05/26/2011 03:12 EDT | Updated 07/26/2011 05:12 EDT

Fueling the Fire: Combining the Old with the New

The Forestry Products Association of Canada (FPAC), an association consisting of more than 20 member companies from across the wood, pulp and paper industries, issued a brief paper in February 2011, entitled The New Face of the Canadian Forest Industry.

This paper illustrates clearly that "the sky is not the limit for the Canadian Forest Products Industry" by providing a concise yet comprehensive overview of the multitude of bio-based applications that can be derived from traditional forestry operations.

"Yesterday's waste stream is fast becoming tomorrow's revenue stream," states the report, for "a potential global market opportunity of around $200 billion," referring to the ability of game-changing technologies and companies to extract high-value specialty products from low-value wood fibre.

Look at the economics alone: This potential market of $200 billion is four times the current size of the conventional forest products market in Canada.

FPAC asserts that integrating existing processes with new, bio-based operations will create tremendous value across a now-dormant industry (forecasted industry compound annual growth is 0 to 2 percent through 2015). Industry has the ability to "maximize shareholder value by allocating wood fibre to production processes with the highest possible profit and value added."

An integrated biorefinery co-located near a sawmill can more efficiently convert wood waste into green specialty chemicals to produce renewable derived chemicals, plastics and solvents, for a variety of industries. Traditional forest product markets will continue to exist (wood, pulp, paper), but new technologies with smaller niche markets will be able to "generate a much higher price."

Furthermore, it is speculated that "integrated plants could produce up to five times as many jobs as stand-alone bio-energy plants," often in rural areas.

To me, this translates as a serious third-party endorsement in the value of investing in integrated biorefinery-sawmill partnerships, which will pave the way forward for the adoption of green chemistry principles across dozens of industries. This will inevitably have positive environmental and market implications for products and investors worldwide.

The paper says it best: "Combining the old and the new is the way forward for the next-generation forest industry."

Disclosure: David Milroy is Chairman and Chief Executive of Vertichem, a green specialty chemicals company that plans to operate biorefineries to create high-value specialty chemicals.