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How is the forest industry changing?

The forest sector is changing in response to new business conditions and a growing demand for environmental solutions, whether they are nature-based solutions to climate change or forest products with a small greenhouse gas or water footprint.

New markets and new challenges are transforming forest industry structure

The globalization of forest markets continues to drive the transformation of the Canadian forest sector. Consequently, competition in export markets is intensifying. For instance, new entrants from Europe, South America and Russia now offer significant competition to Canadian exporters in markets where they had previously dominated. Globalization also means that international firms are interested in investing in Canada, particularly in the pulp and paper segments. Similarly, Canadian firms are investing abroad with significant investments in the United States and in Europe over the past few years.

Multiple factors provide an impetus for the forest sector to seize opportunities that will transform it into a world leader of innovative sustainable forest products. Globalization, the declining demand for some traditional products such as newsprint, growing protectionism, the cumulative effects of forest disturbances from climate change, and an increasing global commitment to clean growth all play key roles.

Today, you may be wearing clothes made from rayon that started out as pulp from Canadian trees.

Wood fibre is strengthening composite car parts, making vehicles lighter, reducing emissions and replacing plastics made from non-renewable fossil resources.

Also, cellulose from trees is found in the screens of your smart phones and the paint on your walls.

Bioproduct revenues by product type (2015)
Donut chart showing bioproduct revenues by product type in 2015, described below.
Graph data
Table showing bioproduct revenues by product type in 2015.
Product Percent of total (%)
Biofuel (primarily ethanol and biodiesel) 64%
Bioenergy 3%
Intermediary biochemical and biomaterials 1%
Other bioproducts (e.g. materials and composites, organic chemicals) 32%

Low-carbon projects that meet future market demand and consumer preferences are key to supporting a forest sector transition towards the bioeconomy. Such projects include bio-plastics, bio-refineries, nano-cellulose crystals, sugars used in chemicals, and artificial intelligence for real time operations. This transition towards the bioeconomy will help the sector be more resilient to fibre supply challenges and changing markets.

Domestic opportunities are bringing new participants

Leveraging local resources as a means to mitigate or adapt to climate change has become a priority. Nature-based solutions that are focused on forest carbon sequestration or decreasing the risk of forest fire are attracting interest from large non-forest sector multinationals and small Canadian communities alike. Leveraging local forest resources also offers increasing opportunities for rural and Indigenous communities to develop new economic activities. For instance, with increasing Indigenous-held tenure agreements, Indigenous communities are building forest management expertise and turning to bioenergy to lessen their dependency on trucked-in diesel.

Sources and information

Table of contents — The State of Canada's Forests Report

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