. According to ResearchAndMarkets.com,^{Footnote 5} the biochar market is forecast to grow from $436 million in 2018 to $871 million by 2024. The prospects are even more promising if you consider that the market is not yet dominated by a major manufacturer. The biochar industry is divided up among a number of small companies, most of which are new businesses. The five largest manufacturers currently account for only 38% of the global market. The main companies in the field (all foreign) are: Cool Planet, Pacific Biochar, Vega Biofuels, Terra Char, Genesis Industries, Element C6, Carbon Gold Ltd, Biochar Solutions and Phoenix Energy.

The low price of competing products – an irritant for the bioproducts industry

The primary challenge remains the competitiveness of bioproducts, primarily as concerns the price of the products they are trying to substitute in various markets. This is particularly true in the case of bioplastics, given the current drop in the price of virgin plastic. Oil companies, faced with downward pressure on demand for fuel as vehicles become increasingly fuel-efficient, are producing more and more virgin plastic resin, driving down prices and making recycled plastic less competitive.^{Footnote 6} François Bédard of Soucy Techno, a company that produces concentrates used in the manufacture of drainage pipes from recycled resin, is calling for government intervention in the form of regulations: [Translation] “The government needs to step in and force people to use recycled resin in their products, otherwise customers will naturally go for the cheapest option.”^{Footnote 7} The idea of adjusting the regulatory framework to support the commercialization of bioproducts is one of the main recommendations of Canada’s Bioeconomy Strategy, unveiled in 2019 by Bioindustrial Innovation Canada in collaboration with BIOTECanada, FPInnovations and the Forest Products Association of Canada.^{Footnote 8}

Lack of anchor firms in the bioeconomy ecosystem – a significant gap

The need to improve the attraction and retention of anchor firms, i.e., large companies that can play a strategic role in ecosystems, and support for these firms, is one of the priority items identified by the Economic Strategy Tables and the Canada’s Superclusters initiative. Anchor firms assist the smallest—often local—firms in an ecosystem with their integration into global value chains; they also help them grow, facilitate the commercialization of their innovations, and diversify their presence in global markets. Greenfield Global is an example of a Canadian company that has become a global anchor in the bioeconomy field (ethanol refinery in Varennes, Quebec). In the forestry sector, Domtar and Resolute Forest Products are also currently playing an anchoring role in forest bioproduct development in Quebec.

In the absence of domestic anchor firms, attracting foreign firms to local ecosystems can be beneficial.^{Footnote 9} Since the chemical industry can provide a number of market outlets for bioproducts from the forest sector, investment in biochemical related processing activities by large global companies such as Dow could generate benefits throughout the continuum in Quebec. Dow was a key player in the development of the bioproducts industry in Brazil, which now leads the global biochemical industry. More recently, Alberta was able to attract significant investment in the province from this petrochemical sector multinational. In response to difficulties in the oil industry, Alberta is currently stepping up its efforts to develop petrochemicals,^{Footnote 10} which are in competition with biochemicals.

The bioeconomy ecosystem – business capacity needs

The vitality of innovation ecosystems is a key factor in attracting investment from anchor firms. Although the development of the bioeconomy in Quebec can currently count on the presence of numerous research centres, there is still little in the way of support for business capabilities in this field. Less than 10% of the active incubators and accelerators in Canada specialize in supporting bioeconomy companies.^{Footnote 11}.

Productivity gains – a resilience factor in the face of competition

Quebec’s pulp and paper industry and its forest bioeconomy development activities are facing growing foreign competition. In addition, the oil industry is stepping up its efforts to boost the petrochemical industry and its products—the main competitor of the biochemical and bioproducts industry. In response to this competition, the industry needs to improve productivity across the board. Cellulose pulp production facilities can achieve this by adopting the 4.0 model. Productivity gains in traditional refining activities will lead to better support for innovative activities within establishments involved in the shift to the bioeconomy.

Public contracts – an effective lever for scaling up bioproducts

The use of public procurement contracts is a proven means of boosting the scale-up and commercialization of innovative products. In the U.S., the government fosters the development and commercialization of bioproducts through the BioPreferred program,^{Footnote 12} administered by the United States Department of Agriculture on a government-wide basis. This program requires government departments and agencies to purchase bioproducts for certain types of products. In Canada, Bioindustrial Innovation Canada, BIOTECanada, FPInnovations and the Forest Products Association of Canada have recommended that a similar program be put in place to encourage the development, adoption and scale-up of bioproducts in Canada.^{Footnote 13}.

Demand for, and the scale-up and commercialization of, bioproducts can be boosted, not only by means of government contracts, but also through regulation. According to the Association Québécoise de la production d'énergie renouvelable, the creation of a local biofuel industry, through a substantial increase in the minimum volume of renewable fuel in gasoline sold in Quebec, would allow Quebec to reduce not only its oil imports from the U.S. but also its greenhouse gas emissions. It would also create opportunities for the Quebec forest industry’s transition to the bioeconomy (production of biofuels from forest biomass)^{Footnote 14}.

Considerations for CED

• CED’s involvement in forest bioproducts is minimal:
  • From April 1, 2016, to March 31, 2019, only four projects, worth a total of $12.3 million, were approved; of these, three involved wood pellets. The fourth project by the Agrinova CCTT (college centre for technology transfer) related to multi-resource thermochemistry and biochar development ($5.9 million)
  • In 2013, CED awarded $3.7 million to the FPInnovations research centre for bioproduct development R&D activities.
• The pulp and paper industry’s transition to the bioeconomy involves very costly projects that rely on large national funds, e.g., funds set up by Natural Resources Canada and Sustainable Development Technology Canada (SDTC).
• CED is well positioned to support both the innovation ecosystem for the development of the bioeconomy in Quebec, and the development of new products, such as biochar, via organizations dedicated to this transition. CED can also provide business support (incubators), representation and sector promotion (investment attraction)—all areas where there are identified needs.
• Furthermore, CED can support the development of Quebec’s forest bioeconomy by helping manufacturing SMEs in all manufacturing industries to use more biosourced materials as inputs in their manufacturing processes—in short, by supporting demand for bioproducts (e.g., SMEs that manufacture plastic products).

Additional reading

For more information on strategies for the development of the bioeconomy in Canada: http://www.biotech.ca/wp-content/uploads/2016/03/National_Bioeconomy_Strategy_EN-compressed.pdf.

https://www150.statcan.gc.ca/n1/pub/18-001-x/18-001-x2017001-eng.htm

Prepared by: Jean-Pierre Racine, Senior Analyst, and Jean-Pierre Lussier, Head, Economic Analysis Economic Intelligence Directorate, February 14, 2020

Spruce budworm outbreak CED

Issue/question:

What is Canada Economic Development for Quebec Regions (CED) doing to address the spruce budworm outbreak in Quebec?

Suggested response:

• In 2014, the Government of Canada announced $18M to combat the spruce budworm outbreak. The funding included $6M over four years for a special initiative in Quebec, to be delivered by CED.
• The initiative was carried out in partnership with the Société de protection des forêts contre les insectes et maladies (SOPFIM), the organization designated by the Quebec government to protect Quebec forests from the spruce budworm.
• The initiative, which ended in 2017, involved the spraying of biological insecticides over 44,600 hectares of public forests in Quebec. It also allowed the SOPFIM to test and improve its spruce budworm response strategies.

Context:

• In its 2014 Budget, the Government of Canada announced $18M over four years to implement measures to combat a new spruce budworm outbreak.
• The $18M budget included $10M for ACOA-delivered measures in Atlantic Canada; $6M for measures in Quebec (delivered by CED); and $2M for activities by Natural Resources Canada (NRCan).
• As concerns the Quebec component, the aim of the Strategic Initiative to Combat the Spruce Budworm Outbreak in Quebec (SICSBOQ) was to ensure the sustainability of the forestry industry and protect the jobs of workers who depend on it.
• The initiative included measures to combat the spruce budworm outbreak, including the spraying of insecticides; planning and monitoring activities; and the experimentation, testing and development of tools aimed at fostering the emergence of more effective spruce budworm control methods.
• DEC awarded a $6M non-repayable contribution to the SOPFIM, the organization designated by the Quebec government to protect Quebec forests from the spruce budworm.
• The funding, which targeted activities to complement the SOPFIM’s basic activities, was paid out over four fiscal years ($1.5M per year from 2014–2015 to 2017–2018).
• Completed by the end of 2017, the project allowed for more than 44,600 hectares of public forests, mainly in regions in Eastern Quebec affected by the outbreak, to be sprayed with biological insecticides.
• The SOPFIM reported many short-, medium- and long-term benefits, including the training of a specialized workforce; the protection of investments in forest management; the acquisition of new knowledge on the effectiveness of protection regimes; the socio-economic benefits associated with jobs and the purchase of goods and services; and the development of expertise that can be exported for the benefit of other regions of North America.
• Despite the SOPFIM’s efforts, the epidemic persists in Quebec.

Temporary initiative for the strengthening of Quebec's forest economies (TISQFE)

Issue/question:

How has CED supported communities and businesses in regions that are heavily reliant on Quebec’s forest industry and which were affected by the 2009 forestry crisis?

Suggested response:

• In 2010, Canada Economic Development for Quebec Regions introduced a temporary diversification and support measure for communities affected by the forestry sector crisis: the Temporary Initiative for the Strengthening of Quebec’s Forest Economies (TISQFE).
• The TISQFE, which had a supplementary budget of $100M, was in effect from June 17, 2010, to March 31, 2013.
• The TISQFE had two objectives:
  • Strengthen and increase economic activity in areas affected by the forestry crisis in order to create and preserve jobs
  • Pay particular attention to SMEs based in affected communities with a view to enhancing their performance through innovation and improved productivity
• A total of almost $80.5M in assistance was awarded for 210 projects, the total costs of which amounted to $249.3M.

Context:

• Since 2005, the Quebec forest industry had been going through one of the worst crises in its history, with job losses, plant closures and a drop in demand.
• The situation was further compounded by the 2009 financial crisis.
• The TISQFE was delivered via two of CED’s regular programs: Community Diversification and Business and Regional Growth
• The Initiative targeted SMEs and NPOs in 54 Quebec RCMs that are heavily dependent on the forest industry (logging, wood processing, etc.).
• The following types of projects received funding: secondary and tertiary wood processing; productivity enhancement; innovation capacity building; community economic recovery plans; etc.
• The Initiative and all projects receiving funding were required to comply with the Softwood Lumber Agreement.
• After the TISQFE ended, CED continued to support forestry sector businesses and communities through its regular programs.
• CED intends to continue contributing to the development of an innovative and competitive forest industry that fosters the green economy.

Community Adjustment Fund (CAF) – Forestry measures

Issue/question:

Does the Community Adjustment Fund (CAF)—put in place to counter the effects of the 2009 global recession—include forestry measures?

Suggested response:

• The goal of the Community Adjustment Fund (CAF) was to mitigate the short-term impact of the economic slowdown by contributing to job creation and retention, while responding to the challenges of community transition.
• The CAF, which had a supplementary budget of $211.6M, was in effect from April 3, 2009, to March 31, 2011.
• As part of the CAF, Canada Economic Development for Quebec Regions signed seven agreements with the Government of Quebec aimed at helping forestry workers and communities deal with the crisis in the sector.
• Worth a total of $119M, these agreements targeted the creation and retention of some 8,000 jobs involving silviculture work and the rehabilitation of bridges and culverts.

Context:

• Since 2005, the Quebec forest industry has been going through one of the worst crises in its history, with job losses, plant closures and a drop in demand.
• The situation was further compounded by the 2009 financial crisis.
• CED has always supported forestry sector businesses and communities, both through its regular programs and via the CAF.
• The Ministère des Ressources naturelles et de la Faune du Québec (MRNFQ) acted as prime contractor for the implementation of the seven agreements:
  • The first six agreements involved forestry work: bringing poorly regenerated areas back into production, rehabilitating hardwood forests, and carrying out intensive silvicultural work.
  • The seventh agreement involved the rehabilitation of river crossings on wildlife and multi-resource roads on Quebec public land.
• CED intends to continue contributing to the development of an innovative and competitive forest industry that fosters the green economy.

Saguenay–Lac-St-Jean – Agrinova – #400051978 – January 9, 2017 – CCTT – QEDP

Non-repayable assistance: $5.9M / Total project costs: $7.9M

An initiative of the agri-food community and based on a regional partnership, Agrinova is a college centre for technology transfer (CCTT) created in 1996 by the Collège d'Alma. Its mandate is to assist agri-food–related businesses in their innovation process.

The project stems from the activities of the Filière forestière des Premières Nations du Québec (FFPNQ) which, between 2012 and 2015, carried out various work relating to the production of biochar and its derivative bioproducts. In 2015, in co-operation with the Indigenous community of Mashteuiatsh and the Domaine-du-Roy RCM, the FFPNQ created BioChar Borealis, an NPO.

CED authorized a non-repayable contribution of $5.9M for Agrinova to set up the Centre de recherche en conversion thermochimique, which will act as an accelerator for businesses interested in the commercial opportunities presented by the production of biochar and derivative bioproducts. The centre’s mission will be to accelerate the growth of SMEs by providing them with privileged access to specialized equipment for the production of biochar and derived bioproducts, a non-traditional option for the recovery of harvestable forest wood waste and by-products of the sawmill industry. Total project costs amounted to $7.9M and primarily involved leasehold improvements and the acquisition of specialized equipment.

In addition to the positive impact on the environment, the project is expected to generate significant economic benefits in the community over the medium and long terms. The development of products derived from the pyrolytic process and using wood chips will provide a new avenue of diversification for forest communities. The project will create five new jobs.

Several regions (ATNQ, BSL, OUT) – Uniboard Canada Inc. - #400053809 – July 25, 2018 – QEDP

Repayable assistance: $1M / Total project costs: $18M

Uniboard Canada Inc. is a Quebec family business acquired from foreign interests in 2012. The company has three panel manufacturing plants (Sayabec, Val-d'Or and Mont-Laurier), and a resin manufacturing plant (Val-d'Or). Its head office is in Laval.

A North American leader in the manufacture of engineered wood panel products, Uniboard employs more than 800 people in Quebec and has been experiencing steady growth since 2012, with a 43% increase in revenues from 2012 to 2017. Its growth strategy is based on increased penetration of export markets, particularly in the U.S. The company exports over 75% of its products, either directly or through its clients.

CED authorized a repayable contribution of $1M for a project valued at $18M targeting productivity at the Uniboard plant in Mont-Laurier. The project involves integrating a new and innovative drying process that will make it possible to recover energy currently dissipated in the atmosphere, while improving environmental performance (CO2 sequestration and reduction of particles in the air).

It is part of a five-year investment plan totalling more than $350 million by 2022, the goal of which is to grow the company by at least 5% over the coming years, thus allowing it to be recognized as Canada’s leading global company in the engineered wood sector.

NB: CED recently approved two projects that were also part of this five-year plan: one in the Abitibi-Témiscamingue region ($5M contribution, out of a total cost of $38.5M) and the other in the Bas-Saint-Laurent region ($3M contribution out of a total cost of $15M).

Outaouais – DV Hardwoods Inc. – #400057203 – March 2, 2020 – REGI

Repayable assistance: $185K / Total project costs: $458K

Founded in 1992, DV Hardwoods specializes in the transformation and distribution of hardwood that has been sorted and comes in various dimensions. The company has 38 employees, and its annual turnover has risen considerably since 2017. It is present in more than 15 countries, where it generated 63% of its sales in 2019. Recognized in Canada and internationally for the quality of its products, DV Hardwoods has built up a clientele made up of tertiary wood processing manufacturers (e.g., furniture, flooring and kitchen cabinets) and distributors.

CED authorized a $185K repayable contribution out of a total cost of $458K to allow DV Hardwoods to enhance its productivity and implement a marketing strategy. The main activities include the integration of a new automatic drying control management system, the optimization of production operations, the acquisition of handling equipment, and various marketing activities.

The company has planned its growth by providing for the hiring of three foreign workers to offset the labour shortage that affects not only DV Hardwoods, but all companies in the forest sector. Furthermore, DV Hardwoods has demonstrated an ongoing interest in human resources, which earned it the Coup de cœur award at the Créateurs d'emplois du Québec 2019 gala.

Mauricie – Industries John Lewis – #400052556 – June 13, 2017 – QEDP

Repayable assistance: $569K / Total project costs: $1.7M

Industries John Lewis Ltd. (John Lewis) is a manufacturing company involved in secondary and tertiary wood processing; its plant is located in La Tuque. The company is the North American leader in the production of wooden sticks for the agri-food processing industry (ice cream / popsicle sticks, coffee stirrers, pogo sticks and skewers). It produces overs 28 million sticks a day, with U.S. exports accounting for 85% of its sales; a smaller proportion is destined for Europe and a handful of other countries. John Lewis has 154 full-time employees and is a major employer in La Tuque, a single-industry town that is dependent on the forest industry.

The Agency authorized a $569K repayable contribution to support the growth of this company, which produces a valueadded wood product for the food industry. The project, valued at over $1.7M, involves acquiring a third finishing line and upgrading existing first-line facilities. It will result in the creation of six full-time jobs and the retention of eight others.

Mauricie – Innofibre # 400055190 – May 2, 2019 – QEDP

Non-repayable assistance: $750K / Total project costs: $1M

The Centre d'innovation des produits cellulosiques (Innofibre), is a college centre for technology transfer (CCTT) affiliated with the Cégep de Trois-Rivières. It works out of the offices of the UQTR’s former Centre Intégré en Pâtes et Papiers (CIPP), which was dissolved in 2017. In business for 25 years, Innofibre has 38 employees. Its mission is to contribute to the technological positioning and sustainable development of the paper and bio-refinery industry in Quebec by supporting innovation and the diversification of biomass products, and by adapting paper technologies. Innofibre targets forest and paper industry companies, and biomass sector companies in particular.

The Agency’s $750K non-repayable contribution will serve to boost innovative and technology transfer capacity in order to support the businesses and organizations that Innofibre serves, specifically through the development of clean technologies associated with the bio-based product sector. The project, which is valued at over $1M, involves the acquisition of equipment to be used for the development of renewable materials, new bioactive products and an advanced paper de-inking process, as well as for the chemical modification of fibres. This project will help position the Mauricie region as a leader in the development of biobased products and materials.

The Agency’s $750K non-repayable contribution will serve to boost innovative and technology transfer capacity in order to support the businesses and organizations that Innofibre serves, specifically through the development of clean technologies associated with the bio-based product sector. The project, which is valued at over $1M, involves the acquisition of equipment to be used for the development of renewable materials, new bioactive products and an advanced paper de-inking process, as well as for the chemical modification of fibres. This project will help position the Mauricie region as a leader in the development of biobased products and materials.

Between Novembre 4, 2015 and March 3, 2020

Demographic Data

Financial Data

Source of data :

Context for the numbers: The Public Accounts of Canada for the years 2017-2018 and 2018-2019 were used to provide information on expiry rates. The figures provided are those of the Main Estimates and Supplementary Estimates B for 2019-2020 as the Main Estimates for 2020-2021 have not yet been approved. As actual spending for 2019-2020 has not yet been tabled, we are reporting planned spending for the year (Main and Supplementary Estimates - both public sources). The most recently published actuals are for 2018-2019.

Program Data

The tables below exclude unsigned agreements (status 501) and cancelled agreements (status 700) - Prepared by CEBI on February 25, 2020, based on data as of February 20, 2020.

• Canada Economic Development for Quebec Regions is the key federal partner in regional economic development in Quebec.
• Since November 4, 2015, CED has approved 2,735 projects for a total authorized assistance of $1.28 billion.
• This assistance generated investments of $6.86 billion. These 2,735 projects are expected to create more than 22,000 jobs.
• Of the 2,735 projects supported by CED, there were:
  • 1,219 projects for non-profit economic organizations (NPOs), totalling more than $720 million in authorized assistance and total investments exceeding $2.7 billion.
  • o 1,516 projects for small and medium-sized enterprises (SMEs), totalling more than $557.8 million in authorized assistance and total investments exceeding $4.2 billion.
• Each year, Canada Economic Development for Quebec Regions coordinates more than 250 announcements, highlighting nearly 500 projects by companies and organizations in the heart of every Quebec community.

National initiatives

• CED also implements Canadian-wide initiatives in Quebec, adapting them to meet the needs of enterprises and communities, while taking Quebec's particularities into account.  
  • For example, in the case of the Canadian Experience Fund, it was important to ensure that projects were supported by community stakeholders in order to enhance the regional tourism offering.
• These national programs include the Women's Enterprise Strategy, the Steel and Aluminum Sector Support Initiative and the Canadian Experience Fund.
• Both in its regular programs and in the implementation of the Strategy for Women in Entrepreneurship (SWE), CED helps women entrepreneurs make their business projects a reality by drawing on their talent, leadership, expertise and creativity.
  • As part of this initiative, CED authorized 70 projects totalling $20.3 million in assistance to women-owned and -operated businesses throughout Quebec.
  • For example, with its non-repayable contribution of $100,000, CED supported Staca Inc. a Jonquière company specializing in the recovery and processing of industrial aluminum smelter waste. The company, headed by three women, offers a service that is unique in Canada and is the result of ongoing research and development activities. Thanks to Staca's expertise, only 0.12% of the materials treated annually are sent to landfill.
• CED also supports the steel and aluminum industry. Thanks to a new $26.2 million envelope dedicated to the Steel and Aluminum Initiative (SAI), CED has approved 38 projects. The total budget was applied to make investments of $71.8 million and maintain or create 387 jobs.
  • For example, CED authorized financial assistance for Entreprise Lefebvre Industri-Al Inc. (ELIA), a family-owned SME founded in 2000 whose main activity is to recover, process and recycle various alloy residues for the Alcoa aluminum smelter in Baie-Comeau. The repayable assistance of $1.7 million out of total costs of $8.4 million will support ELIA's expansion by adding an innovative process for recovering aluminum scum. With this project, ELIA expects to grow from 9 to 17 employees.

Regional initiatives

• CED also provides financial support for the economic transition of communities affected by the end of the chrysotile industry. In June 2013, CED launched the $50 million Canadian Economic Diversification Initiative for Chrysotile-Dependent Communities for the RCMs of the Sources and Appalachian regions.
  • To date, this entire envelope has been committed and has supported 65 projects generating investments of more than $147 million in the region. These projects have created or maintained 481 jobs.
• CED continues to assist Lac-Mégantic following the 2013 railway accident. Through a $35-million envelope, CED is supporting the economic recovery of Lac-Mégantic and helping the town, its businesses and organizations recover from the railway accident.
  • Since the initiative was launched in 2013, 30 projects have been approved for a total of more than $26 million in assistance. These projects will have generated total investments of more than $74 million and will create and maintain 133 jobs.
• CED is also innovating to bring Quebec SMEs and research centres closer to their clients and suppliers.
  • For example, CED, in co-operation with Aero Mtl and the multisectoral association STIQ, is organizing a mobilizing event that has quickly become a must-attend event for Quebec's defence and security sector, the Symposium. With the Symposium, CED is fully playing its role as a rallying point and catalyst for economic development.
• Young innovative companies are at the heart of the strength of the Canadian economy and the vitality of our communities. That is why, in 2019, CED launched the Rocket Power Challenge.
  • This entrepreneurial competition for engineering students and recent engineering graduates is designed to help them make their business project a reality. The Challenge had a budget of $500,000, with $50,000 for each of the 10 projects selected.
• The CED model is flexible and adapts to regional realities.
  • Indeed, CED targets its investments to support the economic development of devitalized regions: for every dollar invested per capita in communities with high economic potential, CED invests 2.3 in communities with low growth potential.

Incubator

• With a dedicated team to implement sustainable solutions based on new technologies. The CED Incubator achieves this through experimentation and the communication of the results associated with it, while working in an agile and customer experience-oriented manner.

Issue / Question

What are some examples of noteworthy projects that Canada Economic Development for Quebec Regions (CED) has supported in recent years?

Suggested response

• Founded in 2012, Mecademic is an innovative high-tech company that emerged from CENTECH, the business incubator affiliated with Montréal's École des Technologies supérieures. The company designs and manufactures very small, ultra-compact high-precise industrial robots. Its turnover is growing strongly and its sales, 95% of which are on international markets, are growing strongly. In 2018, CED authorized a repayable contribution of $450K for a $1.8M project to support Mecademic's growth by improving its competitiveness and implementing an international marketing strategy. As a result of this project, Mecademic will increase its production capacity fivefold, growing from 10 employees to more than 30.
• Galenova Inc. is a woman-led Saint-Hyacinthe-based company specializing in the design, preparation and packaging of chemical and pharmaceutical products, supplies and equipment for the healthcare field. CED is supporting Galenova's growth through a repayable contribution of $1M, awarded in 2019, to automate its production processes. The company's $8M expansion project includes the construction of a new plant and the acquisition of state-of-the-art equipment. These investments will help Galenova continue its growth, particularly in U.S. markets, resulting in the creation of a number of quality jobs in the Centre-du-Québec region.
• In operation since October 2017, Boivin Évolution Inc. (BE) in Lévis is a start-up company specializing in the manufacture and marketing of 100% electric bodies and automated arms for waste collection. In 2018, CED authorized a repayable contribution of $250K for a $1.88M project to support the design of two demonstration units at manufacturing cost. BE is the first company to make these 100% electric innovations available in North America. Its collection bodies can be installed on both diesel and electric truck chassis. Therefore, with BE's line of products, all waste collection could be done using 100% electric vehicles.

Issue/Question:

What is Canada Economic Development for Quebec Regions (CED) doing to support the steel and aluminum industry?

Suggested answer: CED

• Since November 4, 2015, through its regular programs, Canada Economic Development for Quebec Regions has approved 28 projects that support business growth in this sector, for a total of approximately $14 million in authorized assistance, generating a total investment of over $78 million.
• In the spring of 2019, our government designed a targeted, one-time program called the Economic Growth through Innovation Steel and Aluminum Initiative. This initiative aimed to support innovative projects by SMEs operating within the Canadian steel and aluminum supply chain.
• With a new $26.2-million envelope dedicated to the Steel and Aluminum Initiative, Canada Economic Development for Quebec Regions was able to approve 38 projects. The total budget was used to make an investment of $71.8 million and maintain or create 387 jobs.

Background:

• Launched on March 11, 2019, the Regional Economic Growth through Innovation Steel and Aluminum Initiative aims to support the innovative projects of SMEs operating within the Canadian steel and aluminum supply chain. These investments are expected to maintain and create jobs as well as promote economic growth through adoption of innovative technologies and processes.
• More specifically, the Initiative will:
  • Assist firms with high growth potential to scale up and expand;
  • Support technology demonstration and the commercialization of new technologies;
  • Encourage the early adoption or adaptation of leading-edge technologies and processes to improve productivity;
  • Increase businesses’ capacity to grow.
• For example, Lefebvre Industri-AL Inc. (ELIA) is a family-run SME founded in 2000 whose main activity involves recovering, processing and upgrading various alloy residues for the Alcoa aluminum smelter in Baie-Comeau. CED authorized a repayable financial assistance of $1.7 million of the total cost of $8.4 million to support ELIA’s expansion by adding an innovative aluminum dross recovery process. The project consists mainly in expanding the smelter and acquiring processing equipment. The project will completely eliminate the need for landfilling residues by recovering all aluminum recycling by-products and reintroducing them to the Alcoa aluminum smelter production line. In addition, it will significantly limit the creation of greenhouse gases. The number of ELIA employees has grown from 9 to 17 thanks to this project.

CED

Issue / Question

What is the Initiative for infrastructure development from Canada Economic Development for Quebec Regions (CED)?

Suggested response

• On August 27, 2019, Canada Economic Development for Quebec Regions (CED) launched a targeted and temporary initiative to support the dynamism and attractiveness of Quebec's communities.
• The Initiative for the development of regional economic infrastructure has three components: transportation infrastructure, tourism infrastructure and research infrastructure.
• Since the initiative was launched, CED has approved 9 regional economic infrastructure projects, amounting to over $18.8M in authorized assistance and generating investments totalling more than $77.8M.
• We estimate that these nine projects approved under this initiative will create or maintain 115 jobs.

Background

• To contribute to the dynamism and attractiveness of our communities, Canada Economic Development for Quebec Regions (CED) launched, on August 27, 2019, the Initiative for the development of regional economic infrastructure in Quebec, a temporary initiative that contributes to the economic development of communities in the regions of Quebec.
• Through this targeted support, CED fosters investment in infrastructure that contributes to the economic dynamism and attractiveness of communities. The Initiative has three components:
  • Transportation infrastructure: support for projects involving the construction, modernization or expansion of transportation infrastructure (airport, rail, port).
  • Tourism infrastructure: support for projects involving the construction, modernization or expansion of tourism infrastructure likely to improve the attractiveness of regional tourism.
  • Research infrastructure: support for projects involving the acquisition of equipment to foster the development of applied research and technology transfer to business initiatives.
• These components are implemented through CED's regular programs, namely, the Quebec Economic Development Program (QEDP – transportation and tourism) and the Regional Economic Growth through Innovation (REGI – research) program.
• All projects approved to date have been approved under the tourism infrastructure component.
• The Government of Canada's December 2019 Economic and Fiscal Update referred to a transfer of a total of $82.091M from Infrastructure Canada (INFC) to CED.

Project example

• The Société de développement du Mont Sainte-Marguerite (SDMSM) was established in 2017 as an NPO with the objective of operating all the activities of Domaine du Radar, located in Saint-Sylvestre on a former military air surveillance base used during the Cold War. The goal of the project is to strengthen the SDMSM's ability to attract tourists, enhance the Lotbinière regional county municipality's tourism offerings and increase spending by tourists from outside Quebec. The nonrepayable contribution of $818,000 will go toward installing mountain coaster infrastructure, rehabilitating the bunker, creating a multimedia tour, creating a radar museum space, renovating the main complex and other related activities. The site is developing gradually: from its first year in operation to 2018, the number of visitors it welcomed rose from 700 to 60,000.

Issue/question:

How do the Regional Development Agencies (RDAs) deliver the Community Futures Program (CFP)?

Suggested response:

• The Community Futures Program (CFP) supports a vast network of 257 Community Futures organizations in rural communities across the country.
• The regional development agencies (RDAs) provide $95.8M in annual funding for these Community Futures organizations.
• The CFP is a powerful tool for leveraging economic development in Canada’s rural regions. In 2018, Community Futures organizations helped create or maintain 37,360 jobs in rural regions of Canada through their interventions in businesses.

Background:

• Community Futures organizations are funded through the CFP, a national program set up in 1985 and administered by the RDAs that helps rural communities build their capacity to take charge of their own development.
• Community Futures organizations provide essential services for entrepreneurs and communities, including:
  • Funding: loans for SMEs to help them with their startup, modernization and scale-up;
  • Technical assistance: business plan development support for SMEs; and
  • Local economic development: collaborative efforts with economic stakeholders in the various communities on the development of strategic plans or economic diversification initiatives.
• In 2018, the Community Futures organizations invested over $320M in approximately 4,480 local economic development projects. Their activities helped create or maintain 37,360 jobs in rural regions of Canada (2018–2019 Community Futures Network of Canada’s Annual Report).

Issue/question:

How does Canada Economic Development for Quebec Regions (CED) deliver the Community Futures Program (CFP) in Quebec?

Suggested response:

• In 2019, Canada Economic Development for Quebec Regions (CED) renewed its agreements with the 65 Community Futures Development Corporations (CFDCs) and Business Development Centres (BDCs) in Quebec.
• The new agreements represent a financial commitment of $167M over five years.
• The new agreements meet community needs and provide the CFDCs/BDCs with the means to assume their key role as partners with CED in the local economic development of rural communities.

Background:

• In Quebec, CED awards non-repayable contributions to the 57 CFDCs, the 8 BDCs, the Network of CFDCs and BDCs, and Capital Réseau SADC et CAE (Common Fund), to support their operations associated with the implementation of the Community Futures Program's three business lines in their respective areas, namely:
  • technical assistance and support to help small businesses carry out their projects;
  • funding for small businesses and young proponents for startup, modernization and scale-up projects; and
  • local economic development involving the implementation of local initiatives aimed at kick-starting the economic development of rural communities.
• With their 350 professionals and the over 1,000 volunteers that represent their communities, the CFDCs and BDCs constitute a major client for CED and a preferred partner on the ground.
• In 2018–2019, the Quebec CFDCs and BDCs approved 1,696 new loans worth $86.3M. Support was provided for over 1,500 local economic development projects.
• CED funds the CFDC-BCD to offer the 3 business lines of the CFP program in their territories: Local Development, Technical Assistance and SME Financing.
• The budget model is based on 4 types of funding:
  • Core funding for operations (Salaries, rent, travel expenses, professional fees). This envelope is mainly used for the 2 business lines Technical Assistance and SME Financing.
  • Funding for the Youth Strategy initiative. It enables CFDC-BDC to acquire a resource to provide technical and financial assistance to young people aged 18 to 39 who wish to start their own business and to implement measures to stimulate youth entrepreneurship in rural areas.
  • Funding for local economic development activities. It enables CFDC-BDC to support communities in addressing economic development issues, for example, in planning an economic diversification strategy or conducting a feasibility study for the development of a new industrial or commercial sector.
  • Funding for Local Intervention Measures through an envelope managed by the CFDC-BDC Network. It makes it possible to complete the funding of local economic development activities according to the needs of the CFDC-BDC.
• Budget Model
  • Basic Funding-Fixed Amount:
    • CFDC: $347,169 per year
    • BDC: $295,421 per year
  • Funding for the provision of services in both official languages-Fixed amount :
    • $15K per year (20 CFDCs and BDCs)
  • Funding for travel to remote areas-Fixed amount :
    • $40K per year (6 SADC)
  • Funding for the Youth Strategy-Fixed Amount initiative :
    • CFDC: $61.2K per year
    • BDC: $30.6K per year
  • Funding for local economic development activities: Variable amount calculated according to the needs of communities in terms of devitalization and economic potential.
    • CFDC-BDC: $16.5K to $53K
  • Amounts available through the Local Intervention Measures (LIM) initiative coordinated by the CFDC Network and BDCs-Variable amount with maximums :
    • $40K per year for CFDCs and $30K for BDCs.

CED

Issue / Question

Why transfer $10M from the Strategic Innovation Fund of Innovation, Science and Economic Development Canada (ISDEC) to Canada Economic Development for Quebec Regions (CED) to support a centre of expertise for the advancement of artificial intelligence?

Suggested answer:

• In collaboration with industry stakeholders, the scientific community and civil society, the International Centre of Expertise for the Advancement of Artificial Intelligence (AI) in Montréal will contribute to the responsible development of artificial intelligence based on the core principles of ethics, human rights, inclusion, diversity, innovation and economic growth.
• The Centre will generate significant benefits for Canada by supporting our global leadership in AI and promoting our competitive advantage in the field of digital technology.
• The federal government has committed to investing up to $10 million over five years to support the Centre's activities once it begins operations through the help of CED.
• Because of its programs and experience with similar projects, Canada Economic Development for Quebec Regions is the best vehicle for allocating this funding to the Centre.

Background:

• On September 6, 2019, the Minister of Innovation, Science and Economic Development and Quebec's Minister of International Relations and La Francophonie announced a government investment of $15 million over five years for the establishment of the International Centre for Expertise, including up to $10 million from the Government of Canada and $5 million (previously announced) from the Government of Quebec.
• Minister Morneau's Economic and Fiscal Update, released on December 16, 2019, confirmed a $9.8M transfer over five years (2019-2020 to 2023-2024) from ISDEC to CED. This amount, allocated under the Quebec Economic Development Program (QEDP), will be used to fund the Centre's activities once it begins operations.
• The establishment of the Centre was discussed for more than a year by Canada, France and other international partners, as part of the Global Partnership in Artificial Intelligence (GPAI) discussions. The GPAI was originally announced by Prime Minister Trudeau and President Macron in June 2018. The decision to establish the Centre in Montréal was made following further discussions at the G7 Summit in the summer of 2019.
• The Government of Quebec will have a special role as a key partner in the development of responsibly used AI as part of Canada's participation in the GPAI.
• Under the umbrella of the GPAI, the Centre will be an independent organization working in collaboration with industry, the scientific community and civil society, as well as governments and other international organizations. Its key mandates will be related to the implementation of GPAI initiatives, for which the Centre will provide service delivery. The Centre will be expected to:
  • contribute, through analysis and research, to the responsible development of AI based on the core principles of ethics, human rights, inclusion, diversity, innovation and economic growth;
  • organize in Montréal every two years, alternating with Paris, an international forum on progress achieved in GPAI activities; and
  • analyze measures aimed at strengthening national capacity to market and adopt AI technologies.
• By locating the Centre in Montréal, the GPAI wishes to access Montréal's and Canada's recognized expertise in AI and Canada's leadership in the global debate on ethical AI, particularly the December 2018 "Montréal Declaration for a Responsible Development of Artificial Intelligence". The Centre will benefit from AI ecosystems and national and provincial initiatives, such as the Government of Canada Advisory Council on AI, the SCALE-AI Supercluster in Montréal and the International Observatory on the Societal Impacts of AI and Digital Technologies (funded by Quebec).

Issue / Question

What has Canada Economic Development for Quebec Regions (CED) done to support the development and diversification of communities reliant on chrysotile?

Suggested response

• In June 2013, Canada Economic Development for Quebec Regions (CED) launched the Canadian Initiative for the Economic Diversification of Communities Reliant on Chrysotile, which has a $50M budget for the RCMs des Sources and des Appalaches.
• To date, this entire budget has been committed and has helped support 65 projects generating over $147M in investments in the region. These projects have created or maintained 481 jobs.
• The Initiative is set to end on March 31, 2020. Diversification efforts have been successful, and CED will continue to support these communities through its regular programs.
• Community stakeholders have repeatedly expressed their satisfaction with the growth-generating projects funded under the Initiative.

Background

• Following cancellation by the Government of Quebec of a $58M loan for relaunch of the Jeffrey Mine in Asbestos, the Government of Canada announced in 2012 that it would no longer oppose the inclusion of chrysotile on the list of products subject to prior consent under the Rotterdam Convention.
• In parallel, the Government of Canada developed, and mandated CED to ensure delivery of, the Canadian Initiative for the Economic Diversification of Communities Reliant on Chrysotile (the Initiative), which was intended to provide financial support for the economic transition of communities in the Des Appalaches and Des Sources regional county municipalities affected by the end of the chrysotile industry. The Initiative has a budget of $50M over seven years. It was launched in June 2013 and will end on March 31, 2020.
• The Initiative met its objective of supporting the transition of communities affected by the foreseeable end of the chrysotile industry in order to foster economic growth.

CED

Issue / Question:

What is Canada Economic Development for the Quebec Regions (CED) doing to help Lac-Mégantic following the rail accident?

Suggested response:

• Canada Economic Development for the Quebec Regions (CED) was awarded $35M to support the economic recovery of Lac-Mégantic and to help the town, its businesses and organizations recover from the rail accident.
• CED has dedicated a team to this initiative, which is present on site, working closely with local stakeholders and guiding the businesses and the town.
• Since the launch of the initiative in 2013, 30 projects have been approved for a total assistance amount of $26M generating total investments of over $74M. These projects will help create and maintain 133 jobs.

Background:

• In the night of July 6, 2013, the derailment of a runaway freight train comprised of 72 tankers filled with light crude oil caused a series of explosions and a fire that killed 47 people and destroyed about 30 buildings in a 2-km² area of downtown.
• In 2013, the Government of Canada assigned CED to deliver an initiative to support the economic and commercial recovery of the town of Lac-Mégantic. The initiative has a budget envelope of $35M over seven years (2013–2020) and has three components: Component 1 – Reconstruction of the town ($20M); Component 2 – Projects to support businesses ($10M); and Component 3 – Investment fund ($5M).
• In March 2018, upon the request of the town of Lac-Mégantic, CED's minister authorized the extension of the initiative for three years, until March 31, 2023. The need to extend the initiative is related to some improvement projects and the construction of the town's public infrastructure.
• Decontamination and infrastructure rehabilitation work (sewers, water lines, sidewalks and paving) downtown are complete. The town of Lac-Mégantic is working to attract promoters to develop the rebuilt portions. One institutional building, residential and commercial projects and social housing have been completed to date. The construction of a hotel is planned for spring 2020.
• The largest request made of the government is the construction of a rail bypass to avoid having trains pass through downtown. Through Transport Canada, the Government of Canada announced in 2018 that it would fund 60% of the construction costs.
• The Government of Canada (CED and Transport Canada) made a financial contribution of $870K to fund a feasibility study for the rail bypass.

CED

Issue / Question:

Why is a $450,000 transfer from Transport Canada to Canada Economic Development for Quebec Regions (CED) required for the Lac-Mégantic rail bypass?

Suggested Answer:

• The construction of a rail bypass to avoid the passage of trains in its downtown area is a major project for the economic recovery of the town of Lac-Mégantic, following a rail tragedy in 2013.
• The Government of Canada (CED and Transport Canada) and Quebec's Ministère des Affaires municipales et de l'Habitation (MAMH) are providing equal funding for a feasibility study for the construction of this bypass.
• The funds transferred are essential to cover the additional costs required to complete Phase 2 of this feasibility study. The purpose of this phase is to optimize all the components of the scenario selected in phase 1 by carrying out in-depth analyses in order to support the optimization and improvement of the technical solution.
• Through Transport Canada, the Government of Canada announced in 2018 that it would fund 60% of the construction costs of this bypass.