Howe Sound Pulp and Paper (HSPP) is looking at a fundamental change in its business model and environmental practices following a joint announcement between the federal government and BC Hydro.
Stockwell Day, treasury board president and Minister for the Asia -Pacific Gateway, made the trip to the Coast to announce approximately $37 million in funding from the Pulp and Paper Green Transformation Fund (PPGTF) for HSPP to make significant upgrades to its boiler for energy efficiency and electricity production.
"What we're going to be doing is a major modification on our power boiler," said Mac Palmiere, HSPP's president and chief executive officer. "We're changing, fundamentally, the design of it so it can burn more wood waste and wood waste of the quality we are used to on the Coast - higher moisture content - and get better efficiency out of the boiler."
The increased efficiency will cut down on the amount of energy the mill needs to run and provide surplus electricity that can be fed directly into the BC Hydro grid.
Also at the meeting Wednesday morning at Cedars Inn in Gibsons, BC Hydro's director of power acquisition Jim Scouras was on hand to announce that HSPP and Hydro had reached a deal for the power company to purchase 400 gigawatt hours of that surplus electricity per year - roughly enough to power 10,000 homes.
Palmiere said the power deal and boiler upgrade funding will fundamentally change HSPP's revenue stream.
"Howe Sound is adding a third leg to its business. Two-legged stools aren't that stable. Three are better. We'll have pulp, we'll have paper, we'll have power," Palmiere said. This addition of the third business is crucial to the survival of Howe Sound going forward.
"The long-term viability is dependent on energy reduction and generation of green energy, and Howe Sound will become B.C.'s largest independent producer of electricity."
Refurbishing the boiler is also expected to reduce HSPP's natural gas consumption and cut about 12,000 tonnes of greenhouse gas emissions per year.
The deal with BC Hydro, Palmiere said, could bring in upwards of $40 million a year and, unlike pulp and paper sales, the electricity sales will be guaranteed and not subject to market forces.
Palmiere said electricity generation should now make up about 10 per cent of HSPP's revenue. He said adding power sales to the business will ensure that HSPP will remain the "backbone of the economy for the Sunshine Coast."
"Howe Sound has a long history, over 100 years, and it's had many ups and downs. Eighteen months ago, our long-term vision was about three months and the outlook was very bleak," he said. "Now we've certainly turned a new chapter, and I believe there is room for not only optimism, but enthusiasm for Howe Sound Pulp and Paper."
Palmiere said the changes would likely create only one or two new jobs, but job security for everyone at the mill would be increased as a result.
Day, who stopped on the Coast as part of a tour around the Strait of Georgia, said the $37 million was "money well spent" given the greenhouse gas reduction, ability to produce electricity and the tough times Canada's pulp and paper industry has gone through.
"[The electricity production] would power about 10,000 homes. That's the kind of numbers we're talking about in terms of conservation related to this project and what they're going to do with these hours," Day said.
Day seemed especially excited at the reduced greenhouse gas emissions: "That's a lot of emissions being removed from the atmosphere. That's going to have not only a global effect, but certainly a community effect. That's the equivalent of taking 3,000 cars right off the road," he said.
Scouras said BC Hydro and HSPP began working together on its integrated power offer when the federal government announced the PPGTF in the fall of 2009. He said Hydro staff helped HSPP in developing the plan and preparing an application for the PPGTF to help meet Hydro's goal of finding more sources of alternative energy in the province.
"The results are here today and we're super-pleased that Howe Sound Pulp and Paper has been successful in that application and they now have received the funds they have from the green transformation program," he said.
Scouras said HSPP's approval for such a project will serve as a model for others in B.C.
"This is one of the first real successes we've had in this program and in the near future we plan to make more announcements," he said.
This is the second time in the last six months HSPP has been awarded a grant from the PPGTF. In April, HSPP received $6 million for upgrades to its evaporator to increase energy efficiency and begin producing electricity.
The company will also soon be ready to go public with some early results of the environmental study now underway into the effect of burning construction debris to power the boiler. Palmiere said the results so far look positive.
HSPP is set to be sold to Paper Excellence BV, a subsidiary of Indonesia-based Sinar Mas, by the end of the month. The sale has triggered blowback from environmental groups who accuse Sinar Mas of having an abysmal environmental record, but Palmiere said Wednesday's announcement should reassure the public that HSPP's environmental record stands on its own, regardless of the parent company.
