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The potential of increasing the use of BC forest residues for bioenergy and biofuels Larock, Fraser 2018

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 THE POTENTIAL OF INCREASING THE USE OF BC FOREST RESIDUES FOR BIOENERGY AND BIOFUELS  by  Fraser Larock B.Sc. The University of British Columbia, 2014 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF APPLIED SCIENCE in THE FACULTY OF GRADUATE AND POSTDOCTORAL STUDIES (Forestry)  THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver) January 2018   © Fraser Larock, 2018    ii  Abstract Groups such as the International Energy Agency have predicted that increased bioenergy and biofuels production will be needed to reduce greenhouse gas (GHG) emissions and fossil fuel use globally. British Columbia (BC) has a world-renowned forest sector and the highest percentage of third party certified sustainable forests in the world. Therefore, BC is well positioned to supply sustainable forest biomass for bioenergy/biofuels. Currently, underutilized forest residues could provide a major source of biomass for bioenergy/biofuels. However, the use of forest residues under current BC forest management standards does not fulfill some sustainability requirements defined by trade policies. Therefore, an improved sustainability verification system would support the growth of bioenergy/biofuels globally. Most forest certification systems were initially developed for traditional forest products such as lumber and pulp. In contrast, the evolving bioenergy sector uses biomass-sourcing certification standards that have limited connection to in-forest certification procedures. As a result, gaps between these certification standards challenge the potential of forest residues being used as sustainable feedstocks for the current and future bioeconomy. A partnership between forest and biomass-sourcing sustainability standards is likely, to connect GHG emissions data and other key metrics along the supply chain. The Programme of Endorsed Forest Certifications has begun developing a GHG tracking system for forest managers and is considering partnership opportunities with the Sustainable Biomass Program, a prominent wood pellet certification organization. However, there are significant economic challenges limiting the increased use of BC forest residues. To reduce the economic challenges of using forest residues, BC’s forest and climate policies need to be modified, while making sure any unintended negative stakeholder impacts are considered. The thesis work indicates that a combination of policy and economic incentives will be required for commercial-scale use of forest residues. One way to enhance forest residue use is through the use of regulatory incentives. As described in the thesis, it is likely that any increased use of BC forest residues will require significant government support via policies that will ensure the sustainable management of BC’s forest while further developing markets for the various biomaterials derived from forest residues.  iii  Lay summary The global economy hopes to reduce its addiction to oil by developing sustainable biomaterials/bioenergy/biofuels derived from renewable resources. British Columbia has the world’s highest percentage of third-party certified, sustainably managed forests. However, current forest certification schemes are primarily concerned with the sustainable production of “traditional” forest products such as lumber, pulp and paper, not bioenergy. As a result, other certification schemes have evolved which currently focus on renewable energy subsidy requirements, rather than forest/land management. The thesis work compares various sustainability certification schemes and suggests areas for expanding and/or pairing standards, to ensure sustainable removal and use of currently underutilized forest residues. Once sustainability can be assured, the work assessed various policy and economic tools that might motivate greater use of BC’s forest residues. It is likely that a combination of policy and economic incentives will be required to encourage increased, commercial-scale use of forest residues for bioenergy/biofuels production.   iv  Preface Drs. John (Jack) Saddler and Susan Van Dyk initiated this study and obtained financial support from the Green Aviation Research and Development Network (GARDN). They both provided invaluable feedback and advice in structuring the research strategy and thesis work. I identified and analyzed regulations, standards and other documents critical to develop potential options to increase forest residue use in BC. Additionally, I drafted the thesis and synthesized the results of the analysis into policy and economic tool recommendations for a sustainable BC forest residue.    v  Table of contents Abstract ........................................................................................................................................... ii Lay summary ................................................................................................................................. iii Preface............................................................................................................................................ iv Table of contents ............................................................................................................................. v List of tables .................................................................................................................................. vii List of figures ............................................................................................................................... viii Acknowledgements ........................................................................................................................ ix Dedication ....................................................................................................................................... x 1 Introduction & background ..................................................................................................... 1 1.1 Unique characteristics of BC forest policy and the forest products supply chain............ 3 1.1.1 International markets and forest products ................................................................. 6 1.1.2 Timber supply and the Mountain Pine Beetle........................................................... 7 1.1.3 Forestry and renewable energy ................................................................................. 9 1.2 Third-party certification standards ................................................................................. 10 1.2.1 Forest management certification ............................................................................. 10 1.2.2 Biomaterials certification ........................................................................................ 17 1.2.3 Biomass certification .............................................................................................. 19 1.3 Problem statement and objectives .................................................................................. 21 2 The possibility of adapting third party certification standards to include forest residue use in British Columbia ........................................................................................................................... 24 2.1 Sustainability considerations of harvesting additional forest biomass .......................... 26 2.1.1 Comparing BC forest policy and certification standards to possibly include forest residue management.............................................................................................................. 28 vi  2.1.2 Developments in third party sustainability certification in wood pellet production/bioenergy applications ........................................................................................ 33 2.1.3 The scope of biomass-sourcing sustainability standards in North America’s wood pellet industry........................................................................................................................ 36 2.2 Extending forest certification systems for bioenergy and biofuels markets .................. 40 2.3 Conclusions .................................................................................................................... 43 3 Potential policy and economic tools to increase access and use of BC forest residues for bioenergy and biofuels production ................................................................................................ 45 3.1 Introduction .................................................................................................................... 45 3.1.1 Economic challenges of increasing BC forest residue use ..................................... 47 3.1.2 Provincial regulations and limitations .................................................................... 51 3.2 Methods of analyzing economic tools and policies ....................................................... 52 3.3 Expanding the use of forest residues for bioenergy and biofuels .................................. 54 3.3.1 Policy alternatives for expanded use of residues .................................................... 54 3.3.2 Criteria for policy alternative analysis .................................................................... 55 3.3.3 Analyzing policy and economic tool alternatives ................................................... 56 3.4 Conclusions .................................................................................................................... 61 4 Thesis conclusions ................................................................................................................ 64 Works cited ................................................................................................................................... 67    vii  List of tables Table 1: Forest certification authorities in Canada, adapted from Auld, Gulbrandsen, & McDermott, (2008b) ............................................................................................................. 15 Table 2: Comparing biodiversity aspects within forest certification Principles and Criteria with BC Forest Policy  (adapted from FSC, 2005; Government of British Columbia, 2002; Roach & Berch, 2014; SFI, 2015; Standards Council of Canada, 2016) ......................................... 29 Table 3: Comparing forest soil nutrients and management in forest certification Principles and Criteria with BC Forest Policy (FSC, 2005; Government of British Columbia, 2002; Roach & Berch, 2014; SFI, 2015; Standards Council of Canada, 2016) ......................................... 30 Table 4: A comparison of third-party certification “biomass/bioenergy” standards, their focus and Principles and Criteria (ISCC, 2016; RSB, 2017; SBP, 2015) ...................................... 38 Table 5: The costs of BC forest residues in the current supply chain (Friesen, 2016; Friesen & Goodison, 2011). ................................................................................................................... 49    viii  List of figures Figure 1: Natural Resources Canada map of the BC Mountain Pine Beetle affected areas (Natural Resources Canada, 2016) ........................................................................................................ 8 Figure 2: Comparing the growth trends of forest certifications prominent in Canada (CSA-SFM, SFI and FSC), sourced from Forest Products Association of Canada (FPAC), 2011 .......... 12 Figure 3: Trends in forest certification adoption in Canada from 2000-2016 (Rotherham, 2016)16 Figure 4: A relationship map illustrating the recognition and partnerships between forest certification standards (left side) and biomass certification standards (right side) ............... 40 Figure 5: Availability of BC forest residues based on their delivered cost per oven dried tonne (odt) in 7 large tenures. (Roser, 2016) .................................................................................. 50   ix  Acknowledgements I offer my enduring gratitude to the lab mates, staff and faculty at UBC, who have inspired me throughout this thesis work. I owe thanks to Dr. J. Saddler, whose constant support and pursuit of excellence made me a better researcher. I am grateful for the financial support from GARDN and the stakeholders that pursue low-carbon alternatives to reduce emissions and support the growing bio-economy.  I thank Dr. S. Van Dyk for the (always) fascinating conversations and for changing the way I think about science, art and writing. Her feedback and advice were invaluable to my time at UBC. Finally, I am very grateful to have known and worked beside the incredible students and lab mates in the Forest Products Biotechnology/Bioenergy (FPB/B) group at UBC. I will miss their positivity and endless curiosity.    x  Dedication This thesis is dedicated to my wife, parents and friends who have supported me throughout my years of education and constantly inspire me to do work that matters.1   1 Introduction & background Bioenergy and biofuels are critical components of many national renewable energy strategies to reduce GHG emissions and fossil fuel use. Recently, the International Renewable Energy Agency (IRENA) released a report suggesting biomass demand could double from today’s 50 EJ to approximately 108 EJ, helping reduce emissions in the electricity and fuels sector (IRENA, 2015). Although there are many sources of potentially usable biomass, forest biomass is best-positioned to fulfill the growing demand of the bioenergy sector as it is abundant, democratically distributed and typically has a high yield per land area. Forest and mill derived pellets are currently the most traded biomass commodity in the global market. They also have well-established supply chains capable of delivering biomass feedstocks in significant quantities (Goss, Thesis, & Rials, 2016; IRENA, 2015). Forests are natural carbon sinks and can be a dual contributor to achieving the world’s climate goals by reducing emissions through substituting fossil fuels and sequestering carbon through good forest management and afforestation (IPCC, 2014; Xu, Smyth, Lemprière, Rampley, & Kurz, 2017). It is recognized that carbon sequestration will be crucial to achieve a less than 2oC temperature increase, as global emissions must be net negative and humanity must sequester more carbon than is emitted into the atmosphere (Xu et al., 2017). British Columbia (BC) and the rest of Canada’s provinces have some of the most comprehensive forest management policies in the world and are globally recognized for producing sustainably derived forest products (Research Intelligence Group, 2015). Typically, these forest products are produced using conventional logging techniques where the tops and branches are removed and discarded and only the trunk (round wood) is removed from the forest as this is usually the most valuable part of the tree. The tops and branches, usually referred to as forest residues, are typically left behind in slash piles, which are burnt during winter to reduce the risk of fire. However, the wood pellet industry, the fastest growing wood product in Canada, are increasingly using forest residues to supplement the sawmill residues which are still the predominant feedstock for wood pellets. Forest residues are a large, yet untapped source of forest biomass that 2  are not generally utilized in Canada (although it is increasing utilized in other jurisdictions such as the US south east). It should be noted that forest residues play a role in returning carbon to the soil for soil health and they also provide wildlife habitat. Therefore, the concept of sustainability is important. Although forest residues can be removed from the forest and utilized in a sustainable manner to produce forest products, their management, collection and use can greatly affect emission reductions of downstream products (based on life cycle analysis). Forest residue management can also affect the overall sustainability of BC forests and their role as a carbon sink in combating climate change. Should the Canadian forest sector want to start utilizing forest residues for additional products, understanding the current economic and regulatory landscape in the BC forestry industry will be crucial to support the increased, sustainable use of forest residues in bioenergy and biofuels supply chains. In this introduction the unique characteristics of BC’s forest policies are described as key features of the BC forest product supply chain. This is done to provide a greater understanding of the BC economic and policy landscape. Over the last twenty years, the sustainability of forest products has been determined through third-party forest certification. BC and Canada have the highest acreage of sustainably certified forests in the world. The following section provides a brief overview of the different forest management certification standards that are currently used around the world. Their evolution to better document the sustainability of traditional forest products and their potential to accommodate the removal and utilization of forest residues to make additional forest products is discussed. By understanding the BC forest product supply chain and the economic and regulatory framework currently in place, we hope to better describe the opportunities and challenges associated with using BC forest residues as the feedstock for the evolving bioeconomy. The goal will be to guarantee the continued sustainability of BC forests and forest products.   3  1.1 Unique characteristics of BC forest policy and the forest products supply chain The BC forest supply chain spans large areas of forestland and multiple continents, delivering sustainable forest products to local producers and international markets, such as Japan and the US. Based on a variety of factors, Canada and BC are considered to have some of the most robust, sustainable forest policies in the world. During World War II, demand for lumber and paper increased beyond historical levels and put pressure on BC’s forest sector to harvest more old-growth forests. In recognition of the value of BC forests, as a natural resource deserving protection, the British Columbia Foresters Act was given Royal assent in 1947. This effectively established the profession of foresters to manage BC’s public forests and set in motion the beginnings of the Association of BC Forest Professionals (Association of BC Forest Professionals, 2004). The ABCFP registers and regulates the forestry profession (professional foresters and forest technologists) in BC, upholding the public’s interests in the province’s forests, in return for the right to practice forestry (Association of BC Forest Professionals, 2004). The establishment of the ABCFP coincided with a rapid expansion in chainsaws and heavy trucks capable of hauling logs out of the bush, changing the landscape and the forestry supply chain. Vast quantities of lumber and pulp and paper were produced from 1940-1980 by professional foresters, in response to a new home construction boom, resulting in record high timber cuts and employment.  The initial objectives of forestry companies were mainly economic, removing large amounts of biomass out of BC forests for products. However, a 1947 amendment to the Forest Act placed additional restrictions on harvesting activities, limiting harvesting to an ‘allowable annual cut’ (AAC). The AAC is a unique regulation in that no other jurisdiction outside of Canada has a set limit on harvesting volumes, controlling the access of timber. In BC, the AAC allocates a specific volume of wood, in cubic meters, that companies can harvest per year (Government of British Columbia, 2002). The AAC limits are applied to every forest tenure system and are reviewed at least every five years by the province’s Chief Forester. The goal is to ensure a long-term supply of timber for future BC generations. By the 1980s, the forestry industry was worth $19.8 billion per year and employed one out of ten Canadians (Natural Resources Canada, 2017). However, a growing concern in BC during the 4  mid-80s was the unknown environmental effects of logging, specifically regarding the common practice of ‘clear cutting’. Clear cutting is a highly cost effective harvesting technique that cuts all the trees in a specified area greater than 0.5 ha, leaving an empty landscape to be replanted. Several environmental organizations began campaigns against companies and staged acts of civil disobedience to protest this practice. One such act that garnered international attention was a protest at Clayoquot Sound on the west coast of Vancouver Island. This occurred in 1993, resulting in over 800 environmentalists blockading logging roads and being arrested. This marked the beginning of a major environmental non-governmental organization (ENGO) focus on BC forests that continues today (Hayter, 2003).  BC’s political history has also shaped BC forest policy. When the New Democratic Party (NDP) took power in the early-1990s (Cashore, Mcdermott, & Levin, 2006), they sought consensus and a de-escalation from the ‘conflicts in the woods’ between environmental groups and industry members. The change in government coupled with international environmental groups, such as Greenpeace and the Dogwood Initiative, strongly influenced forestry issues in BC. As a result, global public opinion trended towards more sustainable forest management practices and sparked numerous policy changes within BC forest policies as well as industry practices. Another key component that is continually shaping sustainable forest management in BC is the evolving relationship with First Nations provincially, federally and globally. Although the role of First Nations in resource management is not covered in any detail in this thesis, First Nations have demonstrated their influence on BC forest and resource policy development over the past decades (Newman, 2005; Supreme Court of Canada, 2004). While treaties were established throughout much of Canada during settlement, there are comparatively few in BC. The lack of signed treaties is partially a result of the government of those times claiming BC was an ‘empty land’ at the time of settlement, therefore not requiring any specific treaties. However, some BC First Nations have gone through the exhaustive legal work to gain some sense of ‘right and title’ over areas in BC, arguing that unless aboriginal title was formally ‘extinguished’, aboriginal title still exists. The developments from several high profile legal cases between First Nations and the Government of British Columbia and Canada, coupled with the recent UN Declaration of Rights of Indigenous Peoples (UNDRIP), has led to a complex, multi-stakeholder approach to BC forest 5  policy development (United Nations Declaration, 2008). The complexity is compounded when considering the international nature of BC forest products and the worldwide stage on which BC foresters find themselves. Among the 46 articles within the UNDRIP the ‘free, prior and informed consent’ (FPIC) is one of the most important and contentious pieces for BC forest management, as many industrial forestry projects have been approved without FPIC. The current government’s view on UNDRIP is that, while Canada will implement it, modifications are necessary to avoid undermining the constitutional integrity upon which Canada is based (Indigenous and Northern Affairs Canada, 2017). The UNDRIP is not yet implemented into the federal constitutional and legal framework. However, BC legislation is consistent with many UNDRIP principles, such as legislation requiring companies to ‘consult and accommodate’ First Nations with regards to operating harvesting activities within ‘unceded territory’ in BC (Indigenous and Northern Affairs Canada, 2011). The potential additional federal legislation and/or private governance systems may influence future BC forest policy and likely add to forest company obligations to achieve UNDRIP principles of FPIC to effectively operate. Existing BC forest policy supports sustainable forest management through specific requirements of forest tenure holders, relying on professional foresters and silvicultural practices such as limits on clear cuts, maintaining riparian buffer zones and numerous other ecological considerations. The reliance on professionals, like the Association of Professional Engineers, has been critical to Canada and BC’s success in establishing sustainable forest management. The progression from economic to environmental to social concerns regarding forest management has created a robust policy foundation on which third-party forest certification was established in 1993-94 (Cashore et al., 2006). In addition to the influence of professional foresters in the BC forest industry, the development of the forest product supply chain also helped defined the way BC’s forests are managed today. Investments in BC’s interior roadway and railway infrastructure in the mid-1900s increased access to forest resources and newer, more efficient mills replaced and consolidated many old saw and pulp mills in BC. In addition to the critical role policy played in BC forest management, forest product markets and environmental factors also influenced Sustainable Forest 6  Management (SFM) and harvesting activities. To explore this influence on forest harvesting, and subsequently forest residue collection and use, this section discusses three key areas:  • International markets and forest products, • Timber supply and the Mountain Pine Beetle (MPB) and  • Forestry and renewable energy. 1.1.1 International markets and forest products The forestland in BC consists of valuable old growth and second-growth softwood trees, such as Douglas fir and Western Red Cedar. The abundance of valuable timber led the BC forestry industry to a top rank in BC’s and Canada’s GDP. BC’s trees have fulfilled the demand for a wide range of forest products such as raw logs or tissues. Selling into the global marker helped support coastal and interior rural communities that rely on forest management and mill jobs for their livelihood. The costly process of removing trees in geographically disparate areas in BC has led to a multi-product supply chain that aspires to maximize the value of extracting a renewable resource. After more than a century of technological and logistical developments, the forest products supply chain has primarily relied on saw logs, pulp and paper as the industry’s main source of revenue. However, the reliance on global markets for BC’s forest products has positioned the industry in a precarious situation resulting in high-exposure to international demand, and subsequently, price fluctuations (Natural Resources Canada, 2017). For example, BC has historically exported most of its softwood lumber to the US, exporting $21 Billion, or 54% of the Province’s total exports in 2016 (Natural Resources Canada, 2017). However, the decades-long ‘Softwood Lumber Dispute’ between Canada and the US has put additional tariffs on softwood exports to the US, affecting the entire forestry supply chain, from forest harvesting to saw mills to product sales. While the outcome of this ongoing dispute is unknown at the time of this writing, it is likely Canadian companies will be subject to additional, market-limiting, duties on products exported to one of Canada’s biggest export markets in forestry. For example, President Trump’s recent announcement of a tariff up to 24% could create challenging markets for BC’s future forest products. The ongoing uncertainty created by this 7  dispute is a highly salient issue that is affecting politicians, forestry companies and environmentalists.  Other market shifts that have affected BC forest product production are the recent shifts to digital media consumption instead of newspaper and magazines and the 2008 US housing crisis. The US housing crisis in 2008 coupled with export restrictions and a declining demand for pulp and paper products put significant pressure on the forestry industry during the 2000s, resulting in many mill closures. While specialty paper products are a focus for many companies, the reduced demand has led to consolidation of pulp and paper companies and a reduction in forest harvesting activities. US housing starts (the number of new privately owned houses) dropped dramatically in 2008, causing Canada’s forest product production to decline (Natural Resources Canada, 2017). In many parts of Canada, this led to an extreme cut in harvesting volumes in an already flagging market for lumber and pulp and paper products.  1.1.2 Timber supply and the Mountain Pine Beetle The beginning of the 2000s was also marked by the mountain pine beetle (MPB) epidemic, which threatened thousands of BC jobs in forestry as well as the ‘mid-term timber supply’. The mountain pine beetle (MPB) is a native insect in BC that primarily attacks lodgepole pine trees. Historically, the MPB has a geographic range that extends into northern BC and the boreal forest of Alberta. Although infestations and tree death occur every year in interior BC, a sequence of events in the early 2000s led to a massive outbreak and millions of hectares (ha) of tree deaths in BC and Alberta (Figure 1).  8   Figure 1: Natural Resources Canada map of the BC Mountain Pine Beetle affected areas (Natural Resources Canada, 2016) Climate change coupled with past forest management practices has led to a drastic increase in MPB infestations, killing millions of cubic metres of forests in BC and Alberta (Figure 1). The factors contributing to this epidemic are three-fold. First, the onset of climate change has resulted in milder winters and warmer summers for interior/northern BC and Alberta, allowing large portions of the beetle population to survive multiple seasons. This contributes to both higher numbers and survival rates of the MPB. Second, previous forest management practices in these areas increased the number of trees susceptible to the MPB, namely ~70-90yr old Lodge Pole Pine trees. The ‘mono-cultural’ approach to planting strategies in large areas resulted in over 15 million hectares of BC’s interior being susceptible to the MPB, accelerating their spread. Lastly, favorable weather conditions have allowed beetle populations to travel far greater distances (greater than 100km), much farther than historically known. Adult beetles can now quickly move across the landscape and have begun to attack and infect additional tree species in Alberta, such as the Alberta boreal pine stands. The MPB epidemic threatens the livelihoods of thousands of rural British Columbians, causing many mills to lose their timber supply and close. Millions of trees, now dead, lost significant economic value and could not be economically recovered from the forest. The massive swaths of 9  dead trees also present a highly elevated risk of forest fires, so much so that the BC government released a Mountain Pine Beetle Action Plan and other initiatives. These plans encouraged companies to find alternative uses for the now large quantity of non-merchantable beetle-killed wood, for example the Bioenergy Strategy that was developed in 2008 (Government of British Columbia, 2008a).  1.1.3 Forestry and renewable energy The forestry industry’s approach to combatting climate change was initially only as a ‘carbon sink’, with trees sequestering carbon over time, removing the harmful GHG from the atmosphere and storing it in wood and soil. However, during the 1990s and 2000s, sawmills and pulp and paper mills began to see an opportunity to play a more active role in renewable energy initiatives. As new mills were built in the interior of BC, operational efficiency became a high focus to reduce costs and increase profits. Therefore, mills began burning mill waste (i.e. ‘mill residues’) to generate heat and electricity, reducing their electricity costs and removing a waste stream from their processes. Using mill residues (bark, saw dust, wood chips, pulp black liquor) onsite to produce heat and power became an effective way to reduce costs and the energy load on BC’s electricity grid, while at the same time eliminating the polluting practices of burning mill residues in the open air in ‘beehive burners’. In fact, by 2008, BC’s main utility, BC Hydro, developed a bioenergy strategy to encourage forestry companies to produce electricity onsite to reduce industrial electricity requirements. The inclusion of co-generation facilities on mill-sites brought an additional revenue stream to an increasingly hindered forestry industry. Through stand-alone bioenergy facilities, saw mills, pulp and paper mills and BC Hydro created new economic opportunities. This strategy also provided the mills with incentives to use beetle-kill trees for onsite co-generation, as large areas of harvestable land decayed into non-merchantable timber (Government of British Columbia, 2008a). The Bioenergy Strategy and ‘co-generation’ facilities marked the beginning of the BC forestry industry’s foray into bioenergy development, laying the foundations for future growth and purchase agreements between bioenergy producers and BC Hydro. In addition to the numerous influences of the forest product supply chain, the BC forest industry faces pressure from third-party certification standards. Despite having relatively stringent forest 10  policies in BC, some markets require the use of certifications to ensure forest products are sourced sustainably. Sustainability certification standards are critical to the continued use of BC forests (and forest residues) and therefore are reviewed in the following section. 1.2 Third-party certification standards As will be described in more detail in the main body of the thesis, certification systems have become a major due diligence tool, used to verify that multi-national supply chains are sustainable based on established definitions of each EU Member State, particularly in the forestry industry. However, ‘new’ products and supply chains, such as BC wood pellets, often develop faster than certification standards can adapt and create new verification procedures. Therefore, new feedstocks and products often require overlapping standards or new modules to define and verify sustainable practices. Wood pellet production using forest residues is one such case, where there is no ‘one-size-fits-all’ solution to help verify the sustainability of a forest residue. The following section explores the history and influence of forest management certification in BC. This is compared with other relevant certification standards (i.e. biomass-sourcing and biomaterials standards) which are currently used ensure the sustainable acquisition and use of biomass residues.  1.2.1 Forest management certification Over the last two decades, sustainable forest certification has become a large part of the management of Canada’s forests, with more than 43% of the world’s third-party certified forests located in Canada (Natural Resources Canada, 2017a). Forest certification authorities, such as the Forest Stewardship Council (FSC) and the Sustainable Forest Initiative (SFI), emerged globally in the early 1990s due to concerns about unsustainable harvesting in the pulp and paper industry (Auld, Gulbrandsen, & McDermott, 2008). ENGOs continue to play a pivotal role in the growth of private governance systems or forest certifications in BC, which have become a due diligence tool for multinational supply chains of traditional forest products. Forestry is among the first industries to rapidly adopt and adapt private governance systems directly addressing sustainability, in response to a variety of pressures including global consumer trends to buy products that have additional transparency and sustainable practices.  11  Greenpeace and other ENGOs helped catalyze the formation of FSC as a response to international, non-binding agreements regarding forest management and deforestation. This helped fill in the apparent governance gaps between public concerns and industry regulation regarding global and domestic forest management (Gan & Cashore, 2013). To help increase public knowledge of these organizations the ENGO’s developed media campaigns which targeted forest product buyers (e.g., Staples, Home Depot), pressuring businesses to only buy forest products from certified sustainable forests (of course, only ones that are FSC certified!). However, shortly after the establishment of the FSC, industry associations developed their own standards (SFI and the Canadian Standards Association on Sustainable Forest Management (CSA-SFM)), certifying forests as sustainable while also maintaining low administrative costs for forestry companies. In the last two decades, more than 60% of Canadian forestry companies have been certified under one of the three prominent certification authorities, SFI, FSC or CSA-SFM. The FSC and the Programme for Endorsed Forest Certifications (PEFC), an international organization representing SFI and CSA-SFM and other national forestry standards globally, reported a global total of 196.2 million hectares and 300 million hectares of certified forestlands respectively, dated mid-2017  (Forest Stewardship Council, 2017; Programme for Endorsed Forest Certifications, 2017). A likely stimulus for the rapid adoption of third-party forest certification schemes in Canada is provincial land ownership rights and forest tenure systems. The various Canadian Provinces own large portions of Canada’s harvestable land base. As a result, forest harvesting practices are subject to provincial forest legislation, such as the BC Forest Range and Practices Act (FRPA) and the Forest Practices’ Code (Government of British Columbia, 2002). This public tenure system has led to relatively few, large forest companies holding the right to harvest timber, leaving less availability for smaller forest companies. It was rationalized that larger companies could receive several tenure system rights and could afford to harvest trees in the more rural areas of BC. Therefore, these companies could afford the additional cost of certifying their forests and mills under a sustainability certification and, in most cases, stay within the already legislated forest harvesting practices in their province. As mentioned earlier, FSC, SFI and CSA-SFM are Canada’s three main forest certification authorities, each with its own standards recognized by different countries and organizations around the world. The work described in the thesis has mostly focused on FSC and SFI 12  standards, as they are by far, the popular choice among forest companies and are active in both BC and the US. Although membership has fluctuated, as demonstrated in Figure 2, the overall trend shows an increase in hectares certified in Canada over time (Figure 2).  Figure 2: Comparing the growth trends of forest certifications prominent in Canada (CSA-SFM, SFI and FSC), sourced from Forest Products Association of Canada (FPAC), 2011 SFI and CSA-SFM are both industry-focused certification standards yet differ in their popularity in North America. Today, SFI has become a critical component of the BC forest sector, most likely because SFI is a US-based certification and BC relies heavily on forest product exports to the US. Forest certification systems generally follow the framework of three specific standards: 1) Sustainable Forest Management (SFM) Standard;  2) Chain-of-Custody Standard (CoC); and  3) SFI Fiber Sourcing (SFI-FS) or Controlled Wood (FSC-CW) Standard. The CoC of both the FSC and SFI are similar in that they relate to mills that use forest biomass, or the downstream wood supply (Sikkema et al., 2014). Saw mills, pulp and paper mills or wood pellet mills can certify under a CoC standard, to be recognized as a stakeholder in a sustainable supply chain. Another major benefit to certifying under FSC-CoC or SFI-CoC, is their recognition under EU Timber Regulations and biomass sustainability requirements relating to residues and wastes (Department for Environment Food & Rural Affairs, 2013; European Parliament and the Council of the European Union, 2009). A critical component of both FSC-CoC and SFI-CoC is the track and trace requirements of forest fiber from stump to product, 13  relating to the legality requirements under the US Lacey Act and its recent amendments (US Lacy Act Amendments, 2008). CoC standards allow companies to track and communicate where they sourced fiber from, either from certified lands, certified fiber sourcing, recycled fiber or non-certified forest biomass. The third standard commonly used in the wood pellet industry is the FSC Controlled Wood standard. The FSC-CW standard “define[s] the minimum requirements that non-certified forests and fiber must meet in order to be mixed, under strict circumstances, with FSC-certified and/or recycled fiber”(Forest Stewardship Council, 2017a). The FSC-CW follows a risk-based assessment process of fiber sourced from uncertified forests, which verifies that fiber fulfills the minimum requirements for legal timber. Although similar to a CoC standard, the FSC-CW allows businesses to source their fiber from many different sources, including uncertified forests, and still achieve some requirements under EU timber and renewable energy regulations (Forest Stewardship Council, 2017a; personal communication, S. Ellsworth, July 2017). 1.2.1.1 Sustainable Forest Management Standards To assess the management of BC forest residues in a bio-product supply chain, the analysis in Section 2 has focussed on SFM standards. The SFI Forest Management (SFI-FM) and FSC Forest Management (FSC-FM) Standard in BC contain principles and criteria that aim to maintain key aspects of a forest, such as biodiversity, soil nutrients, tree health and the social welfare of local populations (FSC, 2005; SFI, 2015). Although the FSC-FM standard is currently undergoing a revision, the current standard has 10 Principles and numerous Criteria for BC forests that provide prescriptive measures. Currently, companies must complete, measure and receive third-party verification in order to be certified as an FSC sustainable forest (FSC, 2005). The likely outcome of the revision, set to be finalized by late 2017, is a national Canadian FSC standard, to which forest companies will be held accountable (Forest Stewardship Council, 2017c). In parallel, SFI has 13 Principles, 15 Objectives and 101 Indicators that apply to companies that own or manage forestland that seeks certification under the SFI standards framework (SFI, 2015). The nuanced and detailed differences between these two standards, namely at the forest management unit (FMU) level, has been well studied and debated (Auld, Gulbrandsen, & McDermott, 2008; Cashore et al., 2006; Mcdermott, Noah, & Cashore, 2008).  14  As a result, many organizations have described the growing similarities between the three forest certification schemes (FPAC, 2011). While they do cover similar areas of forest management, the nuanced differences influence their market position and what constitutes acceptable forest management practices and recognition. The origins of each certification scheme is critical in understanding their position in the market, coverage of various sustainability objectives and partnerships with international and downstream supply chain organizations, such as the RSB (Auld, Gulbrandsen, & McDermott, 2008b).  The FSC originally began in the early 1990s, in response to a lack of legally binding forest protocols issued by the UN at the Rio 1991 forest conference, (as described in Section 1.2. FSC was supported by major international environmental organizations, such as the World Wildlife Fund (WWF) and designed to equalize the participation of the management of forests across three ‘chambers’ of governance, Civil, Environmental and Economic, thereby limiting traditionally dominant interests from controlling decision making (Cashore et al., 2006; Mcdermott et al., 2008; Mcdermott, 2003). The formation of the FSC sparked concern in industry professionals, as economic values were given equal weight to environmental and social concerns. In response, the forestry industry founded their own forest certification authority –the Sustainable Forestry Initiative (SFI) -- to establish a standard of practice that improved sustainability of the harvesting supply chain, yet did not jeopardize the third part of the sustainability stool – economics (Clark & Kozar, 2011).   15  Table 1: Forest certification authorities in Canada, adapted from Auld, Gulbrandsen, & McDermott, (2008b) Certification Authorities Geographic Concentration Key Stakeholders involved Recognition from Downstream Policies/Standards Forest Stewardship Council World ENGO, Civil Groups, Industry, First Nations Roundtable on Sustainable Biomaterials (RSB); European Commission; US Green Building Council; Sustainable Biomass Program (SBP) Sustainable Forestry Initiative North America Industry, government, ENGO, First Nations, Civil Groups European Commission; Programme for Endorsed Forest Certifications (PEFC); US Green Building Council; Sustainable Biomass Program (SBP) Canadian Standards Association – Sustainable Forest Management Canada Industry, government European Council; Programme for Endorsed Forest Certifications (PEFC); Sustainable Biomass Program (SBP) Recent work has compared FSC and PEFC at the international level, as well as specifically comparing FSC to SFI and CSA-SFM in Canada (Auld et al., 2008; Cashore et al., 2006). Other comparisons have been completed by environmental organizations who have used FSC as a benchmark to criticize SFI and CSA-SFM as not stringent enough on environmental standards (Overdevest, 2009). “Strategic public comparisons were addressed to important economic audiences, i.e. those that controlled market access…” (Overdevest, 2009), such as Home Depot, to pressure companies to certify with FSC. Of course, these comparisons contained significant bias and affected the development of industry-led forest certification authorities. As a result, the 16  differences between each SFM standard are becoming more nuanced as ENGO’s lobby for further management restrictions and the industry moves towards a more sustainable forest management regime. Auld et al.’s (2008) review of the history and growth of forest certification in Canada highlights the ENGO influence in FSC, as well as the comparatively ‘loose’ standards in the industry driven standards SFI and CSA (Auld et al., 2008).  Figure 3 shows the trend of forest certification in Canada, illustrating the rise of SFI over recent years and the slow decline of hectares (ha) covered by the CSA-SFM standard (Figure 3).   Figure 3: Trends in forest certification adoption in Canada from 2000-2016 (Rotherham, 2016) Many factors enter a business decision to certify with a forest certification authority. Companies clearly see a difference in which forest certification authorities are suitable for their forest products (Figure 3). Based on these differences in market adoption, researchers Clark and Kozar (2011) completed a meta-analysis of over 30 studies comparing PEFC and FSC at the international level. They suggested that the FSC is more inclined to develop environmentally focused standards, as they give equal representation to industry, civic groups and ENGOs in their governance structure (Clark & Kozar, 2011; Table 1). However, Clark and Kozar’s study demonstrated the lack of available data and the challenge in coming to any concrete, real-world, conclusions about one forest certification authority being ‘better’ or more stringent than the other. All except one recent comparison paper (Sverdrup-Thygeson, Borg, & Bergsaker, 2008) studied the written works of forest certification standards. However, this study lacked any forest management in-the-field data (Clark & Kozar, 2011).  17  Some studies have also attempted to compare certification authorities based on their ability to impact the industry or their ‘effectiveness’, i.e. the impact certification schemes had on sustainable forest management practices (McDermott, 2012). Instead of coming to a singular conclusion, McDermott et al. (2011) considered the issue of ‘prescriptiveness’ as a critical difference between these standards. Prescriptiveness refers to the level of stringency a standard may enforce within its standards, including adding quantitative thresholds for companies to meet. For example, the FSC has a mandatory buffer zone width that must be applied to riparian areas within a harvesting block whereas SFI and CSA-SFM simply have guidelines or point to existing legislation within each province for buffer zone width. Based on these studies, FSC standards in the US and Canada tend to be more prescriptive in nature than SFI or CSA-SFM standards (Auld et al., 2008; McDermott, 2012). The studies that have compared these three forest certifications standards only focus on the Principles and Criteria, lacking any reference to regional policies such as FRPA and do not address forest residues directly. None of the current SFM certification standards include any significant mention or objective for using forest biomass for energy or bioeconomy purposes. All certifications certify the forest, not the product, focusing on forest ecosystem Principles and Criteria – not focusing on aspects outside of the Forest Management Unit (FMU) level. Therefore, the areas worth analyzing for forest residue management procedures relate to overall ecosystem productivity and resiliency within the standards’ Principles and Criteria.  1.2.2 Biomaterials certification Multi-national agreements and governmental support policies and programs, such as the EU Renewable Energy Directive, marked the global shift towards renewable energy and biofuels in particular (European Parliament and the Council of the European Union, 2009). The EU-RED has influenced the European market for liquid and solid biofuels, requiring large amounts of biomass imported from areas richer in natural resources, such as Indonesia or North America. To ensure liquid biofuels were produced sustainably, EU-level policies require a certain level of due diligence from buyers, tracking biomass and biofuels from producer all the way to end-user. Thus, companies seeking government subsidies from support programs are required to provide up-to-date data, verified by a third party, to prove sufficient GHG emissions reductions and ensure critical aspects of sustainability are maintained or improved. 18  In the last decade, ENGOs and industry associations developed certification schemes for biofuels to fulfill sustainability objectives set by regulation and ratchet up the expectations of sustainable supply chains, particularly in developing countries such as Indonesia (European Parliament and the Council of the European Union, 2009). Biomaterial certification standards play numerous roles in bio-product markets as they are commonly relied upon to ensure sustainable practices are being met in developing countries or to ‘harmonize’ a supply chain by recognizing some certification standards as ‘equivalent’ to their own. Biomaterial standards are also critical to a supply chain that uses forest residues because they could significantly limit the potential markets that forest residues are eligible for, simply by recognizing one type of SFM certification standard over another (preferring FSC over SFI for example).  The Roundtable of Sustainable Biomaterials (RSB) (formerly Biofuels) is a multi-stakeholder initiative developing standards for bio-products using woody biomass and other forms of biomaterials as feedstocks. The objective of the RSB is to implement a certification system ensuring bio-products are sustainable and do not adversely affect the economic, ecological or social aspects of stakeholders along the supply chain (RSB, 2017).  A wide range of ENGOs, such as the World Wildlife Fund (WWF), supports the RSB and its certification of biofuels and biomaterials supply chains. However, the RSB has not spread as widely as some of its industry-led counter parts, such as the International Sustainability and Carbon Certification (ISCC). While RSB has made important steps in measuring and managing environmental and social sustainability, its pursuit of high environmental standards likely increases the costs of certification, resulting in limited participation by biomass businesses and industry stakeholders (Moser, Hildebrandt, & Bailis, 2014). Although the specific details of the ISCC and RSB standards suggest they are similar in their coverage of sustainability principles, “…there is variation in the way compliance with standards is measured, i.e. different sustainability criteria and indicator systems and monitoring procedures exist” (Pelkmans et al., 2013). Specifically, the use of 'minor musts' in the ISCC's Sustainability Requirements document provides a large amount of flexibility in their social principles compared to the RSB's Principles and Criteria, streamlining their certification process compared to the more difficult RSB standard system (ISCC, 2016; RSB, 2016). The varying degrees of stringency leads larger industry players to support the ISCC. Ponte and Riisgaard (2011) argue 19  the ISCC "…might be perceived as more efficient and thus more appealing to producers," (Riisgaard et al., 2010). Moser et al. (2014) supports this theory, suggesting the ISCC is more favorable for businesses as it provides "minimum criteria and guidelines as outlined by the EU-RED, whereas the RSB goes above and beyond for screening local, regional and global conservation values" (Moser et al., 2014). The differences between biomass certifications can assist in determining their influence on forest management and forest certifications. Although not all companies are solely interested in profits, there is a threshold of economic sustainability that must be maintained in a sustainability standard and, so far, the RSB has not been able to convince many biomass producers certification is worth the cost. Other studies confirm this line of reasoning, arguing that the types of stakeholders involved with the RSB or ISCC affect the choice of larger biofuel and feedstock producers "…and that legitimacy (understood as participatory inclusion) may not necessarily translate into uptake and compliance," (Moser et al., 2014; Upham, Tomei, & Dendler, 2011). As standards are developed and implemented, the incentives and interests of their customers are critical. Therefore, the ISCC focuses more on the economic gains and efficiencies in their standard.  1.2.3 Biomass certification As mentioned earlier, the EU Member States have primarily driven the rapid growth of the wood pellet industry in BC and the US south east. Therefore, the regulations and third-party certification standards commonly used by EU markets are critical to the future management and use of BC forest residues, even for future bio-products where EU Member States may not be the primary market. Many regulations and definitions of biomass sustainability will likely remain in effect regardless of the end use of forest residues, given the potential impacts of forest residue management and potential GHG emissions reductions, as mentioned previously. Unfortunately, although the EU-RED regulations established a united definition of sustainability requirements for liquid biofuels, biomass sustainability requirements for solid biofuels and bioenergy were defined by each EU Member State. This decentralized approach resulted in a variety of definitions and a complex regulatory environment for wood pellet producers and bioenergy utilities, such as Drax Biomass, Inc.  20  In the last few years, biomass sustainability requirements have been defined by key markets importing wood pellets for bioenergy, namely the UK, the Netherlands and Belgium (Cramer & et al, 2007; Department for Environment Food & Rural Affairs, 2013). Currently, forest biomass used for energy purposes has limited or developing certification schemes, driven by regulatory measures in key markets (e.g., EU, UK). A prominent certification body in the biomass-to-energy industry, the Sustainable Biomass Program (SBP), was developed by European power utilities to verify the sustainability of their biomass (wood pellet or wood chip) purchases, allowing the importation of North American wood pellets into the UK and other Member States.  As described in more detail below, SBP certification is important for forest residue use because of its prominence and use in the US south east. The US south east produces approximately two-thirds of North America’s wood pellets and is the subject of many ENGO campaigns who have been lobbying against wood pellet production and use in Europe (Murray, 2015). The SBP is also unique in the sense that it only applies to wood pellet production and wood chips. Biomaterials certification standards, such as RSB or ISCC, can apply to numerous product categories and is a broader level of certification, whereas SBP is focused primarily on certifying wood pellet supply chains to fulfill renewable energy subsidy policies in the EU (particularly the UK), largely excluding forest management sustainability issues. SBP’s feedstock standard and its Principles and Criteria are similar to the UK’s Central Point of Expertise on Timber (CPET) regulations, and in fact occasionally reference UK forest policies, indicating the importance the SBP Standards document places on fulfilling EU biomass policies (Department for Environment Food and Rural Affairs, 2016; SBP, 2015). The SBP certification of forest management uses risk-based assessments for forest management, avoiding specific principles or criteria pertaining to management at the FMU level, particularly in Canada where forest management is comprehensively covered in existing provincial forest policies. Overall, the numerous sustainability certification standards create a complex landscape in which forest residues must be certified as sustainable, as well as be recognized as sustainable in relevant markets (e.g., the UK). Given the, at times, nuanced differences between forest certification standards and the competing interests in biomaterials/biomass certification standards, further analysis is required to determine if forest residues are completely managed, or only partially managed under these certification standards. Additionally, BC is almost 21  completely certified under forest certification standards, which can affect the eligibility of BC forest residues in the EU and other markets.  Finally, there are also areas that are seemingly within the scope of a standard when it may be insufficiently managed. For example, SBP’s forest management certification procedure is risk-based, meaning companies only need to prove their regional area is not prone to mismanagement of forest resources. Therefore, SBP may not establish in-depth forest management principles at the FMU-level. An analysis comparing the applicable certification standards is required to determine whether they fulfill the sustainability requirements of forest residues and how they may adapt to future policy developments in the bioenergy and biofuels sector.   1.3 Problem statement and objectives BC forest residues can be a sustainable feedstock for bioenergy and biofuels production (i.e. bioeconomy feedstocks) if two main challenges can be overcome. First, current sustainability certification schemes (FSC, SFI, etc.) in North America do not fulfill sustainability requirements regarding forest residue use in bioenergy supply chains. In addition, biomass-sourcing standards (RSB, SBP) rely on risk-based assessments of forest management, leaving some objectives, such as ecosystem resilience, to the regulations of a particular country or state. Unfortunately, this not only leaves sustainability to policy rather than third-party certified practices, it also can expose stakeholders to criticism from ENGOs and other lobbyists attempting to influence policymakers in key markets, such as the UK or Denmark. Sustainability certification standards have long been a part of the wood products industry, developed in response to market pressures and ENGOs lobbying customers (e.g., Staples), ensuring sustainability for pulp, paper and lumber products. Conversely, certification standards in the bioenergy industry developed more recently due to regulatory pressures from key markets, i.e. UK, Denmark and Belgium, thus focusing more on fulfilling downstream policies and less on forest management. The gaps between certification standards result in an unverified forest residue, jeopardizing the potential for utilization of additional biomass for current and future bio-products. Second, the economic and regulatory barriers to using forest residues in BC pose a significant obstacle to increased access to available forest residues for bioenergy and biofuel supply chains. The absence of favorable economics for forest residues limits investment and development in the BC forest residue supply chain and, subsequently, limits the benefit that can be gained by 22  Canada’s forest sector in global renewable energy strategies. These economic challenges are the result of the current structure of the harvesting supply chain and the geographic distribution of BC forest residues. BC’s harvesting supply chain maximizes the value of its trees by optimizing each aspect of the chain, from building roads to the number of times a harvesting company enters the forest (typically only once).  Therefore, any changes to the supply chain, such as changing the type of truck used to haul biomass, can significantly increase the price of operations in BC forests. In addition, BC’s ~22 million hectares of harvestable forestland are dispersed across long (at times mountainous) distances, far from roads and urban areas (Canadian Council of Forest Ministers, 2015). Although these barriers continue to be studied and the supply chain optimized, additional support and incentives are required to make retrieval of forest residues from BC forests more economically viable. Additionally, the current BC tenure system rewards timber-centric forest practices by distributing rights to cut timber only, jeopardizing the opportunities to value alternative forest products, such as carbon. In almost all the objectives set by the BC Government in the Forest Range and Practices Act (FRPA), “…without unduly affecting the timber supply” supersedes many alternative subjects, such as biodiversity or wildlife protection. Conversely, a developing aspect of BC forest policy with First Nations and UNDRIP indicates the potential for added complexity when distributing forest tenures, as well as the influx of culturally significant forest values. Therefore, regulatory and policy changes will be analyzed as part of an economic assessment. To address these two challenges, this thesis has four main objectives: 1. Define the scope of current forest management and biomass-sourcing standards, to ensure forest residues are verified sustainable; 2. Identify the certification procedures necessary to fill any gaps between forest management and biomass-sourcing standards, including future potential regulatory requirements in the bioenergy and biofuels sectors; 3. Identify potential policies and economic tools that could act as drivers to overcome the economic challenges within the existing BC forest harvesting supply chain and policy framework; and 23  4. Evaluate and suggest the policies and economic tools that could overcome the economic challenges of a BC forest residue supply chain. The four objectives guide the research of the following two sections of this thesis. Section 2 examines the possibilities of expanding or pairing forest management and biomass-sourcing certification standards to ensure a sustainable supply chain of forest residues. Section 3 analyzes the specific economic challenges in the BC forest supply chain and argues for policy and economic tools that can incentivize forest companies to remove additional forest biomass for bioenergy and biofuel production. The conclusions of this research aim to support the continued growth of BC forest residue use and the greater bioeconomy.   24  2 The possibility of adapting third party certification standards to include forest residue use in British Columbia The most traded renewable energy commodity in the global market is biomass, biofuels and bioenergy (Goss et al., 2016; IRENA, 2015). With the worldwide shift to renewable energy, the existing supply chains and national forest regulations position the forestry industry to effectively supply sustainable forest biomass, by substituting fossil fuel energy with bioenergy and/or biofuels. Although large-scale removal of forest biomass beyond that of traditional forest products could have unsustainable impacts, studies indicate that well managed forests can produce a substantial amount of sustainably derived forest residue (Dale et al., 2017; Gan & Cashore, 2013). The wood pellet industry is one of the largest bioenergy/biofuels markets in the world, fueling the shift away from coal-fired power plants, particularly in the EU. Additionally, wood pellets are the fastest growing forest product in North America, with Canada and the US exports reaching approximately 5-6 Mt/year in 2016 (Murray, 2015). The growth and prominence of wood pellet production in North America means forest residue use and sustainability (for biofuels, biojet-fuel or bio-products) will likely depend on future developments in the wood/forest derived pellet sector. Wood pellet production in BC relies heavily on mill residues, such as the wood shavings and chips produced as a by-product of traditional forest products, such as sawn logs or panels. The reliance on mill residues is due primarily to the availability of low-cost mill residues, which currently supply most of the feedstock for BC’s wood pellet production (Drax Group plc, 2015). However, forest residues are becoming increasingly desirable for wood pellet production for two reasons. First, mill residue supply is in decline in the wake of the declining MPB epidemic and the resultant reduced midterm timber supply. Second, based on current projections of increased wood pellet demand, particularly from EU Member States and Japan, BC wood pellet producers need to collect additional forest residues from BC forests to fulfill demand (Goss et al., 2016; Murray, 2015). 25  Sustainability has become a critical factor in wood pellet production and trade, as renewable energy policies and timber procurement policies overlap and support the industry through subsidies and complementary regulations (Department for Environment Food & Rural Affairs, 2013; European Parliament and the Council of the European Union, 2009). However, as discussed in Section 1.2.3, solid biomass sustainability requirements are decentralized. Every EU-Member State can impose their own restrictions on what biomass is deemed sustainable, such as the Netherlands Framework for Sustainable Biomass detailing definitions that are beyond what the UK’s biomass sustainability requirements are (Cramer & et al, 2007; Department for Environment Food & Rural Affairs, 2013). Thus, the procedures used to verify sustainability vary between countries, creating a complex regulatory environment for wood pellet producers. Adding to the complexity, sustainability is a subjective tool, with the general definition that is means produce a valuable product (e.g., resources, products or services) in the present, without jeopardizing potential value for future generations. The definition of sustainability typically includes the three legs of a stool: economic, social and environmental. In the work described here it factors in land management, products, services and the wider economy. However, even simply defining sustainability for specific products or feedstocks, such as forest residues, there are many possible factors that may affect the interpretation and definition of a sustainably managed forest residue. As the world shifts towards a greater reliance on bioenergy and biofuels, defining and measuring sustainability is increasingly critical. Since forest residue-derived products will, hopefully, displace fossil fuel use, subsequently curbing GHG emissions, all the environmental factors that contribute to sustainability will be critical for effective forest residue use. Although forest management certification standards, such as the FSC, verify sustainability in forest management, they mainly focus on traditional forest products and do not specifically encompass forest residues and associated concerns about “harvesting” additional biomass. More recently, biomass certification standards in the wood pellet sector have tried to develop effective downstream policy requirements. However, they miss critical sustainability concerns, such as soil nutrient management and management techniques to increase biodiversity, at the forest management level when harvesting additional biomass.  Therefore, four main objectives guide this section of the thesis. First, identify direct and indirect Principles & Criteria that concern forest residue management in forest management 26  certifications. Forest certification standards are the most likely to extend their certification to include forest residue sustainability for future bioenergy/biofuels, given their prominence in Canada and their established sustainable forest management framework (Lattimore, 2009). However, there are additional sustainability concerns and requirements for biomass used for bioenergy/biofuels that are often required by renewable energy policies and subsidies in key markets (i.e. UK, Denmark and Belgium).  The second objective is to define the scope of biomass sourcing standards and the extent of in-forest Principles & Criteria. To account for additional biomass sustainability requirements, other certification standards must be included. Biomass-sourcing certification standards are developing in the bioenergy sector and are influencing the definition and verification of sustainable forest residues. Therefore, the collaborations and overlap of third-party standards will affect BC forest residues use and certification. Third, we have assessed the certification procedures necessary to ‘fill the gaps’ between forest management and biomass sourcing certification standards. A pairing or partnership between certifications is suggested as the most likely option to supply a globally recognized forest residue from the BC forest supply chain. Lastly, we have reviewed the current and future potential regulatory requirements for a sustainable forest residue supply chain in BC. For example, additional regulations, climate targets and sustainability requirements from key markets can affect the role of certifications in the future and their decision to collaborate with downstream or upstream stakeholders. This section discusses Canada’s efforts towards supplying a globally recognized feedstock for biojet-fuel production and suggests how to develop forest residues as a feedstock for the world’s evolving bio-economy. 2.1 Sustainability considerations of harvesting additional forest biomass Forest residues in BC typically consist of treetops, branches and non-merchantable trees (e.g., crooked or damaged trees) from harvest blocks that have undergone, or are being, harvested for traditional forest products. Historically, BC forest residues have been collected, piled and burned during the winter months of the harvesting period. In fact, the provincial legislation mandates forest companies to reduce the fire risk in harvest-blocks by removing ‘unavoidable waste’ from their sites. Some of BC’s forest residues are currently used in small quantities in power generation facilities next to sawmills and pulp and paper mills, or in wood pellet production 27  where mill residue supplies do not fulfill current feedstock demand (Drax Group plc, 2015). However, regardless of the end use of forest residues as a feedstock, there are significant sustainability concerns when managing a forest more intensively through biomass removal beyond merchantable timber and products.  The rotation age of trees in BC (how long it takes a tree to grow until it is harvested) is approximately 80-100 years. The long rotation age, relative to other areas, results in larger trees used for construction products, panels and other high-quality products. Comparing BC’s forest residues and its use in other areas that utilize forest residues for energy products can demonstrate how BC forest residues can achieve sustainability requirements in bioenergy/biofuels. In the US SE, North America’s largest wood pellet producer, forest residues are different. Given the nature of the forest products industry and dominant tree species, the US south east has much smaller diameter trees, thus aiding in the removal of tree tops/branches and other biomass considered forest residues. The decline of the pulp and paper industry has resulted in the increased availability of smaller trees unfit for sawmills. Therefore, the US south east relies on forest residues and pulp and paper logs for wood pellet production, exporting close to 4M t/year of wood pellets, 90% to the UK, Belgium and Denmark (U.S. Department of Commerce, 2016). Similarly, Finland’s forest residues consist of smaller treetops or pulp and paper logs, which are ’whole-tree harvested’. The whole tree is cut and used, leaving little residues left on site. Forest managers in Finland use every part of a tree in most cases, selling larger portions to sawmills and using residues for domestic combined heat and power systems and other bioenergy applications (Berndes et al., 2016). Despite the lack of certification, studies have shown the use of forest residues for energy in Finland results in an increase in sequestered carbon and an overall reduction in GHG emissions. The US south east and Finland provide unique perspectives on the development of wood pellet production, forest residue sustainability and the role of certification standards. There has been extensive research into the impacts of removing additional forest biomass from forests and these studies generally indicate that, when managed sustainably, forest residues can be a sustainable feedstock for the evolving bioeconomy (Stupak et al., 2011).  Despite these studies, the verification of sustainable forest management practices will be an ongoing necessity, to ensure the availability of enough forest residues for bioenergy/biofuels applications. Key environmental sustainability considerations in forest management include 28  forest productivity, forest ecosystem resilience and quality (soil nutrients, biodiversity, and water resources), the ecological integrity of the landscape and the reduction of harmful pollutants (Hennenberg et al., 2010; Stupak et al., 2011). 2.1.1 Comparing BC forest policy and certification standards to possibly include forest residue management As most forest certification standards focus on forest management, not a specific forest product, forest residues are likely already managed under existing forest certification authorities, if indirectly. For example, forest management certification standards limit the amount of biomass removed from a harvesting site, thus ensuring forest residues are not over-harvested. However, forest management standards do not include other elements of a supply chain, such as the grinding of the biomass in an industrial grinder or trucking the wood chips to a wood pellet mill. As summarized in table 2 the four certification authorities have tried to adapt biodiversity aspects into existing forest certifications (e.g., FSC) methods to include forest residue use for bioenergy.  Table 2: Comparing biodiversity aspects within forest certification Principles and Criteria with BC Forest Policy  (adapted from FSC, 2005; Government of British Columbia, 2002; Roach & Berch, 2014; SFI, 2015; Standards Council of Canada, 2016) FSC SFI CSA BC Policy 6.1 An assessment of environmental impacts shall be completed - appropriate to the scale, intensity of forest management and the uniqueness of the affected resources - and adequately integrated into management systems. Assessments shall include landscape level considerations as well as the impacts of on-site processing facilities. Environmental impacts shall be assessed prior to commencement of site-disturbing operations. 6.1.6 In areas proposed for timber harvesting, prior to preparing stand level prescriptions and selecting harvesting methods, inventories at the cut-block or stand level are completed, including at a minimum: a) Stand structure, including occurrence of live wildlife trees and snags, and relative amounts of coarse woody debris; b) Presence of aquatic habitats, rare ecosystem features and/or other critical habitats identified at the site level; and, c) Basic ecosystem and soil information. Objective 4. Conservation of Biological Diversity To manage the quality and distribution of wildlife habitats and contribute to the conservation of biological diversity by developing and implementing stand- and landscape-level measures that promote a diversity of types of habitat and successional stages, and the conservation of forest plants and animals, including aquatic species, as well as threatened and endangered species, Forests with Exceptional Conservation Value, old-growth forests and ecologically important sites. Performance Measure 4.1. Program Participants shall conserve biological diversity by incorporating the conservation of native biological diversity, develop criteria and implementation of practices, as guided by best scientific information to retain stand-level wildlife habitat elements, such as snags or stumps. Additional management plans, research and monitoring are required for further biological management and maintenance 6.3.1 Criterion 1 — Biological diversity Managers shall conserve biological diversity by maintaining integrity, function, and diversity of living organisms and the complexes of which they are part, including ecological elements that contribute to cultural values. The public participation process shall include discussion of the following topics: • forest habitat connectivity and conservation at the landscape level; • management in the context of natural disturbance regimes and patterns and the range of natural variation; • maintenance of populations and communities over time; • local and regional protected areas and integrated landscape management; • Biomass utilitization 6.3.2 Criterion 2 — Ecosystem condition and productivity Conserve forest ecosystem condition and productivity by maintaining the health, vitality, and rates of biological production. Forest managers must assess each cutblock on a case-by-case basis, taking account of the size, adjacent cutblocks and relative restriction on harvesting based on wildlife tree retention areas. Harvesters must ensure that the total area coverd by a wildlife tree retention area that relate to the cutblocks is a minimum of 7% of the total area of the cutblocks (Division 5, FRPA). Coarse Woody Debris (CWD) must be maintained at a minimum of 4 logs per hectare, each being a minimum of 5m in length and 30cm in diameter at one end on the Coast, and 2m in length and 7.5cm in diameter at one end in the Interior of BC. Finally, an existing cutblock must be reforested to at least 75% of the net area, achieving an average height of 3m at 500 trees/ha on the Coast and 700 trees/ha in the Interior. Additional, general wildlife measures also apply to authorized persons who carry out primary forest activities (Division 6).    30  Table 3: Comparing forest soil nutrients and management in forest certification Principles and Criteria with BC Forest Policy (FSC, 2005; Government of British Columbia, 2002; Roach & Berch, 2014; SFI, 2015; Standards Council of Canada, 2016) FSC SFI CSA BC Policy Measures shall be taken to maintain or improve soil structure, fertility, and biological activity. The techniques and rate of harvesting, road and trail construction and maintenance, and the choice of species shall not result in long term soil degradation or adverse impacts on water quality, quantity or substantial deviation from stream course drainage patterns. Forest management maintains soil fertility and natural soil processes by limiting detrimental soil disturbance to less than 7% of the timber harvesting land base or limiting detrimental soil disturbance to less than 10% of the timber harvesting land base, where there are off-setting environmental, cultural or other non-economic benefits for the increases over 7%, and the benefits are explained in a written rationale.  Performance Measure 2.3. Program Participants shall implement forest management practices to protect and maintain forest and soil productivity. Som indicators include: 1) Process to identify soils vulnerable to compaction, and use of appropriate methods, including the use of soil maps where available, to avoid excessive soil disturbance.  2) Use of erosion control measures to minimize the loss of soil and site productivity.  3) Post-harvest conditions conducive to maintaining site productivity (e.g., limited rutting, retained down woody debris, minimized skid trails).  4) Retention of vigorous trees during partial harvesting, consistent with scientific silvicultural standards for the area. 5) Criteria that address harvesting and site preparation to protect soil productivity.  6) Road construction and skidding layout to minimize impacts to soil productivity. Forest managers shall conserve soil resources by maintaining soil quality and quantity. The core indicators of this principle are the level of soil disturbance and the level of downed woody material. Downed woody material can be managed by leaving both dead and live trees, as well as downed logs, whenever timber is harvested. Managers must not allow disturbed areas to exceed the following limits: (a) if the standards unit is predominantly comprised of sensitive soils, 5% of the area covered by the standards unit, excluding any area covered by a roadside work area; (b) if the standards unit not is not predominantly comprised of sensitive soils, 10% of the area covered by the standards unit, excluding any area covered by a roadside work area; (c) 25% of the area covered by a roadside work area. Additionally, forest managers must rehabilitate disturbed soils by either: (a) placing woody debris on the exposed soils, or (b) revegetating the exposed mineral soils.   Table 3 uses the perspective of scientists on the potential environmental impacts and subsequent certification adaptations for removing forest residues, which is necessary when considering the potential changes to harvesting practices within BC’s forestry industry (Table 3). Table 2 uses the most recent volume of forest certification standards; FSC and CSA standards are from 2009 and SFI is for the period between 2015 – 2020 (Table 2). Biodiversity and soil nutrient impacts were identified by Lattimore et al. (2009) and Stupak et al. (2011) as critical components of a standard that consider the potential environmental impacts of removing forest residues (Lattimore et al., 2009; Stupak et al., 2011).  The SFI, FSC and CSA-SFM standards primarily focus on maintaining or improving (depending on the standard) forest productivity and ecosystem resilience. This includes soil nutrients or ‘attributes’, biodiversity and water quality of a forest. Soil attributes include slope and soil structure impacts (Table 2); biodiversity concerns the potential habitat concerns and ecosystem interactions with forest residues (Lal, 2004; Lattimore et al., 2009; Stupak et al., 2011). Additionally, the often-referenced Coarse Woody Debris (CWD) contributes to water quality, soil stability and overall biodiversity of a forestland.  Generally, most studies agree that FSC certification is prescriptive and tends to skew towards a more specific approach in its standards, which is consistent with FSC’s emphasis on the impact of harvesting on soil, biodiversity and CWD requirements (Lal, 2004; Lattimore et al., 2009).  The FSC standard also relies on the concept of ‘Range of Natural Variability’ (RONV), the natural ebb and flow of biomass accumulation and loss within a forest ecosystem (FSC, 2005). The “ecological functions and values shall be maintained intact, or restored…” (FSC, 2005) relies on the Range of Natural Variability’ (RONV) of a particular site to inform forest managers of their management decisions. Conversely, SFI is less prescriptive towards a specific management system and rather “outlines” key biodiversity values, including woody debris that may otherwise be utilized for bioenergy purposes. It is worth noting that each harvesting site requires a regional scientifically guided plan to retain stand level characteristics including biodiversity values, soil impacts and CWD requirements. The CSA-SFM standard contains comparatively ‘loose’ standards regarding CWD, opting to reference BC’s existing legislation of approximately 10m3/ha of CWD to be left onsite post-harvest (SFI, 2015). All its other values regarding biodiversity and soil impacts are similar to the SFI criteria.  32  The main difference in all three of Canada’s prominent forest certification standards is the presence, or lack thereof, of bioenergy. SFI specifically mentions producing woody biomass for bioenergy applications and requires companies to include a ‘review of non-timber issues’ including bioenergy feedstocks, while CSA-SFM and FSC do not mention bioenergy feedstocks in any part of their respective standards. While this does not limit any company from harvesting forest residues, it does highlight the potential ambiguity companies may face if/when they collect and use their forest residues.  The development of SFI’s forest management standards demonstrates how forest certification standards focus on forest management and not forest products. In SFI’s 2009-2014 standards, bioenergy became a critical piece of their forest management standard (SFI, 2015). However, after an extensive review process, the SFI 2015-2019 standards changed to minimal mention of bioenergy use of forest biomass. Instead, similar to the other forest certification standards, SFI now focuses on the Principles and Criteria that support sustainable forest management, regardless of the use of the forest biomass (SFI, 2015). As mentioned earlier, BC forest policy is globally recognized as one of the most stringent and sustainable in forest management (Research Intelligence Group, 2015). Burning forest residues is common practice in BC forests, depending on the region, for a variety of reasons including to clear the land for effective replanting, Silvicultural treatments or for fire management. The main concern with harvesting forest residues is ensuring harvesters continue to leave more than they take for sustainable regrowth. If, from an economic stand point, companies take more from the forest in the form of forest residues, as is the case in the US Southeast, there must be criteria outlining the need for ‘leave trees’ in the face of forest residue removal.  BC forest policy has developed additional provincial level legislation, manuals and guides for sustainable forest biomass and forest biomass removal (Roach & Berch, 2014). For example, the Secondary Licensee Fiber License increases the likelihood of forest biomass use from harvest blocks, granting rights to pellet producers or other businesses that want it. Another example is BC’s Biomass Handling guidelines that address specific forest productivity and ecosystem resilience concerns (Table 2 & 3). Legislative requirements regarding the handling of forest residues in BC greatly adds to efforts to expand forest residue use globally. It is a mandatory benchmark for sustainable forest management, not just voluntary private governance systems. 33  Although BC’s policy and private governance standards are globally recognized in many markets, downstream certification standards have become more prominent recently. Renewable energy policies in key markets, i.e. UK and Denmark, contain ‘biomass sustainability requirements’ defined and set by national energy strategies.  While third-party certification of forest residues has become a critical factor in wood pellet production in the US south east and Canada, Finland’s lack of sustainability certification and its domestic use of forest residues for bioenergy indicates that it the international market’s demand for additional biomass sustainability requirement that is primarily driving the need for third party certification. Therefore, as described below, an assessment of current biomass-sourcing certification standards in the wood pellet sector, with a focus on international markets, should help illustrate the potential extensions or adaptation that could be considered to ensure forest residues are recognized as sustainable.  2.1.2 Developments in third party sustainability certification in wood pellet production/bioenergy applications The trend towards sustainability verification in the wood pellet sector began with the need to:  a) Verify sustainable practices according to policy requirements; and  b) Respond to pressure and lobbying from ENGOs, such as the Dogwood Alliance.  ENGOs have been effective at labeling wood pellet use as unsustainable, particularly in the US south east where wood pellet production relies heavily on forest residue collection and use. The formation of SBP and the role of energy utility companies, such as Drax Biomass, who established their own sustainability standard, is an example of regulatory pressures incentivizing third-party standard use to ensure biomass supply chains fulfill sustainability requirements of policies, such as the UK Central Point of Expertise on Timber (CPET). The heavy reliance on forest residues in the US south east, coupled with a lack of forest certification adoption in the area, has led to a rapid increase in biomass-sourcing certification authorities and a greater influence of downstream stakeholders, i.e. EU energy utilities. These factors have influenced forest management in the US south east and will most likely influence the management and use of BC’s forest residues as well as SFI, FSC and CSA-SFM standards. As a result, the section below assesses the developments in US south east concerning biomass-sourcing certification, specifically the RSB and the SBP certification schemes.  34  2.1.2.1 US SE wood pellet production and certification Despite significant differences between the BC, the US south east forest sectors, we wanted to assess if the US pellet supply chain could provide insights into how BC could better use and certify its forest residues. The US south east forest sector is comprised of ~80% private land, where smaller landowners rely on the forestland for their livelihoods and are free to manage their forests according to state-defined ‘Best Management Practices’ (BMP) (U.S. Department of Commerce, 2015). Although private ownership might give more power to the forest owner it likely limits the transparency of harvesting practices and actions, as little to no public reporting is required in some areas (Dale et al., 2017; Personal communication, V. Dale & K. Klein, June 2017). In addition to domestic use, the southern and southeastern states have recently increased wood pellet production, primarily to fulfill the demand for biomass in the EU in response to the EU’s Renewable Energy Directive (EU-RED) and 20% renewable energy target (Abt, Abt, Galik, & Skog, 2014; Mendell & Hamsley Lang, 2013; U.S. Department of Commerce, 2015). Renewable energy policies and increased wood pellet demand has led to more than 98% of US wood pellet exports going to the EU: UK (53%), Belgium (21%) and the Netherlands (14%) (U.S. Department of Commerce, 2015). The US Southeast is currently the largest wood pellet producer in the US, with more than 62% of total US pellet production capacity (Abt et al., 2014). However, it has been reported that domestic and international demand for wood pellets might impact the management of US forests, encouraging forestry companies in the US south east to meet demand with additional forest residue removal (Spelter & Toth, 2009). Unlike Canada, US south east forest companies already harvest large amounts of forest residues and whole, unmerchantable trees such as warped or diseased trees for wood pellet production. This is due in part to a declining pulp and paper sector, the prominent hardwood forests that are grown in the US south east and the private land-ownership many forest companies hold. US south east hardwood forests supply furniture and veneer industries, compared to BC’s saw log dominant coniferous forests (Natural Resources Canada, 2017; U.S. Department of Commerce, 2015). Supplying timber to these “value-added” industries means there is a higher standard of selection, leaving many warped or crooked trees defined as unmerchantable and available for different product streams, such as wood pellet production. 35  The US forest companies in the south east have not adopted forest certification as readily as Canada. The lack of adoption of certification standards is due, in part, to private land ownership and the average size of harvesting operations. Foresters and landowners in the US have stated that they do not need third-party certification as they argue they balance the need for economic viability while balancing environmental and social values, ensuring continued prosperity of their forest resource for their children and grandchildren (The Forest Landowners Foundation, 2008). The average size of a forest company’s harvestable land base in the US Southeast is approximately 50 ac where most forestry companies are family-owned businesses, many of whom cannot afford the administrative burden of forest certification. However, despite having a stake in SFM, sustainability certification and verification are required for key wood pellet markets, i.e. UK and Denmark. The recent decision by the USA to exit the Paris Climate Agreement emphasizes the importance of sustainable certification (Shear, 2017). A new proposal for the EU-Renewable Energy Directive, set to be finalized by the end of 2017 states that if a country has not ratified the Paris Agreement, forest management systems must be “…in place at the forest holding level” (European Commission, 2016). The decision to leave the Paris Agreement jeopardizes the US south east wood pellet market, since 90% of total production goes to the UK, Denmark and Belgium. Additionally, the UK leaves the EU in 2019 this could also affect the wood pellet market. However, it is too early to make any reasonable projection on its effects. Due to the uncertainty of the political landscape and subsequent financial risk, energy utilities have begun to secure verified sustainable feedstocks through a variety of methods. First, some energy utilities have established third-party certification schemes to develop standards that fulfill biomass import requirements. Second, often in addition to the first method, EU energy utilities are vertically integrating their supply chain through partnerships, investment and acquisition to secure a supply of verified sustainable biomass (Drax Group plc, 2015). The following two sections will address these methods and assess their impact on the US south east forest management of forest residues. 36  2.1.3 The scope of biomass-sourcing sustainability standards in North America’s wood pellet industry The EU has approved multiple sustainability certification authorities that conduct due diligence on the sustainability requirements for biomass imports intended for energy use. This has allowed companies and organizations to choose the standard system that fits their interests best, depending on a wide range of factors, such as an efficient certification process with minimal costs or a standard that is recognized by other organizations (European Parliament and the Council of the European Union, 2009). The reliance on standard systems by the EU government for biofuels and bioenergy has also led to market actors developing their own systems to fulfill policy requirements.  Relying on third-party certification standards to ensure sustainability is like other biomass policies that apply across the EU market. The EU Timber Regulations (EUTR) on illegal harvesting also mandates timber importers to fulfill specific criteria related to the tracking of biomass and proof of legal harvesting (European Commission, 2010). Coincidently, the EUTR also applies to wood pellets imported from North America. The EU-RED simply adds to this requirement for forest biomass, layering environmental and social requirements on top of existing legality requirements (European Parliament and the Council of the European Union, 2009).  There are two types of forestlands that SBP is designed to certify to allow biomass to be imported into EU Member States and secure a sustainable supply chain for energy utilities. First, for forestlands currently certified under the FSC or PEFC standards (e.g., CSA-SFM, SFI), SBP will recognize those standards as sufficient (SBP, 2015). However, in some instances FSC and PEFC standards miss a few critical elements such as GHG calculations for supply chains. The SBP standards framework accounts for these additional requirements.  Second, SBP certifies forestland that does not have forest certification and is unlikely to obtain certification. The SBP Feedstock Compliance Standard ensures that a forestland has the same level of ‘sustainability characteristics’ as certified material, using a risk-based analysis of the region. For example, SBP certified Enviva’s forest in Southampton, Virginia based on the current Best Management Practices (BMP) of the state, legal framework of forest policy and a reasonably amount of data provided by the forestland owner (Enviva, 2016; SBP, 2015).  Lastly, 37  a critical goal of SBP certification is to bridge all national EU Member State requirements for solid biomass use (SBP, 2015). This is especially critical for North American wood pellet producers, given their large amounts of biomass available and the potential market for wood pellets in all EU Member states. Although Denmark and the UK currently recognize SBP, their standards do not satisfy other EU Member states, such as the Netherlands or Belgium (Personal communications, G. Murray, November 2017). The Netherlands have one of the most comprehensive biomass sustainability requirements including a management system at the mill or forest level, long-term objectives and measures aimed at the long-term conservation/expansion of carbon stocks (Richter, 2016). For this reason, other supply chain certification standards have developed procedures to fulfill the additional sustainability requirements, such as Green Gold Label.  Currently, RSB recognizes the FSC forest management standards exclusively, as part of a global effort between international standards organizations to ‘raise the bar’ of private certification standards, through the formation of the ISEAL Alliance. Part of this organization focuses on biomass/biofuels industries giving equal weight to environmental, social and economic sustainability. Despite this claim, for a variety of reasons, many industry organizations opt to certify with other standards organizations. Finally, a prominent, industry-driven standard in the bioenergy/biofuels sector is the International Sustainability and Carbon Certification (ISCC). Industry stakeholders, such as bioenergy suppliers/producers, formed the ISCC to try to establish a social license to operate and fulfill national sustainability requirements. Biomass producers and other companies seeking access to international markets, such as the EU, currently use the ISCC. It represents their interests and has relatively ‘loose’ certification standards, reducing the administrative burden of certifying entire, multi-national supply chains. To understand the differences between biomass-sourcing standards and how they might apply to forest residue certification in BC, the three certification standards identified were compared based on their Principles and Criteria and how their standards are structured.   38  Table 4: A comparison of third-party certification “biomass/bioenergy” standards, their focus and Principles and Criteria (ISCC, 2016; RSB, 2017; SBP, 2015) Biomaterials and Biomass Certification Geographic and Industry Focus Principles and Criteria for Wood Pellet Supply Chain Forest Certifications Recognized RSB Global Biomaterials and Bioliquids Environmental focused FSC standards exclusively (under ISEAL Alliance) SBP Wood pellet production for bioenergy in the EU Policy fulfillment focus & sustainability driven FSC & PEFC, excluding SFI-FS ISCC Global Biomaterials and Bioliquids Industry focused FSC & PEFC, excluding SFI-FS Like the nuanced differences between SFI and FSC, the ISCC, SBP and RSB schemes follow different standards development and certification paths. The ISCC and SBP are largely governed by industry and bioenergy suppliers/producers while the RSB strives for a complete and comprehensive multi-stakeholder strategy by empowering small groups, civil organizations, and NGOs. For example, environmental activist groups, such as Greenpeace, endorse the RSB, which focuses more heavily on environmental restrictions than economic sustainability compared with the industry driven standards. Biomass producers and other companies seeking access to international markets on the other hand, such as the EU, look to a standard system that secures their feedstocks in a sustainable manner and does not infringe heavily on administrative costs or supply chain management.  Bioenergy certification authorities have established principles and criteria to fulfill end-product specifications and aim to certify the pellet mill supply chain. The ISCC, SBP and RSB standards are similar to CoC standards in forest certification and SFI-FS/FSC-CW. Biomass-sourcing certification requirements focus on tracking the origin of biomass and achieving a benchmark 39  level of ‘biodiversity’ and ‘high conservation areas’ (HCV), with limited requirements specific to forest management (RSB, 2017; SBP, 2015). However, the scope of RSB and SBP standards for in-forest sustainability considerations is limited. Although risk-based assessment does reduce the economic burden of certification procedures and administrative costs, some forest management practices and procedures are not accounted for, such as specific silvicultural practices. Therefore, biomaterial and biomass-sourcing certification standards, on their own, lack the comprehensiveness necessary to manage an increase in forest residue use. The current practice of using wood pellets sourced from SBP-only certified forests is unlikely to last, given the proposed updates in the EU-RED II document and the additional data tracking systems and behaviors of energy companies such as Enviva and Drax Biomass Inc. (European Commission, 2016). As renewable energy policies and subsidy programs develop to further reduce GHG emissions and achieve national renewable energy targets, energy utilities, particularly in the EU, are increasingly influencing forest management in the US south east, by vertically integrating their supply chain. Similar to many other multi-national corporations (e.g., Apple, Ikea), utilities are incorporating forests into their value chain, through partnerships, initiatives and straight-out asset purchases to secure a recognized sustainable supply chain. A most recent example of this is Drax Biomass Inc. Drax Inc. has been buying several wood pellet facilities in the US south east, ensuring a long-term supply of feedstock at a particular price point (Drax Group plc, 2017). Buying wood pellet production facilities provides certainty in pellet prices, allowing Drax to continue to invest capital in wood pellet-fired power plants in the UK, as well as certainty in the fulfillment of biomass sustainability requirements in the UK. In addition to buying mills, Drax recently announced their intention to support the certification of smallholder forests in the US SE, through financial sponsorships (Stanko & Malkin, 2017). The recent partnership with the American Forest Foundation (AFF) gives the financial support necessary to train forest owners on sustainable forest management practices accepted by the EU. The partnership also supports the certification of over 10,000 ac under the American Tree Farm System (ATFS), endorsed through PEFC and recognized by the EU for wood pellet trade (Stanko & Malkin, 2017). While 40  the direct effects of this partnership are yet to be realized, it is clear EU energy utilities are having a greater influence in North American forest management and planning strategies. 2.2 Extending forest certification systems for bioenergy and biofuels markets The existence of biomass-sourcing certification standards and forest certification standards in a supply chain results in a complex governance landscape, in addition to state/provincial and federal level forest management and biomass trade policies. Due to the complexity, there are overlapping biomass sustainability requirements, standards, and potential gaps that could affect the use of BC forest residues in the future. It should be noted that ‘non-timber’ forest products, such as forest residues, will likely require a larger scope than a management unit or even landscape to fulfill downstream policy requirements.  Although many studies point to a ‘harmonization’ between certification standards as the answer to the complexity and assurance of a transparent/sustainable supply chain, a pairing or coupling is more likely and more effective. Figure 4 below illustrates the relationships between certification standards analyzed in this thesis (Figure 4).  Figure 4: A relationship map illustrating the recognition and partnerships between forest certification standards (left side) and biomass certification standards (right side) For a variety of reasons, SFI (through PEFC) and SBP are best-positioned to develop a partnership to verify sustainable business practices across the entire wood pellet supply chain and likely into other products that use forest biomass (Figure 4). First, one of the major extensions to forest certification standards likely to occur is the development of a GHG emissions tracking module. GHG emissions reporting is a current requirement for wood pellet 41  production and trade to the EU (European Parliament and the Council of the European Union, 2009). There are several methods used to calculate GHG emissions, which unfortunately vary between each EU Member State. Additionally, emissions tracking within the forestry supply chain is becoming particularly important, as ENGOs lobby EU policy markets, arguing against the use of wood pellets sourced from BC or the US south east, due to their ‘high GHG emissions’. Although biomass-sourcing certification standards have GHG emissions tracking systems in place, they do not enter the forest at the forest management unit (FMU)-level. Current tracking systems do not report on emissions from the forest or from forest management practices. The EU Forest Strategy (2013) indicates the growing need and interest in maximizing the use of woody biomass, thus requiring additional GHG emissions tracking. Life Cycle Analysis (LCA) has become a well-used tool to measure and manage GHG emissions in a variety of industries around the world for products. Forestry companies will most likely need to adapt to include LCA GHG emissions tracking to ensure feedstocks (e.g. forest residues and low-grade logs) adequately fulfill a net decrease in GHG emissions when converted into a product. Currently, the PEFC has initiated a Working Group to develop its own GHG emissions tracking module for SFM and/or CoC certification. There is a potential additional module that will apply to PEFC certifications aimed at tracking and managing FMU-level GHG emissions (Programme for Endorsed Forest Certifications, 2015). While the working group is ongoing, PEFC has presented results of their developments to the SBP in stakeholder meetings. Although forest certification standards have not recognized SBP, PEFC is working on modules that support the SBP mission. SBP is a likely and preferred collaborator on a GHG module, as the SBP ‘Data Transfer Platform’ (DTP) system ensures all the GHG data along the supply chain is tracked and reported to EU Member States (Personal communications, I. Stupak, July 2017). The DTP allows energy producers to use all the data needed for a specific region or supply chain and do their GHG calculations using an acceptable model, such as Biograce (required in Denmark). Tracking GHG emissions in this way shows compliance with national requirements for GHG emission savings. However, a major challenge is still the varied requirements for GHG emission savings for solids between the UK, Denmark, the Netherlands and Belgium.  42  The FSC has an Online Claims Platform (OCP), which ‘digitally connects certified FSC suppliers and customers’ and could manage the tracking and reporting of GHG emissions data from a variety of sources. However, FSC OCP does not currently include GHG emissions tracking or reporting. While this type of certification is likely to have minimal impact on harvesting forest residues, it does involve some adaptations to include the GHG emissions of biomass cultivation, harvest and transport (Rosenbaum, Schoene, & Mekouar, 2006). The FSC OCP or the CoC standard could be the tracking system necessary to integrate the forestry supply chain with downstream standards, such as SBP or RSB, subsequently fulfilling GHG reporting requirements. CoC’s will need to be adapted to handle the new or modified equipment and processing of forest residues for collection and production and be able to include large scale downstream organizations, such as a biorefinery. Second, the recognition between standards will become increasingly important as more businesses use forest biomass to produce various bioproducts, to reduce the reliance on fossil fuel alternatives. To accommodate the overlap of sustainability standards, SBP, ISCC and RSB have recognized some forest certification standards, ensuring equivalency and at times collaborating to ensure future requirements align. Many standard authorities are recognized by others or EU Member States, based on their equivalent fulfillment of policies or Principles and Criteria. However, there are ongoing issues with the recognition or selection of certain certification standards over others.  It is apparent that the stakeholders and underlying politics involved in both biomass-sourcing and forest certification authorities have resulted in a complex private-governance landscape. For example, the RSB, to support environmentally focused standards, which are supported by one of their main funders, the WWF, recognizes the FSC as a credible and equivalent sustainability standard for bioenergy and biofuels feedstocks. This recognition of one forest certification over another, limits the potential for BC forest residue use as, currently, SFI or CSA-SFM certification dominates BC forests. Recognizing only some upstream standards limits other businesses who certify with other certification schemes (i.e. SFI), which, as the thesis work describes, contains nuanced differences to FSC. The fact that RSB preferentially recognizes FSC is part of a larger movement, supported by environmental organizations, such as the World Wildlife Fund (WWF), to develop and lobby for environmentally focused sustainability 43  standards to the diminution of industry-driven standards. The ISEAL Alliance represents this movement.  The relationship between forest certification standards, biomass-sourcing certification standards and stakeholders in the market can apply additional restrictions on forest residue use in some markets. For example, the Sustainable Aviation Fuel User Group (SAFUG) has publicly supported the ISEAL Alliance standards in the pursuit for a globally recognized sustainable supply chain. However, ISEAL recognizes the FSC as the only forest management standard to meet their requirements for membership, thus excluding most of BC’s forest residues, which are under SFI or CSA-SFM certification.  The recognition of one standard over another can exclude large amounts of BC forest residues based on a political decision between forest certification standards. Therefore, a significant challenge is in ensuring forest residues are properly and consistently certified and that governments support all credible certification standards. While FSC may already be fully supported by RSB, the SBP which includes all forest certification schemes likely makes them better positioned to partner with the wood pellet industry and other bio-product industries as they develop. Compared to FSC and RSB, which excludes industry-focused standards outside of the ISEAL Alliance, a possible PEFC and SBP partnership would likely be more successful in providing a fully transparent, verified sustainable supply chain for increased forest residue use. 2.3 Conclusions The world will increasingly use forest biomass in various ways to reduce our reliance on fossil fuels. However, effective policies and standards will be required to ensure acceptable levels of sustainability and transparency. Currently, the wood pellet sector is at the forefront of better verifying forest sustainability, particularly in the US south east, with pellets likely playing a key role in the development of the evolving global bioeconomy that will include a range of bioenergy, biofuel and biomaterials. Thus, global recognition that BC’s forests, including its residues, are sustainably managed will be critical to the development of forest-derived bio-products and renewable energy strategies such as the development of biojet-fuel.  Currently, third-party certification schemes are predominantly used to ensure the sustainability of BC’s forest management. However, there are nuanced differences between the forest certification standards regarding forest residue management. Each certification satisfies Canada’s 44  sustainable forest management practices, beyond current provincial legislation. Existing forest certification principles, criteria and auditing measures, including forest residue extraction and management, do fulfill most of the sustainability considerations of forest residue use. Biomass-sourcing certification standards, such as SBP, and other sustainability requirements are most likely to affect how BC forest residues will be used and managed in the future. Additional market forces, such as energy utility companies, will also affect forest management through a variety of strategies including supply chain integration. Therefore, expanding forest and biomass-sourcing certification standards in the wood pellet industry through standards development or, more likely, partnerships, will likely facilitate the use and trade of bio-products derived from forest residues.  A likely outcome of a partnership between biomass-sourcing and forest certification standards is a reduced administrative burden on forestland managers/owners and the development of supply chain wide GHG tracking systems, from harvesting to end use. Although many systems and LCA models are already in place globally, these partnerships will ensure the GHG tracking system uses methods recognized in markets critical for the intended product. PEFC and SBP are already working closely together to develop a GHG emissions tracking module, signaling a desire to increase the validity of their verification procedures and anticipate future sustainability requirements from key bio-product markets. Recent policy proposals from the EU suggest that additional biomass sustainability requirements will influence future forest residue management (European Commission, 2016; European Parliament and the Council of the European Union, 2009). Most notably, policy proposals indicate that forest carbon management will become an increasingly important issue of significant importance for future bio-products post-2020. Although carbon may be critical for future forest residues, the measurement and verification of carbon in forest management will require further research. Particularly how forest carbon might be included in carbon pricing and how it might be accepted by key markets and within Canada.   45  3 Potential policy and economic tools to increase access and use of BC forest residues for bioenergy and biofuels production 3.1 Introduction Economic sustainability is critical to the development of bioenergy and biofuels production, given the reliance on large-scale feedstock supply chains. The BC forestry industry is uniquely positioned to leverage the existing forest product supply chain and annually provide enough forest biomass for biofuels and wood pellet production. To date, large renewable energy subsidies in some markets (i.e. EU-Member States) have driven the demand for wood pellets for biomass-fired power plants and have encouraged the development of BC’s wood pellet industry over the past decade (Murray, 2015). To date, BC wood pellet producers primarily rely on saw and pulp mill residues as their biomass feedstock as well as on small quantities of forest residues.  However, increased demand for wood pellets from EU Member States and other countries, such as Japan, has increased pressure on BC wood pellet producers to seek additional sources of forest biomass. Unfortunately, due to the recent mountain pine beetle epidemic, (outlined in Section 1.2.2 of this thesis), there has been an enormous reduction in the midterm timber supply in BC. In response, in their efforts to remain in operation, sawmills have increased their log recovery through new technology investments, resulting in reduces wastage and residue generation. Thus, the reduced production of mill residues has resulted in less mill residues being available for wood pellet production. Therefore, pellet mills are currently operating below capacity due to the lack of mill residue feedstocks and the current cost of most of BC’s forest residues. Both pellet producers and primary industry actors are forced to consider integrating more forest residues as fiber supply decreases, which greatly affects the amount of forest residue currently available in BC for additional bio-products. Regulatory tools, such as the AAC, could be modified or simply replaced to encourage better use of forest biomass and maximizing the amount of biomass companies remove from the forest. Adjusting how much companies can harvest from their tenure could be tied to how they use their biomass and their overall management of trees.  46  However, there are significant limitations to the large-scale collection and use of forest residues due to two major challenges in BC forests. First, the cost of removing forest residues is tied to BC’s vast and mountainous geography, requiring high investments in road construction and transportation. Additionally, there is a downward pressure on bio-product prices, such as wood pellets, as they must compete with fossil fuel alternatives, such as coal or oil. This high feedstock costs and low-value products cannot support a sustainable multi-national supply chain. Second, BC forest policies limit the accessibility of companies to forest residues. Under the current tenure system, the rights to harvest a public resource (i.e. timber) for forest products excludes other non-timber values such as carbon and optimizes most aspects of the supply chain for log extraction and traditional forest products. This section outlines the challenges to forest residue collection and use in BC and analyzes the potential policies and economic tools that could facilitate increased forest residue use for bio-products. As illustrated in Section 1.2 of this thesis, the BC wood pellet supply chain is best positioned to define how BC forest residues are managed and their economic availability. The work described in this part of the thesis has focused on current and developing forest residue policies and economic tools in the wood pellet industry. Economic tools refer to the technical changes or direct-action government can take to decrease costs along the supply chain, from standing tree to product. Policies refer to the regulations and amendments available to the provincial government to incentivize or influence company behavior and get more value out of BC forests or achieve other objectives, such as operational forestry legislation (i.e. Forest Range and Practices Act (FRPA)).  The analysis relies on the rational comprehensive method, evaluating potential policies and economic tools based on set criteria (in Section 3.3.2 in this chapter). To implement effective policies capable of encouraging companies to enter the forest to collect additional forest biomass, the policy analysis has looked at the economic and policy tools that have been successfully used in other countries, such as Sweden and the US south east. It is highly likely that accessing BC forest residues will be heavily dependent on the existing supply chain and markets of traditional forest products (i.e. pulp, paper and lumber). As mentioned earlier, due to the low economic value of forest residues they are typically collected into slash piles on a harvest block and burned. This practice has been adopted as it 47  simultaneously recycles nutrients from biomass back to the forest soil and removes unwanted biomass that can impede future tree growth. In fact, BC forest policy requires forest fire prevention methods, which include the burning of unavoidable waste wood from harvesting activities, particularly where regular forest fires are part of a resilient ecosystem cycle such as in the BC interior (Government of British Columbia, 2002). Although controlled burns (forest fires that are intentionally set and managed by forest managers to reduce forest fire risk) are not common, burning relatively small slash piles in the winter months is relatively common. Increased utilization of forest residues would involve changing policies related to the burning of slash piles, which could divert this resource to additional value-added products. However, as well as the policy implications, the economic viability of removing these residues based on current conditions is questionable. Two major challenges limit the increased access to and utilization of BC forest residues, based on the current forest supply chain: • Economic limitations of the BC forest residue supply chain which impacts the business viability of forest residue utilization; and • Provincial forestry policies focus on traditional forest products rather than additional values of biomass. These challenges are discussed below, in the context of better accessing and using forest residues.  3.1.1 Economic challenges of increasing BC forest residue use Perhaps the largest barrier to increased use of forest residues in the wood pellet supply chain is the economic viability of forest residue removal. The costs of collecting, processing and transporting forest residues from a harvest block to a mill makes large-scale removal economically challenging. Thus, although large quantities of residues are available at a theoretical basis, their actual availability based on economics is more challenging. In general, forest residue availability is theoretically calculated at a ratio of 20% of wood harvested. On this basis there are 11.2 million tonnes of forest residues available each year in BC (Friesen, 2016). Research recently completed by FP Innovations, Canada’s private forestry research firm, focused on key areas in BC to estimate actual forest residue availability from existing timber supply areas (TSA) (Friesen, 2016; Friesen & Goodison, 2011).  48  Using their proprietary model, FPInterface (2010-14), the biomass inventory was based on a 20-year harvest and road network established by the BC Ministry of Forests, Lands and Natural Resource Operations (FLNRO), excluding Tree Farm Licenses, Community Forest Agreements and First Nations tenures (Friesen, 2016). Over the next 20 years, the Kamloops TSA is expected to produce 4.90 million oven-dried tonne (odt) of available biomass, or approximately 245,000 odt/yr, with 118,000 odt/yr expected to be available at a $60 CAD/odt feedstock cost. For wood pellets, currently priced globally at $120 USD/odt, the $60 CAD/odt feedstock cost is too expensive for a feedstock to support an economically sustainable business. Some of the studies that have been carried out in BC to access forest residues have suggested ways to reduce costs (Friesen, 2016; Friesen & Goodison, 2011; Pledger, 2016). These studies outline approximately four steps in the forest residue supply chain that could be further optimized. One major recommendation is to use a separate transportation network than the one currently used for traditional forest products, implying that biomass producers will have to enter the harvest block twice, once for harvesting timber and once for residual biomass. The key steps in a forest residue supply chain include; pre-piling, comminution (processing), transport and other costs (road maintenance etc.). Although some costs would be shared, such as pre-piling and road maintenance, the cost of comminution and transportation rely of forest residues would be borne solely by the biomass user. Other studies carried out at UBC and FP Innovations have assessed the potential cost per odt of forest residue biomass (Table 5). While the costs of a forest residue supply chain will vary depending on the region, the range of costs that were determined demonstrate the economic challenges of collecting forest biomass for relatively low-value products such as wood pellets. Due to the vast geographic area where harvesting occurs and the moisture content of woody biomass, the delivered cost of wood to a mill is approximately 40-60% of the total cost of producing a wood pellet (Friesen, 2016). Geographic variabilities critically impact the costs and potential availabilities of BC forest residues. For example, the Kamloops Timber Supply Area (TSA) analyzed by FPInnovations may have similar AAC allocations to areas in Mackenzie, BC, but contain higher quantities of forest residues available for extraction (Friesen, 2016). The mountainous terrain and the tendency to use Williston Lake as low cost transportation of logs makes forest residue removal extremely challenging. As outlined in Table 5 the cost of each step 49  involved in the removal of forest residues and delivering them to a mill or processing facility, based on the Kamloops TSA is quite variable (Table 5 below).  Table 5: The costs of BC forest residues in the current supply chain (Friesen, 2016; Friesen & Goodison, 2011). Price Category Forest Harvesting Residue Comminution (loading residues into grinder then loading into truck on site) $26.82-31.80 /Odt (FPInnovations, 2011, 2012a, b, c; 2013 and 2014).  Transport 3-axle chip truck has a range of 0.18-1.00 $/km/Odt depending on road classes etc. – therefore an average of $0.33/km/Odt is estimated Road Network Construction and Maintenance $0.00-3.80/Odt with an average cost of about $0.80/Odt.  Total Delivered Costs ~$80 The term “sorting” refers to the organization of branches, trunks and other residues into appropriate piles to streamline the processing required before transport. A major cost is comminution, referring to the grinder or processor that must be transported into a cut block to reduce the size of forest residues for transportation. Grinding involves a separate machine that crushes or chips up forest residues into smaller pieces to optimize the transport of large volumes of forest residues. Other harvesting costs, such as felling trees etc. is included in the price for traditional forest products, not allocated forest residue processing. However, forest residue access is included in road maintenance costs. The costs of retrieving forest residues varies depending on the region and harvesting methods. Therefore, studies completed by FP Innovations and UBC estimates $60 CAD/odt is required to get a substantial amount of the actual forest residues out of the forests (not theoretical estimations), with a range of $60-$90 CAD/odt to collect most of the forest residues available and transporting the material to mills across BC (Friesen, 2016). For example, an FP Innovations’ study of a TSA in Kamloops illustrates the potential available biomass as 21odt/ha, 50  depending on the location in BC (Friesen, 2016). Coastal areas are estimated to produce approximately 31odt/ha, while interior areas of BC are estimated to produce 21-24 odt/ha. Regional variances can largely be attributed to the larger size of trees on BC’s coast and the high efficiency of feller-bunchers.  FP Innovations has completed several studies to assess the economic availability of forest residues in BC and has estimated the amount of realistically accessible forest residues based on the delivered costs (Figure 5). Figure 5 illustrates the quantity of forest residue biomass available at a given cost.   Figure 5: Availability of BC forest residues based on their delivered cost per oven dried tonne (odt) in 7 large tenures. (Roser, 2016) The cost estimates used in the FP Innovations studies are based on cut block data for grinding and chipping forest residues and for transporting these chips to the nearest bioenergy or wood pellet production facility. According to the study, approximately 275,725 odt/yr is expected to be available in BC at a cost of CAD $70/odt (Roser, 2016).  The increases in cost per odt demonstrates the economic availability of forest residues in the Kamloops region and identifies a critical component of future BC forest residue use. Feedstock costs are an important part of a sustainable supply chain, especially for low-margin products such as wood pellets. Currently, the $90 CAD/odt cost of a substantial amount of forest residues is simply uneconomical, given wood pellets are currently sold for ~$155 USD/odt (Wood Pellet Association of Canada, 2017). Additionally, while key markets, such as EU Member States, 9,45164,075275,725459,287589,529726,275 747,5190100,000200,000300,000400,000500,000600,000700,000800,00050 60 70 80 90 100 110Available forest residues annually (odt) Delivered cost ($/odt)51  recognize the environmental and social sustainability of forest biomass from BC, the potential impact that forest certification authorities can have on the future use of forest residues is significant. Therefore, sustainability verification procedures are discussed in the next section of the thesis, to assess their potential impact on forest residue availability and potential accessibility in future bioenergy/biofuels supply chains.  Using the cost estimates outlined above and the current market price of wood pellets, we can estimate the extent to which policy support is required to encourage the greater use of BC’s forest residues. Wood pellets are currently selling at ~$150 USD/tonne, as of November 2017 (Wood Pellet Association of Canada, 2017). Using the conversion factor that 2.45 odt is equal to 1 m3 of woody biomass, derived from BC government proposed value of, ~$61 CAD/m3 (Roach & Berch, 2014; Wood Pellet Association of Canada, 2017). With costs upwards of $60-80 CAD/odt of forest residues or, $24-32.65/m3, there is little room for additional processing at the wood pellet mill, let alone the costs of exporting wood pellets. Thus, it is apparent that the costs of a forest residue supply chain are such that significant policy support will be required to encourage greater forest residues collection for products such as wood pellets. However, increases in wood pellet pricing and other traditional forest products could also motivate increased forest residue collection. The high costs of forest residues are especially challenging in low-value products that compete with fossil fuel alternatives. The price of oil has reached historically low levels in the past few years and is subject to volatile markets and geo-political influences. Therefore, energy subsidies and other support programs are most likely required to influence additional changes in supply chain costs to incentivize companies to maximally utilize forest biomass to reduce GHG emissions. 3.1.2 Provincial regulations and limitations The other significant challenge to increased forest residue collection and use is BC’s current forest policies. The government of BC regulates its forest sector by establishing an updated annual sustainable harvesting yield. As described in Section 2.1 of this thesis, the extensive policies that regulate industrial forestry in BC have resulted in some challenges for forestry and biomass companies as it relates to the collection and use of forest residues. However, other 52  constraints limit the accessibility of BC forest residues to forest companies as well as secondary producers, such as wood pellet producers. Currently, BC regulations primarily focus on traditional forestry products, missing opportunities to extract other potential “value” out of forest biomass, such as reducing GHG emissions and supporting the growth of a bioeconomy. Currently, there is little incentive for forest companies to diversify or maximize the value they can extract from BC forests given current forest policies. For example, the current BC forest tenure systems grants the right to harvest publicly owned trees for profit if a certain amount of taxes and revenue is given to the province, stipulated in the Forest Act, Part 4 (Government of British Columbia, 1996). The current tenure system only grants the rights to timber, not additional values such as carbon or other non-timber forest values. Therefore, the section below discusses possible alternative policies and economic tools that could be used to leverage BC’s existing forest residue supply and support the growth of a potential bioeconomy using forest residues. 3.2 Methods of analyzing economic tools and policies Increased forest residue use can be encouraged by developing the right policy and economic tools in BC while slightly modifying downstream regulations in the wood pellet supply chain. Rational comprehensive analysis typically involves the definition of a policy problem or challenge, the values or objectives of a policy analysis and the identification of policy alternatives and criteria to rank those alternatives (Carl & Sawicki, 1993; Peterson St-Laurent, Hagerman, & Hoberg, 2017). While this method of policy analysis is useful, a second more realistic approach to policy analysis and development is incrementalism (Lindblom, 1959). Lindblom argues that comprehensive analysis assumes that policymakers and stakeholders know unequivocally their end goals and values, such that they can rank or analyze policies based on those values. Although incrementalism is a more realistic method of policy development and worth mentioning, the time necessary to conduct a study based on incrementalism is beyond the scope of this thesis. Therefore, rational comprehensive analysis is the method used in this thesis to describe the potential top-down solutions to overcome the economic barriers of a BC forest residues supply chain. BCs forest management and supply chain are complex. There are multiple industry partners involved in the current forest harvesting supply chain, in addition to the international forest 53  products markets. Consequently, balancing international demand fluctuations and local (often-rural) livelihoods and environmental values means that the regulatory framework can quickly become punitive with well-intended policies negatively affecting one group over another. To identify possible policy and economic tool alternatives to overcome the challenges of encouraging a BC forest residue supply chain, proven policies or economic tools used in countries that actively promote forest residues use effectively and serve domestic or international markets are discussed. For example, The US south east and Sweden are two jurisdictions where different policies and methods have been used to encourage increased use of forest residues for wood pellet production and co-generation. While both regions differ from Canada in many aspects, the outcome, commercial-scale removal and use of forest residues for energy purposes, are comparable. The US south east and Sweden are both relatively heavy users of forest residues and use cellulosic biomass for energy or heating applications. The US south east converts their residues into pellets and exports large quantities to the UK, Denmark and Belgium, supporting the reduction of GHG emissions from coal-fired power plants in those areas. Although the US south east has many different policies than BC, such as a largely privately-owned forest land base and reliance on best management practices (BMP), the biomass policies and influence from foreign markets will inform how BC might structure its policies and/or relationships with international markets.  Alternatively, Sweden uses most of its biomass domestically for small home-heating uses and other applications. Sweden is a unique case to consider for alternative policies in BC because the country has a history of sustainable forest management and using biomass for energy. Approximately 22% of Sweden’s national energy mix is from bioenergy (including peat), owing to their large forest resources and active domestic forestry industry (Swedish Institute, 2015). Sweden has both state owned forests and private forests and manages to support companies and rural communities with a wide variety of forest and climate policies. The final step of a comprehensive analysis involves identifying criteria to rank or analyze the economic and policy alternatives. Given the current political climate and regulatory regime of BC, the two most important criteria in assessing economic and policy drivers for forest residue use are the degree of change each driver requires to be implemented and the expected negative 54  stakeholder impacts (if any) of a driver. For example, carbon pricing could be a critical component of BC’s renewable energy efforts and, consequently, BC’s forestry industry could be incentivized to retrieve additional forest biomass for uses such as bioenergy, biofuels and bio-products. However, the likelihood of such a change, such as a $100/tonne of CO2 is politically unlikely currently, barring any changes to the salience of climate change in Canada. 3.3 Expanding the use of forest residues for bioenergy and biofuels As mentioned earlier in this thesis, the main challenge is the significant economic limitations that impede large scale forest residue removal. Therefore, a major focus of the policy analysis is to assess potential economic and policy tool alternatives to either reduce the costs of the BC forest residue supply chain or incentivize companies to retrieve biomass, at a significant cost (i.e. $60-90 CAD/odt), as defined in Section 3.1.1. 3.3.1 Policy alternatives for expanded use of residues There are a variety of policies and economic tools that could be used to incentivize companies to retrieve forest residues. To narrow the search for possible alternatives, existing policies used in the EU/US south east wood pellet supply chain and Sweden’s national bioenergy sector were assessed.  Various researchers (Greig & Bull, 2009; St-Laurent et al., 2017; St-laurent, Hoberg, Kurz, Lemprière, & Smyth, 2017; Upham et al., 2011) have proposed policy alternatives to encourage expanded use of BC forest residues for bio-products. These include: • Changing BC forest policy to grant rights to non-timber forest values such as carbon; • Changing forest residue management behavior with operational-level regulations; and • Developing programs to encourage and implement downstream incentive programs for bio-product production (e.g., UK Renewable Obligation Certifications) • Increasing the carbon price and/or applying that price to BC’s forest biomass; Currently, BC’s forest, climate and energy policies are not unified on maximizing the value of forests for all stakeholders, leaving some gaps in BC’s policies and opportunities that will be needed to achieve Canada’s climate targets under the Paris Agreement (St-laurent et al., 2017). The policy and economic alternatives outlined in Section 3.3.3 could have varied impacts on the availability and accessibility of BC forest residues. However, they can also have unintended 55  effects on stakeholders in the supply chain. Given the current political climate and regulatory regime of BC, it is likely that the most important criteria will be the degree of change each driver requires to be implemented, the expected stakeholder impacts (if any) of a driver and the effect on forest residue collection and use. However, coming to an exact number to which a driver may impact forest residue collection and use is beyond the scope of this project, as a variety of factors can affect the availability and economic accessibility of fiber. Therefore, future research should develop a model that estimates forest residue supply in response to some policy and economic alternatives. 3.3.2 Criteria for policy alternative analysis By assessing the potential for positive or negative effects, it is possible to estimate the likelihood of a policy/economic alternative being supported by all parties, particularly the current and evolving industry, as this “buy-in” will be critical for it to succeed. For example, a significant amount of rural jobs and economic growth directly stems from the forestry industry. This can be severely impacted by government policies that affect the economics of the forestry supply chain. Additionally, other political issues significantly hinder the future economic prosperity of BC’s forestry industry such as the Softwood Lumber Dispute between Canada and the US. The public ownership of BC forests means that the current political climate will influence future forest management and the economic programs that could influence BC’s forest residue use. Current federal policy alternatives will be influenced by programs being implemented by Prime Minister Trudeau and the Liberals, such as establishing a national carbon price in Canada (Government of Canada, 2017b). In parallel, provincial actions, such as changes to FRPA or forest management requirements, are typically highly influenced by the political party that is currently in power. The current coalition between BC’s Green Party and NDP, with John Horgan as Premiere, would appear to create some opportunities for more environmentally focused climate and forest policies. The current political climate could be an opportunity to develop facilitative, economic or policy tools, to encourage enhance forest residue utilization. Therefore, the criteria by which policy and economic alternatives are prioritized typically depend on their ‘political acceptability’. The success or failure of a policy does depend upon its impact on a company’s potential to remove additional biomass from the forest for future bio-products. Therefore, the analysis will 56  focus on the potential effect on forest residue economic availability and not attempt to include specific details on estimated quantities. Political acceptability and potential negative impacts on stakeholders in the supply chain are also used to analyze the policy and economic driver alternatives below. 3.3.3 Analyzing policy and economic tool alternatives The relative influence of the various policy drivers that will likely have an impact of enhanced forest residue utilization are summarized in their respective sections below. 3.3.3.1 Carbon pricing It is possible that carbon pricing could provide the incentives for forestry companies to enter the forest and reduce the amount of slash piles they burn annually. Currently, BC has a $30/tonne of CO2 tax applied to most products, currently excluding forest products. Although the price has stayed the same over the past 5 years, Canada’s plans to implement a national carbon price floor might result in an increase in the carbon price to $50/tonne by 2022 (Government of Canada, 2017a). However, a critical question is whether the price will affect forest management-related emissions, such as burning forest residues in the forest rather than redistributing the residues to processing facilities (Hoberg, St-Laurent, Schittecatte, & Dymond, 2016).  Sweden’s national carbon price is currently approximately $185 CAD/tonne of CO2 and has contributed to the significant increase in biomass used for heat generation (Raab, 2017). Taxing carbon emissions from district heating supports the collection and use of forest biomass and has contributed to lowering the overall cost. The expansion of biomass use in heating in Sweden led to the development of a forest-to-heating supply chain and new technologies in heating plants to reduce the cost to consumers. The success of Sweden’s carbon taxing system, along with other emissions taxes such as Sulphur, suggests BC can provide incentives and use the carbon price as a tool to remove additional forest residues for bio-products. Another related aspect is the possible inclusion of wildfire emissions and other natural disturbance in the provincial carbon tax. BC’s 2017 wildfire season tripled the provincial GHG emissions of a typical year while, over the last decade, the Mountain Pine Beetle epidemic changed BC’s forests from a carbon sink to a carbon source. Taxing carbon in the forest could improve forest fire prevention activities through the removal of additional forest biomass from 57  BC forests, as well as improving forest management practices to reduce GHG emissions due to preventable natural disturbances. Additionally, pricing forest carbon could drastically change the objectives of forest management as a key influencer of forest sequestration over the short to long term. A forest carbon price could broaden the potential of using forests as carbon sinks and as renewable substitutes to fossil fuel as a feedstock for products. As part of the United Nations Framework Convention on Climate Change (UNFCCC), BC has reported harvested wood products (HVP) in its GHG calculations. Currently it is considering how and whether to include forest management net emissions in its accounting (Hoberg et al., 2016). Recent foreign policy proposals (i.e. EU-Land-Use, Land-Use Change and Forestry, 2016; EU-RED II, Article 26, 2016) are considering new requirements regarding carbon management of forests that provide biomass for energy products. Currently, some models account for forest carbon and sequestration rates. If this becomes commonplace, its inclusion could influence the future of SFM in BC and provide more opportunities to incentivize companies to consider carbon as a necessary and potential beneficial asset to manage, in addition to traditional timber for forest products. The inherent risk of proposing a high carbon price in BC is the political acceptability. The BC Liberal Government in 2008 implemented a Carbon price on fuel, which rose to $30/tonne by 2012 (Government of British Columbia, 2008b). To gain support for the tax, the government ensured it was ‘revenue-neutral’, by reducing certain tax bracket rates, providing a low-income climate action tax credit and other tax reductions for small-to-medium businesses. A critical component of raising the tax in the future to get additional support and maximize its effect for forest residue collection and use, must be allocating some funds to fund the development of clean technologies and promoting the use of renewable resources. A sufficient caron price would likely have the greatest effect on forest residue collection and use. However, the results depends on how high the price will become and the political support behind that price.  3.3.3.2 Regulation changes if a BC forest residue supply chain was to be established The BC’s forest tenure system consists largely of Forest Licenses and Tree Farm Licenses (TFLs), as described in the Background Section 2.1 (Government of British Columbia, 1996). The structure of the tenure system, taxation on logs and FRPA affects what companies have rights to, company values, the public’s expectations of those companies in managing BC forests 58  and the objectives that are prioritized in forest management plans (Government of British Columbia, 2002). Therefore, the regulatory framework that governs BC forest companies and forests offers several opportunities to incentivize the removal of forest residues for bioproduct production. The BC tenure system changed recently, with the addition of the Fiber Forestry License to Cut (FFLTC) and the Fiber Supply License to Cut (FSLTC) to encourage the use of forest residues that are left behind on landings and roadsides, by the primary license holders, such as the primary harvester (Government of British Columbia, 2016). While these new tenures do offer the opportunity for additional companies to use biomass, it does not solve the economic challenges of removing large volumes of forest residues from BC forests. However, a tenure system designed to include the ‘rights’ of other ecosystem services and not just timber, such as forest carbon, could provide the additional revenue streams for companies to manage for carbon, not just traditional wood products. Thus, it is possible that accounting for carbon in BC forests could change the management objectives of forest management and encourage companies to consider the potential of substituting fossil fuels with forest residue wastes and incentivize companies to retrieve additional quantities of forest residues. Adapting current tenure systems to support forest residue removal does not provide direct economic support. However, adapting tenure systems could provide a framework in which forestry companies can measure and manage in-forest carbon. Although models do exist to measure forest carbon within an acceptable degree of accuracy, implementing a new system into the forestry supply chain could pose a significant challenge.  3.3.3.2.1 Wildfire management The BC Wildfire Act explicitly requires forest managers to assess fire risk and develop plans to mitigate that risk through industrial activity. Burning piles of forest residues is a common practice in cut blocks in BC as it is a cheap way to drastically reduce the risk of wildfires and clear the land for replanting. Changing the BC Wildfire Act may be the cheapest way to change the perspective on BC forest residues and forest prevention methods and incentivize companies to marginally increase the forest residue collection and use in fire prone areas. Current practices result in the loss of forest biomass that could be used to displace fossil fuels in some capacity. Therefore, an option to incentivize companies to change their behavior is to adapt current 59  wildfire policies to include forestland carbon. However, a recent study completed by the Forest Practices Board found that there is little assessment or consideration of other options to remove forest residues in BC beyond burning them on site (Forest Practices Board, 2015). Changing the Wildfire Act in certain sections could result in a change in behavior, such as including carbon as a ‘forestland resource and value’ in Section 18 (St-laurent et al., 2017). Another example would be to require companies to measure slash piles and record their potential impacts on air quality, wasted fiber and GHG emissions when conducting wildfire risk assessments, aiding in the future management options for forest residues in BC.  Changes to the Wildfire Act and FRPA could result in a moderate change to BC forest practices relating to forest residues. However, funding forest management initiatives, such as fire prevention, has historically been challenging. Government programs that support the removal of ‘ladder fuels’, fuels that elevate the risk of forest fires in summer months, aren’t a political priority compared to other job creation programs. The historical allocation of BC’s forest fire budget has been spent on fire suppression, not fire prevention activities, such as removing forest residues from the forest. 3.3.3.3 Operational regulations that would be required to support diverse uses of forest biomass Part of the economic challenges companies face when collecting and removing forest residues is the operational constraints of the traditional harvesting supply chain. Forest companies optimize the current supply chain for traditional products derived from logs, not forest residues. Therefore, any change in truck configuration or equipment means additional costs to the supply chain, such as road usage.  To reduce the costs of transporting forest residues, or at the very least distributing the costs across all forest products, there are a couple of operationally related drivers that could allow for the flexibility necessary for lower-cost equipment to be used. For example, BC logging roads are a costly necessity to access the remote areas of BCs 25 million ha harvestable forestland. While FRPA and other operational guidelines do outline specific road requirements for companies to follow, they are optimized for long logging trucks, not for other vehicles such as dump trucks. Although this is nuanced, additional road maintenance and accessibility contributes to the ongoing economic challenges of reaching additional forest fiber.  60  Operational regulations create opportunities for different equipment to be used in the forest, and the opportunity to share the costs of extracting forest residues with higher value forest products. The potential for negative stakeholder impacts are moderate given the changes to the existing supply chain, such as road construction costs. This also results in political acceptability to be moderate. 3.3.3.4 Downstream incentives that could be used to raise the value of BC forest residues Renewable energy incentive programs from downstream markets are driven by government subsidies. Two main strategies could be pursued regarding downstream partnerships and end-users of forest residues (e.g., jet-fuel producers). First, international markets could provide downstream product producers with incentives to use forest biomass for bio-product production. Prominent renewable energy incentives, such as electricity certificates or subsidies, have resulted in many countries rapidly adopting low-carbon energy alternatives and reducing their reliance on fossil fuels. Sweden’s use of bioenergy increased since the 2000s with the Tradeable Renewable Energy Certificates (TREC) program and associated subsidies (Ericsson & Werner, 2016). BC’s version of renewable energy credits consists of long-term contracts BC Hydro, the crown corporation energy utility in BC, signed with low-carbon energy producers, such as Conifex, KDL and other forestry/bioenergy companies (Government of British Columbia, 2008). While this does provide the certainty of price per MW and subsequently investment and development of the sector, it does not support the collection and processing of forest residues from BC forests, given the current prices set in those contracts. Retrieving forest residues from the forest are still restricted to $35-$40 CAD/odt at current energy prices set in 20-year contracts. As mentioned earlier, the US south east, although different to Canada in many ways, does rely heavily on forest residues to support the growing wood pellet industry, which supplies wood pellets to the UK and other EU-Member States (Drax Group plc, 2015). A declining pulp and paper sector in the US SE coupled with increased interest from European energy utility companies have led to large-scale collection and use of forest residues. Canada could capture more interest from the EU, if the value of wood pellets were to increase beyond their current ~$150 USD/odt price-point.  The second potential strategy is for the Canadian and BC government to promote and facilitate partnerships between forestry companies, technology providers and downstream 61  providers/producers, such as the recent partnership between Canfor and Licella (Canfor Inc., 2016). Although Licella is a technology company, they have provided the necessary expertise to produce ‘bio-crude,’ a chemical input used for a variety of products and processes within the oil refinery industry. Funding research and development within the forestry industry and promoting the sustainable supply of BC forest residues can support the growth of multi-national partnerships between Canada’s established forestry industry and key industries/markets in the bio-economy. The economics of forest residues is such that downstream partnerships will be necessary to access high-value markets to justify the capital investment. However, it is likely that forestry companies will have to lead the charge. Currently, in initiatives such as biojet-fuel development, forestry companies are largely left out and lack the knowledge or risk profile to further advance the potential of forest biomass use in various aspects of the bio-economy. It is apparent that supportive policies have and will be key in the global transition to a low-carbon economy and at least partially led to the rapid development of the wood pellet sector in BC and the US south east. It should be noted that the potential for negative stakeholder impacts, such as increasing costs, in the forest supply chain is low given the ‘market pull’ of incentive programs. Assessing the political acceptability of this type of strategy requires an assessment of the national and international context. It is likely that Canada and BC recognize the value of supporting renewable energy strategies with forest biomass. However, currently, there is a lack of subsidies or support at the provincial and federal level (Bloomberg Magazine, 2017). This will be needed if BC and Canada are to facilitate the expansion of forest biomass for the expansion of the emerging bioeconomy. 3.4 Conclusions Large quantities of BC annual forest residues are inaccessible given the current economic costs to collect and use them. Much of BC’s forest residues face the challenge of costly geographical distances and ineffective policies which restrict their use to relatively low value products, such as wood pellets. Currently, there is little room to reduce costs within the existing supply chain unless major policy or forest management changes are made. However, the potential to reduce GHG emissions and displace fossil fuels continues to motivate industries and governments to consider the potential of BC forest residues. It is apparent that BC’s current forest policies and the trend of including forests in emission-reduction-strategies provide opportunities to improve 62  the economic availability of BC forest residues. Market and policy forces are the most likely mechanisms by which forest companies can be “encouraged” to sustainably recover some forest residues -- such as a burn ban, downstream policy incentives etc. To reduce the economic burden of retrieving forest residues it is likely that BC forest and climate policies will have to be modified to include forest biomass considerations, while ensuring there are minimum negative impacts on other stakeholders. Additionally, effective policies and economic tools will be highly dependent on the willingness and ability of provincial and federal political support. The complexity of the BC forest residue supply chain and its effective governance will greatly influence the available options that can be used to result in recovery and use of significant quantities of “affordable” forest residues that will be needed for the future bio-economy.  The most likely way to improve forest residue economics is a combination of policies and economic tools. Combining operational changes, such as ensuring logging roads are designed to allow greater access for dump trucks to reach forest residues, the implementation of carbon-pricing programs, etc., could reduce the negative impacts on stakeholders while ensuring the availability of economically viable forest residues. The regulatory measures that are most likely to achieve smaller, incremental gains in forest residue accessibility, such as road design, also require small changes to existing forestry legislation and practices. Alternatively, larger changes, such as a carbon price on forest biomass require much greater changes to BC’s forest management. A key component of applying a carbon price to forest biomass must consider other complementary drivers that assist all stakeholders. As has been describe earlier, carbon management of BC forests is likely to become a critical issue as well as an opportunity to incentivize forest companies to remove additional forest residues. If Canada and BC must report on carbon sequestration rates and the variability of in-forest carbon, forest company objectives may adapt to consider forest biomass use in low-value products that displace fossil fuels. A carbon price could also be implemented at a basic level. For example, applying to slash pile burning. However, a price on carbon in the forest necessitates additional support from the provincial or federal government given the potential for high negative impacts to forest companies, who already operate on commodity product margins. 63  Perhaps the greatest opportunities for increased BC forest residue use are regulatory incentives for bio-products (e.g., aviation policy, wood pellet price changes) to encourage companies to buy sustainable products over fossil fuel products. Incentive programs in the UK (e.g., UK’s Renewable Obligation Certification) and other countries continue to influence North American forest markets, including BC residues. Increasing the value of products through energy subsidies or renewable energy programs will also likely improve the quantity of forest residues available for bio-products. Companies might then afford to pay the $60-80 CAD/odt price to retrieve forest residues. However, there is considerable potential for negative impacts along the supply chain, particularly considering the complex relationship between bio-products, biomass feedstocks and the price of fossil fuel substitutes. It is also clear that the potential for increased BC forest residue use will be influenced by both legislative changes to forest management practices and harvesting as well as by economic incentives to encourage companies to use forest residue-derived products.    64  4 Thesis conclusions Verifying the sustainability of BC forest biomass began in the early 1990’s in response to ENGO pressures and subsequent customer demand. Through these considerable market pressures, many companies began certifying under one of the FSC, SFI or CSA-SFM standards to ensure traditional forest products were recognized as sustainable by their customers. Subsequently, the emergence of the wood pellet market and other new uses for forest biomass, i.e. biofuels, required forest management certification standards to be extended to additional markets and forest products. However, the primary focus on forest management and not end products meant that forest certification standards did not readily fulfill certain biomass requirements regarding some downstream policies, such as the UK’s biomass sustainability requirements. At around the same time several EU energy utilities tried to establish biomass-sourcing standards through organizations such as the SBP which has primarily focused on certifying wood pellet mills. However, this certification scheme provides little verification procedures for sustainable forest management practices. Currently most of the biomass-sourcing standards are used by the EU to help it fulfill its energy and climate policies. At the same time there is significant opposition from many environmental organizations on using forest biomass for bioenergy and biofuels. As a result, the EU’s proposed future policies, such as EU-RED II (2016), have indicated an increasing desire for better tracking mechanisms of in-forest biomass (forest residues). It is likely that the increasing attention given to GHG emissions tracking and carbon accounting will significantly influence the attractiveness of using forest residues (as opposed to mill residues) to reduce GHG emissions and for them to become and increasing component of national renewable energy strategies. The work in this thesis suggests that a combination or pairing of certification standards is the most likely mechanism that can be used to ensure a sustainable supply chain, from stump to end-use. It is likely that, as PEFC and SBP move closer towards a greater partnership and new modules for GHG emissions tracking, this will help reduce the current burden on forest companies to comply with multiple, and often overlapping, certification systems. Although several certification schemes and LCA models are already in place, more synergistic partnerships will ensure better and more representative GHG tracking systems are developed and accepted.  65  However, to fully realize the potential benefits of increased forest residue use, the economic challenges of removing large quantities of low-value biomass need to be overcome. The relatively low global price of pellets means that wood pellet producers must acquire relatively cheap feedstocks. As the availability of mill residues has decreased and their cost increased, pellet producers have only recently begun collecting small quantities of forest residues from those BC forests that are close to pellet mills. However, to access greater amounts of BC forest residues, the biomass delivered cost must decrease from the likely $60-80 CAD/odt, to the $35-40 CAD/odt that is currently paid in many locations.  Regulatory and economic tools are the most likely ways of encouraging greater use of BC forest residues due to current geographic realities of BC’s forests (i.e. mountainous terrain) and current Provincial forest and climate policies. Current forest management practices and business decisions are driven by higher economic value products and not on the potential to reduce GHG emissions or by encouraging carbon sequestration through increased tree planting and growth. Therefore, policy and economic tools must evolve to incentivize companies to manage for additional values and remove forest residues for fossil fuel substitution.  The most likely policy and economic tools that will encourage enhanced forest residue management and usage is a combination of operational level changes to forest legislation, i.e. road design, the BC tenure system and the Wildfire Act, and “more global” economic/climate policies, i.e. renewable energy incentives combined with national support for forest residue extraction and use. It is apparent that BC forests can contribute to the growing need for renewable energy in the short-to-midterm while also encouraging the reduction of fossil fuel use in other regions such as Europe. However, policy and economic support will be critical. A critical finding in both industry reports and academic literature is the importance of policies and external market forces to mitigate the economic realities of removing vast quantities of forest residues from a relatively the large geographic area that constitutes BC. However, the use of public policies also requires additional sustainability requirements that currently are not covered by existing legislation or private governance models, such as forest certification schemes. Therefore, increased forest biomass use must consider the growing body of literature and governance models that must be recognized under support policies. The inextricable link between economic barriers and sustainability concerns has become a serious industry concern in 66  the US southeast wood pellet industry, who are considered to be at the forefront of wood pellet production from forest residue feedstocks. The ongoing discussions make it apparent that more research on the sustainability of forest residues is still required. The potential of increased BC forest residue use in a global biomass supply chains will very much depend upon the willingness of governments to support biomass use and the third-party sustainability verification procedures that will be needed to ensure GHG emissions reductions. Future research will be required to develop the policy tools and models needed to better estimate carbon sequestration rates in the forest. We will also need to better assess how forest management practices can be optimized for maximum carbon sequestration while supplying the world with other sustainable forest products and bio-products that will be needed to establish the global bioeconomy. Additional research will also be needed to determine how the various sustainability certification schemes can work together to ensure a sustainable supply chain from managed forest to final product(s). Although good progress has been made, there are opportunities to improve the various certification systems that will be required to better track biomass through its multi-national supply chains. It is clear that forest biomass can be a sustainable feedstock for bioenergy and biofuels if the management and verification of the feedstock is documented and accepted by the wider community of stakeholders. However, the increased use of forest residues will need both some sort of economic incentive while ensuring the sustainability of the overall forest biomass supply chain.    67  Works cited Abt, K. L., Abt, R. C., Galik, C. S., & Skog, K. (2014). Effect of Policies on Pellet Production and Forests in the U.S. South. Forest Service General Technical Report SRS-202 Southern Reseach Station. Association of BC Forest Professionals. (2004). ABCFP Historical Summary Article. Vancouver. Auld, G., Gulbrandsen, L. H., & McDermott, C. L. (2008). 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