This past August, the Forest Products Association of Canada (FPAC) submitted its recommendations for Finance Canada’s 2025 pre-budget consultation.
Within that document were three pillars identified for building a resilient national forest sector: competitiveness, investment attraction, and trade and market access. The following is taken directly from FPAC’s pre-budget consultation.
Pillar #1: Competitiveness
Remove regulatory barriers to unlock sector growth
Canada’s forest sector operates within one of the most complex regulatory environments in the world, governed by at least eight overlapping federal statutes and dozens upon dozens of provincial and municipal regulations.
This results in:
* Regulatory conflict and confusion between jurisdictions with overlapping mandates;
* Delays in acquiring fibre access and operational permits;
* Uncertainty that deters investment in modernization or expansion; and
* Misalignment between policy intent and operational implementation on the ground, especially as it pertains to reducing wildfire fuel loads.
The lack of co-ordination across federal departments and federal and provincial governments has created duplicative environmental reviews, fragmented permitting pathways, and prolonged decision timelines. On top of the threats of wildfires and pest outbreaks, these regulatory challenges are diminishing the Canadian forest products sector’s competitiveness position with international competitors.
How the government can support forest sector competitiveness:
Enable greater use of bilateral equivalency agreements as authorized under Sections 10-12 of the Species at Risk Act.
* Establish a transparent process to recognize provincial species-at-risk measures that equal or exceed federal standards.
* Create a ‘Prescribed Works and Waters’ regulation under the Fisheries Act for routine, low-risk forestry activities (e.g., temporary crossings, culvert installation, riparian vegetation management), supported by reactivated and expanded Codes of Practice for forest activities that recognize provincial equivalents or industry Beneficial Management Practices (BMPs), rather than case-by-case permits.
* Amend the Migratory Birds Regulations to introduce a science-based incidental take permitting system that allows forestry activities to proceed under strict conditions (e.g., requiring habitat assessments, timing restrictions, or replacement of removed nests) in accordance with recognized Beneficial Management Practices.
* Renew the Early Intervention Strategy (EIS) for Spruce Budworm by launching Phase IV over four years (2027-2030).
Pillar 2: Investment Attraction
Rebuild Investor Confidence and Accelerate Sustainable Growth
Years of deferred capital investment, policy uncertainty, and missed implementation deadlines — particularly regarding clean energy tax measures — have put Canada’s forest sector into a state of managed decline. At the same time, Canada’s housing and clean energy goals are not attainable without substantial, sustained private investment and a reliable, skilled workforce.
If investment conditions in Canada do not improve soon, the sector will see more mill closures, lost innovation opportunities, and an inability to meet federal economic, housing, and environmental goals.
This would result in:
* Delays in delivering on the federal target of 500,000 new housing starts;
* Missed emissions reduction milestones and lost clean energy opportunities;
* Underutilized biomass and mass timber innovations;
* Continued buildup of unmanaged wildfire fuel loads; and
* Shrinking investment, manufacturing capacity, and job creation.
How the government can rebuild investor confidence:
* Expedite the passage and implementation of the Clean Technology and Clean Electricity Investment Tax Credits (ITCs) for biomass projects to provide industry with the clarity needed to unlock over $1.5 billion in near-term renewable energy investments, create new jobs in rural and Indigenous communities, transform wood waste into clean power that reduces wildfire risks, and advance climate and energy security goals.
* Establish a harmonized one-window national regulatory framework and building code for manufactured housing under the Build Canada Homes plan, in collaboration with provinces, to streamline federal and provincial housing approvals while maintaining safety and environmental standards. As part of this, streamline and harmonize approvals and zoning regulations across provinces and municipalities with standard designs and certifications (i.e. CSA A277). Federal funding should also be used to encourage provinces and municipalities to adopt harmonized codes, zoning reforms, and rapid permitting processes for modular construction and repeatable designs.
* Designate domestic wood as a strategic material in its Build Canada Homes plan by prioritizing made-in-Canada mass timber and lumber in federal housing projects to reduce emissions, accelerate build times, and support rural job creation.
* Amend the Housing Accelerator Program to encourage harmonized codes, zoning reforms, and streamlined permitting processes to support modern methods of construction, including prefabrication and mass timber.
* Update Procurement Guides and modernize federal contract templates administered through Public Services and Procurement Canada (PSPC) to include provisions for factory-built housing, modular construction, and mass timber, with procurement processes designed to accommodate repeatable designs and off-site manufacturing timelines.
* Accelerate product approval timelines through the Canadian Construction Materials Centre (CCMC), which currently take as long as two years from start to finish, to support the rapid scaling of innovation, wood-based building products.
* Renew and expand funding for its forest sector innovation programs to $425 million over five years, including $20 million annually to GCWood, $20 million annually to FIP and FRII, and $45 million annually to IFIT. It is essential that this funding be in addition to the $500 million announced on August 5, 2025 for product and market diversification for the softwood lumber industry to meet full demand.
* Reinstate and stabilize federal investment in the Youth Employment and Skills Strategy (YESS) — particularly through the Science and Technology Internship Program (STIP-Green Jobs) delivered by Natural Resources Canada — by restoring funding to 2021-2022 levels of $44.6 million and extending program cycles to a minimum of three years. Longer-term, stable funding is essential to support program planning, build Indigenous and youth talent pipelines, and strengthen workforce resilience. Recent cuts to STIP-Green Jobs have already forced one of its key delivery partners, the Outland Youth Employment Program (OYEP), to reduce operations by 35% — its first scale-back in 26 years — resulting in 76 fewer Indigenous youth employed in the sector.
* Legislate and make permanent Capital Cost Allowance (CCA) proposals from the 2024 Fall Economic Statement, and introduce an enhanced, time-limited, accelerated CCA rate (e.g., 100% immediate expensing) for capital investments made by the forest sector.
* Prioritize the forest sector — particularly advanced manufacturing and transformation in the pulp and paper industry — within the Strategic Innovation Fund (SIF). To date, just $90 million of over $10 billion (4 out of 193 projects) has been allocated to the sector, representing a significant missed opportunity. Given that NRCan’s current funding ceiling and structure overlooks for activities downstream of forestry, Innovation, Science and Economic Development Canada (ISED) is the more appropriate vehicle for investments into pulp and paper industry innovations.
* Through SIF or another appropriate delivery vehicle, introduce a $1.34 billion Pulp and Paper Mill Competitiveness Program (PPMCP) to improve the reliability and global competitiveness of Canada’s pulp and paper sector. Building on the foundation of the $1 billion Pulp and Paper Green Transformation Program (and accounting for 34.56% inflation since 2012), this initiative would strengthen sector performance and resilience.
* Invest $25 million annually for five years into the Forest Enhancement Society of British Columbia (FESBC), matching provincial funding dollars, to support the essential expansion of FESBC’s work in forest rehabilitation, wildfire risk reduction, and biomass utilization. Currently, more than 1.2 million cubic metres (m³) of fibre per year sits in roadside piles above the $50/m³ incremental delivered wood cost (IDWC) threshold — eligible for FESBC support. In addition, over 215 million m³ of dead and damaged standing timber remains in BC forests from wildfire and insect outbreaks. Increased funding will enable the recovery of the annual roadside logging slash volume and a minimum of 1% per year of the provinces current total standing dead and damaged timber. Recovering this woody debris will help reduce fuel loads in the forest, support increased Indigenous participation in the forest economy and maintain jobs in forest product manufacturing.
Pillar #3: Trade and Market Access
Strengthen Market Access and Protect Export Competitiveness
Canada’s forest sector exports approximately 78% of its products to the United States. While this relationship has long sustained the industry, it represents a major vulnerability given current trade challenges.
Escalating duty rates for Canadian exporters driven by the current softwood lumber dispute and the Trump Administration’s current Section 232 investigation into lumber and wood derivative imports underscore the urgent need to diversify export markets, promote Canada’s sustainable forestry practices, and strengthen domestic infrastructure with Canadian wood products.
Meanwhile, emerging global regulations — such as the European Union’s Deforestation-free Product Regulation (EUDR) — pose additional risks to Canadian market access. Without a coordinated national strategy to demonstrate compliance and promote the sustainability of Canadian wood, we risk losing ground in both traditional and emerging markets.
Failure to adapt to new global trade standards could shut out Canadian forest products despite its world-leading environmental performance.
At the same time, the chronic underperformance of Canada’s freight transportation network imposes a significant limitation on our companies’ ability to diversify trade. Without the appropriate infrastructure, market conditions, and accountability mechanisms for transportation providers, Canadian natural resource sectors like forestry will lose out to global competitors and the domestic benefits of trade promotion will be lost or limited.
How the government can support market access:
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