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Details on Transfer Payment Programs
Exceeding $5 Million per Year

14. Listing of Transfer Payment Programs Exceeding $5 million/year

In 2006-07, NRCan managed the following transfer payment programs in excess of $5 million.

1. In support of the EnerGuide for Houses Retrofit Initiative
2. In support of the Ethanol Expansion Program
3. In support of the Energy Efficiency and Alternative Energy programs
4. In support of the Technology and Innovation Initiative
5. In support of climate change: the Opportunities Envelope
6. Forest Research Institutes
7. Payments to the Newfoundland Offshore Petroleum Resources Revenue Fund
8. Payments to the Nova Scotia Offshore Revenue Account
9. Payments for Newfoundland Offshore Equalization
10. Wind Power Production Incentive Contribution Program
11. Federal Response to the Mountain Pine Beetle Infestation in British Columbia
12. Measures to Mitigate the Impact of the Mountain Pine Beetle
13. Canada Softwood Lumber – Canada Wood Export Program
14. Model Forest Program

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1) Name of Transfer Payment Program: In support of the EnerGuide for Houses (EGH) Retrofit Incentive

2) Start Date: October 2003

4) Description of Transfer Payment Program: This grant was established to encourage home owners to make energy efficiency improvements to their homes in order to reduce energy consumption and resulting greenhouse gas (GHG) emissions. The grant was based on the measured improvement in the EnerGuide for Houses home energy rating resulting from retrofit.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: Key performance information for the EnerGuide for Houses (EGH) Retrofit Incentive is provided in the DPR under Section II - Analysis of Performance by Program Activity - Energy. Comprehensive performance reporting on the department's energy efficiency, alternative transportation fuels and renewable energy programs is provided in the department's annual Report to Parliament under the Energy Efficiency Act. The report for fiscal year 2006-07 is expected to be tabled in Parliament by the end of 2007.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Energy
14) Total Grants	10.9	11.9	9.8	41.0	46.7	(5.7)
14) Total Contributions
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances: It was identified to the Minister and to Central Agencies in early March that there was a high probability that the program would be oversubscribed by the end of the year requiring an additional $5,700,000 in grants. The additional grant expenses would be processed under the statutory authority provided under the Energy Costs Assistance Measures Act and the department would offset the shortfall to the statutory payments from lapsing departmental resources. The program exceeded its GHG targets, achieving a total of 0.8Mt savings.

17) Significant audit and evaluation findings and URL to last audit and/or evaluation:

Audit of EGH in 2004:
http://www2cm.nrcan.gc.ca/nrcan/index_e.aspx?DetailID=57
Auditor General:
http://www.oag-bvg.gc.ca/domino/reports.nsf/html/c20060903ce.html

1) Name of Transfer Payment Program: Contributions in support of the Ethanol Expansion Program

2) Start Date: August 2003

4) Description of Transfer Payment Program: This program provided repayable contributions for the construction or expansion of fuel ethanol plants in Canada, in two rounds.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: Key performance information on the Ethanol Expansion Program is provided in the DPR under Section II - Analysis of Performance by Program Activity - Energy. Comprehensive performance reporting on the department's energy efficiency, alternative transportation fuels and renewable energy programs is provided in the department's annual Report to Parliament under the Energy Efficiency Act. The report for fiscal year 2006-07 is expected to be tabled in Parliament by the end of 2007.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Energy
14) Total Grants
14) Total Contributions	31.2	30.5	35.0	35.3	33.7	1.6
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances: The variance of $1,600,000 is due to the uncertainty of the amount of liability under some agreements. The final accounting of all agreements under this program may reduce this variance.

17) Significant audit and evaluation findings and URL to last audit and/or evaluation: Ethanol Expansion Program Audit, 2006, is available on the Audit and Evaluation Branch website at:
http://www2cm.nrcan.gc.ca/nrcan/index_e.aspx?ArticleID=576

1) Name of Transfer Payment Program: In support of the efficiency and alternative energy programs

2) Start Date: April 1, 1997

4) Description of Transfer Payment Program: This program provides contribution funding for a variety of energy efficiency and alternative energy initiatives.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: Key performance information is provided in the DPR under Section II - Analysis of Performance by Program Activity - Energy. Comprehensive performance reporting on energy efficiency, alternative transportation fuels and renewable energy programs is provided in the department's annual Report to Parliament under the Energy Efficiency Act. The report for fiscal year 2006-07 is expected to be tabled in Parliament by the end of 2007.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Energy
14) Total Grants
14) Total Contributions	63.9	77.2	44.7	54.9	53.9	1.0
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances: The variance is explained by delays due to climate change program review.

17) Significant audit and evaluation findings and URL to last audit and/or evaluation:

REDI's latest full evaluation (2003) is available on the Audit and Evaluation Branch web site at http://www2cm.nrcan.gc.ca/nrcan/index_e.aspx?DetailID=74.

Strategic Review of the New Housing Element of the Energy Efficient Housing Initiative, 2006, is available on the Audit and Evaluation Branch website at: http://www2cm.nrcan.gc.ca/nrcan/index_e.aspx?DetailID=567.

Audit of the Commercial Building Incentive Program, 2003 is available on the Audit and Evaluation Branch web site at: http://www2cm.nrcan.gc.ca/nrcan/index_e.aspx?DetailID=54.

Audit of Commercial/Institutional Buildings Retrofit Initiative, 2004, is available on the Audit and Evaluation Branch web site at: http://www2cm.nrcan.gc.ca/nrcan/index_e.aspx?DetailID=43.

Audit of the Federal House in Order Initiative (FHIO), 2006, is available on the Audit and Evaluation Branch web site at: http://www.nrcan.gc.ca/dmo/aeb/aeb-rpts-2006-A06012-e.htm.

Audit of the Commercial Transportation Energy Efficiency and Fuels Initiative (CTEEFI), 2006, is available on the Audit and Evaluation Branch web site at: http://www.nrcan.gc.ca/dmo/aeb/aeb-rpts-2006-A06005-e.htm.

1) Name of Transfer Payment Program: Contributions in support of the Technology and Innovation Initiative

2) Start Date: October 10, 2003

4) Description of Transfer Payment Program: To contribute to the objectives of Canada's climate change agenda by reducing long-term greenhouse gas (GHG) emissions by means of longer-term advanced technologies and enhanced innovative capacity through research, development and demonstration.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved:
Technology and Innovation Research and Development (T&I R&D) Component: Transfer Payments are one of the tools used to perform R&D and comprised 22% of the total T&I R&D budget of $30M in 2006/07. Transfer Payments directly supported 110 of the 322 projects funded by T&I R&D. Recipients included 14 universities across Canada, several provincial research organizations as well as a variety of research associations and private companies.

The funding of these projects directly supports T&I R&D in its five strategic priorities of: cleaner fossil fuels; advanced end-use efficiency; decentralized energy production; biotechnology; and the hydrogen economy. The following are some highlights of funding in 2006/07:

Area: Cleaner Fossil Fuels: NRCan in collaboration with the Alberta Research Council, Alberta Newsprint Company, and the Alberta Energy Research Institute, supported the development of a micro-porous hollow fiber membrane module as gas-liquid contactor to achieve efficient low cost carbone dioxide (CO2) and sulphur dioxide (SO2) capture from flue gas, natural gas, biogas, and for CBM and other applications. The estimated operational cost reduction is 25-30% compared to conventional technology. Development of a quantitative model, with Alberta Research Council, of the variation of coal permeability due to changes in sorbed gas content and stress will allow more accurate assessment of the potential for CO2 storage in natural gas production from coals. Collaboration with the Petroleum Technology Alliance Canada provided an assessment of further development of bitumen recovery technology for "inaccessible" resources. The report built on a number of previous roadmaps and reports prepared over the past 10 years. It is intended to begin defining details around key R&D paths for specific resources.

Area: Advanced End-Use Efficiency: NRCan in collaboration with Ecologix is developing the initial concept, technical strategy, and business case for the ZoneComfort™ product that will reduce peak electrical demand and smog from power generation during summer heat waves. The commercialization of this product has now become available. Also included in this area is the commercialization of software modelling tools that permit the 3D visualization of flames, the spectral energy produced by those flames and the transfer of radiant heat to industrial processes. The tools have been successfully tested in the steelmaking, smelting, and refining industries. The theories that permit the rapid and accurate calculation of radiant flame properties were carried out at the University of Waterloo. This project has applicability to industrial processes that account for 13 Mt/a GHG (10% of industrial total) with potential for 3% to 4% reduction if widely adopted. In the transportation sector, GHG Emissions from Off-Road Machines resulted in a paper published and was recognized by the Society of Automotive Engineers (SAE) as being "among the most outstanding SAE technical papers of 2006" and will be published in SAE's highly respected publication 2006 Transactions.

Area: Biotechnology: Collaboration with industry and various municipalities to support the production of bio-energy from residual wastes from the municipal, agricultural and industrial sectors. Research in this area enables researchers, policy makers and the farming community to assess the sustainability of anaerobic digestion.

Area: Decentralized Energy Production: Development of innovative variable-speed small hydro turbine systems to increase low-head distributed power generation, and to achieve environment-friendliness and cost-effectiveness. Reduction in fish mortality in small turbines would remove an environmental barrier and reduce installation costs of small low head hydro. The variable speed will increase system efficiency.

Area: Hydrogen: Collaboration with the University of Victoria to examine the feasibility of a hydrogen-based renewable-energy-powered residential cogeneration system for grid-connected houses. The paper "The Simulation of a Renewable-Energy-Powered Hydrogen-Based Residential System" was presented at the SimBuild conference in Boston in August 2006 and received the Award for Best Paper by the American chapter of the International Building Performance Simulation Association.

Demonstration Component: During 2006/07, the T&I demonstration component, referred to as the Technology Early Action Measures (TEAM) program, disbursed $5.7M in contributions (G&Cs), providing funding to 14 demonstration projects, 11 of which were started in prior years, and 3 of which were started in-year. In total, 14 new clean energy demonstration projects were approved during the year, with a TEAM investment of $14.2M and a total project value of $111M. TEAM demonstration projects are typically multi-year, ranging from 1-3 years. Contributions typically represent 90% or more of TEAM's annual budget, and are the primary means of funding clean technology demonstration projects. Since inception in 1998, TEAM has funded 120 clean energy demonstration projects, many of which are flagship NRCan projects. Total disbursements to date are approximately $113M, and total project value exceeds $1.1B. The following are highlights of funding and other activities in 2006/07:

• Disbursements assisted Canadian proponents in achieving the following: (1) ATFCAN led a consortium of Canadian companies providing natural gas engine technology for commercial vehicles and trucks, in partnership with leading Indian car and truck manufacturers, in India, (2) Vaperma Inc. demonstrated a much higher efficiency process for producing ethanol at a Greenfield Ethanol facility, (3) Enbridge is demonstrating electricity production by harnessing pressure let-down energy through turbine and fuel cell technology in its natural gas pipeline system, (4) work was commenced on an integrated energy system for the Dockside Green residential development in Victoria, one of the few LEED platinum developments in Canada, and (5) Milligan demonstrated a new bio-diesel production process using off-spec waste canola seed.
  
• Some of the new projects approved included: (1) oil sands natural gas displacement and emissions sequestration project, (2) new low emission heavy oil extraction process, (3) direct-fired biomass gasification for a pulp and paper plant, (4) demonstration of CO2 as a refrigerant for supermarkets, (5) demonstration of Canadian energy efficient chiller technology in Cuba, (6) production of hydrogen from landfill gas, and (7) demonstration of EcoSmart concrete technology in a large construction project designed by Canadian architectural and engineering firms in Dubai.
  
• In 2006/07, TEAM implemented qualitative assessments for air quality impacts from demonstration projects. TEAM is a leader in ISO standards and tools development, relating to the measurement and reporting of demonstration project GHG outcomes and results. In addition, TEAM drafted a verification protocol to provide a method to audit GHG results.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Energy
14) Total Grants
14) Total Contributions	3.0	13.5	30.1	12.2	12.0	0.2
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances:
Demonstration component: The climate change review, change in government, and Treasury Board processes introduced a funding freeze in 2005/06 and 2006/07. As a result of this freeze, operations were significantly affected, resulting in reduced G&C disbursements in 2006/07. This spending will be shifted out to 2007/08.

17) Significant audit and evaluation findings and URL to last audit and/or evaluation: Evaluation of TEAM, as a component of the Climate Change Action Fund http://www2cm.nrcan.gc.ca/nrcan/index_e.aspx?DetailID=392; TEAM was also one of the programs evaluated in the Examination of Federal Energy & Environmental S&T Investment (completed in 2006/07).

1) Name of Transfer Payment Program: Contributions in support of Climate Change : The Opportunities Envelope Initiative

2) Start Date: May 09, 2005

4) Description of Transfer Payment Program: The Opportunities Envelope supports greenhouse gas (GHG) mitigating initiatives proposed by the provinces and territories

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: 23 agreements signed providing estimated annual reductions of 2.0 megatonnes of GHG emissions

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Energy
14) Total Grants
14) Total Contributions	0.0	6.2	40.1	40.1	29.4	10.7
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances: Some projects were delayed in starting and/or were unable to spend as forecast, or withdrew.

17) Significant audit and evaluation findings and URL to last audit and/or evaluation:

1) Name of Transfer Payment Program: Renewal and enhancement of funding for the forest research institutes

2) Start Date: 2005-06

4) Description of Transfer Payment Program: The objective of providing funding to the forest research institutes is to support NRCan's goal of sustainable natural resources development by helping to create an economically competitive forest sector through increased productivity, market access and value-added product development, while encouraging improved environmental performance and forest workplace health and safety practices.

Specifically, funding is provided to Forintek Canada Corp (Forintek) and the Forest Engineering Research Institute of Canada (FERIC) to conduct research in the following priority areas: (i) enhancing productivity; (ii) reducing costs of production; (iii) maintaining and improving market access; (iv) cutting energy consumption while advancing non-fossil fuel options; and (v) improving environmental performance through new processes and technologies.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: In 2006-07, progress in research has been made in a number of areas. Below are some highlights of progress as they relate to the program's objectives.

Forintek's research continued to explore new uses for mountain pine beetle infested timber. Research during the year demonstrated that lodgepole pine affected by the beetle is suitable raw material for high density fibreboard. This development is particularly significant in that it is estimated that 200 million cubic meters of lodgepole pine will be dead and unsalvageable in 10 to 15 years.

In support of enhancing productivity, Forintek developed models that can predict product recovery accurately and directly from forest inventory measurements. Once completed, significant productivity gains can be expected. For a typical Canadian sawmill, a 1% increase in lumber value recovery equates to $250,000 annually.

Forintek also developed a new technique that not only reduces the amount of glue used in the plywood lamination process but also improves the quality of plywood veneer surface. It is expected that this process improvement could result in a saving of up to $675,000 annually at a typical Canadian softwood plywood mill.

In support of maintaining and improving market access, Forintek continued its work in the development of impartial technical data and knowledge to support and influence international codes and standards. During the year, through Forintek's efforts, Canadian timber species and design values were included in Shanghai's draft municipal building code.

In support of cutting energy consumption, FERIC research conducted a study on two trucks that were identical except for their engine size. The data collected demonstrated that the truck with the smaller engine was more energy efficient and just as productive when it came to the quantity of wood transported. The energy efficiency of the smaller engine made it possible to save roughly 4,000 litres of fuel (based on 100,000 km traveled) during the study year.

FERIC also continued its tests of the applicability of hydrogen injection and hybrid systems within the off-road sector of the forestry industry. This research, when completed, could potentially decrease hauling costs, reduce fuel consumption, and reduce emissions per tonne of timber delivered.

Forintek maintains a research program that responds to consumers' growing concern for the environment. Researchers have been actively involved in helping the panelboard industry prepare for compliance with new government guidelines on process emissions. Work completed during the year demonstrated that although emission levels vary, output is well below provincial guidelines.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Sustainable Forest
14) Total Grants
14) Total Contributions	4.9	5.2	5.3	5.3	5.3	0.0
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances:

17) URL to last evaluation:

1) Name of Transfer Payment Program: Payments to the Newfoundland and Labrador Offshore Petroleum Resource Revenue Fund

2) Start Date: 1987

4) Description of Transfer Payment Program: To make payments to the province equivalent to amounts received by Canada in relation to offshore activities in accordance with provisions of the Canada Newfoundland Atlantic Accord Implementation Act.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: Payments were made to the province in accordance with the provisions of the Act

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Energy
14) Total Grants
14) Total Contributions	175.0	427.7	349.1	313.4	313.4
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances:

17) Significant audit and evaluation findings and URL to last audit and/or evaluation:

1) Name of Transfer Payment Program: Payments to the Nova Scotia Offshore Revenue Account

2) Start Date: 1993

4) Description of Transfer Payment Program: To make payments to the province equivalent to amounts received by Canada in relation to offshore activities in accordance with provisions of the Canada Nova Scotia Offshore Petroleum Resource Accord Implementation Act.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: Payments were made to the province in accordance with the provisions of the Act.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Energy
14) Total Grants
14) Total Contributions	80.4	217.8	312.0	275.4	275.4
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances:

17) Significant audit and evaluation findings and URL to last audit and/or evaluation:

1) Name of Transfer Payment Program: Newfoundland Offshore Equalization

2) Start Date: 2002

4) Description of Transfer Payment Program: To make payments to the province to compensate for part of the reduction in fiscal equalization entitlements that would result from offshore revenues being included in the equalization program.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: Payments were made to the province in accordance with the provisions of the Act

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Energy
14) Total Grants
14) Total Contributions	96.3	0.0	109.8	109.8	109.8
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances:

17) Significant audit and evaluation findings and URL to last audit and/or evaluation:

1) Name of Transfer Payment Program: Wind Power Production Incentive Contribution Program

2) Start Date: April 1, 2002

4) Description of Transfer Payment Program: The WPPI Program was set up to help establish wind energy as a full-fledged competitor in the electricity market by providing – over a period of ten years – a financial incentive of about 1 cent per each kilowatt-hour produced from the installation of 1,000 MW of new wind power capacity in Canada by 2007. The Government of Canada is to provide – over a 10-year period – an incentive averaging 1 cent per each kilowatt-hour produced from a qualifying wind energy project.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: At year end, 22 wind farms were in operation representing 924 megawatts of new wind energy capacity in Canada and about $315 million in contribution funding over 14 years.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Energy
14) Total Grants
14) Total Contributions	5.5	10.5	33.9	33.9	24.9	9.0
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances: Wind farms supported under the program had lower than expected production numbers resulting in lower payments to producers. $9.0 M lapse = $5 M reprofiled (WPPI) + $3M reprofiled (WPPI -2) + $1 M to reserve (WPPI-2) on Dec 19/06.

17) Significant audit and evaluation findings and URL to last audit and/or evaluation:

1) Name of Transfer Payment Program: Federal Response to the Mountain Pine Beetle Infestation in British Columbia

2) Start Date: 2006-07

4) Description of Transfer Payment Program: The purpose of the Federal Response to the Mountain Pine Beetle (FR-MPB) program is to slow the spread of the beetle, recover economic value from trees killed by the beetle, and protect communities and forest resources in areas affected by the infestation.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: In 2006-07, the Government of Canada announced the new, $200-million FR-MPB program. Through this program, NRCan will work closely with provincial counterparts to deliver a comprehensive, integrated strategy to combat the beetle infestation. Additional information about this program can be found at http://mpb.cfs.nrcan.gc.ca.

Slowing the Spread
The principal aim of the FR-MPB program is to slow the eastward spread of the beetle outbreak. NRCan is working to develop effective monitoring and control methods. Digital mapping has been completed on 3,750,000 hectares of beetle impacted forests in the Quesnel and Fort St. James, B.C. management units, providing critical information on the rate and severity of MPB infestation. MPB detection activities were completed on 2,300 hectares and direct control of beetles, using fall and burn, was completed on 3,000 infested trees within B.C. provincial park forests. An additional 90,000 beetle infested trees were removed through fall and burn on provincial forest lands along the BC-Alberta border to further control the rate of spread east of the Rocky Mountains.

The MPB is causing widespread destruction of the lodgepole pine, but also poses a potential threat to the jack pine forests of western Canada. NRCan has developed the initial models of stand susceptibility and connectivity of the jack pine forests to MPB infestation. This information is being used by the Province of Alberta in delivering the provincial beetle response.

Recovering Economic Value
The program is also focused on developing options for recovering as much economic value as possible from trees killed by the MPB. Mapping has been completed for active beetle and harvest designation on more than 18,000 hectares. In addition to supporting control activities, this mapping aids in the identification and prioritization of salvageable tree stands. NRCan is also leading the development of non-traditional products and markets for beetle-affected timber.

Protecting Communities and Forest Resources
The program will assist in the delivery of activities designed to reduce the threat of wildland fire facing many communities surrounded by dead trees. In 2006-07, forest fuel management plans were completed for three First Nations communities and fuel load management accomplished on 115 hectares. The construction of fireguards was also completed on the south and southwest sides of the town of Banff, in Banff National Park.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Sustainable Forest
14) Total Grants
14) Total Contributions	0.0	0.0	24.8	24.8	24.8	0.0
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances:

17) Significant audit and evaluation findings and URL to last audit and/or evaluation:

1) Name of Transfer Payment Program: Measures to Mitigate the Impact of the Mountain Pine Beetle

2) Start Date: 2002-03

4) Description of Transfer Payment Program: The purpose of the program is to mitigate the impact of the mountain pine beetle (MPB) epidemic in British Columbia, to assist in efforts to control the emerging MPB infestation in Alberta, and to reduce the risk of future MPB epidemics.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: In 2006-07, the MPB Initiative (MPBI) engaged governmental partners, industry, First Nations, private landowners, and the public to deliver programs, research, and information needed to mitigate the impact of the mountain pine beetle (MPB). To meet the objectives of the MPBI, activities have been focused in three strategic areas that address a range of social, economic, and environmental impacts. These areas of focus are:

1. improving the economic and ecological efficiency of ongoing timber salvage efforts;
2. implementing a research and development program to enable the development, demonstration, and dissemination of forest management options to reduce the risk of future MPB epidemics; and
3. improving the operational abilities and willingness of First Nations and private landowners to effectively manage MPB impacts through the use of forestland rehabilitation programs.

Economically and environmentally efficient methods for utilizing beetle-killed timber are being developed through the MPBI. In cooperation with industry, NRCan examined top priority questions related to the use of post-beetle fibre in the production of both chemical and mechanical pulp. The characteristic blue stain of beetle-affected wood fibre poses potential limitations to its commercial use in areas such as pulp production. During 2006-07, the department released field data on the impact of time since beetle-kill on timber production quality, which will help to prioritize timber salvage efforts. Addressing the potential for alternative uses, the program delivered a comprehensive examination and quantification of the financial dimensions to utilizing post-beetle fibre as a source for bioenergy production.

Research and development programs are leading to effective methods for controlling the spread of the MPB and mitigating the risk of future epidemics. In 2006-07, NRCan published the comprehensive book - The Mountain Pine Beetle - A Synthesis of Biology, Management, and Impacts on Lodgepole Pine. This has proven to be an extremely valuable resource for researchers and forest managers alike, and was the most frequently downloaded publication from the Canadian Forest Service web site in 2006-07. A copy may be downloaded at http://bookstore.cfs.nrcan.gc.ca. Research is also being conducted to assess the MPB risk to Alberta. Connectivity pathways from British Columbia into Alberta forests have been identified, and a preliminary examination of the vulnerability of jack pine to beetle attack has been completed.

Along with beetle control programs in federal mountain parks, NRCan has delivered 80 projects with non-industrial forestland owners and 27 projects with First Nations to address beetle control and post-beetle forest rehabilitation. The department has also hosted MPB information sessions for the public and the forestry sector in both British Columbia and Alberta. These sessions have raised awareness around the MPB epidemic and the programs and resources available to those who are being impacted.

The MPBI has been successful in establishing the foundation for dealing with the variety of impacts caused by the MPB epidemic. Recognizing the need to continue and expand upon this work, the Government of Canada announced the Federal Response to the Mountain Pine Beetle program in January 2007. Details of this new, $200-million program can be found at http://mpb.cfs.nrcan.gc.ca.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Sustainable Forest
14) Total Grants
14) Total Contributions	3.5	4.5	5.7	5.3	5.3	0.0
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances:

17) Significant audit and evaluation findings and URL to last audit and/or evaluation: Audit & Evaluation Branch conducted a program evaluation in 2006-2007. The final report can be found at http://www.nrcan.gc.ca/dmo/aeb/aeb-rpts-2007-e.htm.

1) Name of Transfer Payment Program: Canada Softwood Lumber - Canada Wood Export Program

2) Start Date: 2002-03

4) Description of Transfer Payment Program: There are two initiatives in this program: the Canada Wood Export Program and the Value-Added Research Initiative. The purpose of these initiatives is to mitigate the impact of the U.S. softwood lumber decisions by providing indirect assistance to the Canadian softwood lumber industry. These measures will provide long term benefits to the industry. The Canada Wood Export Program was the only program of the two funded in excess of $5million in fiscal 2006-07.

Canada Wood Export Program: The objective is to establish a national market development program to expand the export of Canadian wood products to international markets. The objective will be achieved through increasing the acceptance of the Canadian system of wood frame construction and the related increase in the use of Canadian primary and secondary wood products in residential construction. In the short term, there would be initial impacts of increased project economies and effectiveness resulting from partnering with and among industry associations. In the intermediate term, increased acceptance and knowledge of Canadian wood products in many international markets is expected. The long term should see an overall increase in sustainable prosperity in the Canadian wood product sector. There should be an increased level of market development by the private sector. In addition, product acceptance of existing and new products should ensure opportunities for export growth over what would have been achieved without the implementation of the program.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved:
Canada Wood Export Program: Canada Wood has successfully integrated Canadian wood products associations into operating coordinated offshore offices in the UK, Belgium, China, Japan and Korea, with representation in Taiwan. The Program has raised the profile of Canadian wood products in these markets, influenced the development of residential codes and standards to accommodate wood use and helped increase wood exports to our key offshore markets.

China - Key Results

• First Draft of Shanghai local wood frame construction (WFC) code and fire code completed - awaiting approval.
• Completion of a re-roofing project.
• Improved Quality Assurance Program.
• Successful delivery of courses at Chinese Universities.
• Wood exports to China increased by $100 million since 2000 - now totalling $121 million.

Japan Key Results

• Ministerial approval of post and beam structures in fire-protected zones.
• Acceptance of jack pine as an approved species in the manufacture of structural laminated wood products in Japan.
• Approval of the certification of Canada Tsuga kiln dried product line with strength equivalency to engineered wood products.
• Hard wood maple and birch are gaining acceptance.
• After years of decline - exports to Japan have stabilized.

South Korea - Key Results

• Opening of a Canada Wood office in Seoul.
• Successful delivery of WFC technical training for Korean builders and architects.
• Establishment of a strong working relationship with Korean wood associations.
• 38% increase in the value of wood exports in 2006 - totalling $100 million.

Europe - Key Results

• Greater awareness of the benefits of WFC (Super E, prefab).
• Successful delivery of technical seminars to architects and designer (Canada Wood Days).
• Increased the awareness of Canadian coastal and hardwood species.
• 18% increase in value of wood exports - totalling $632 million.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Sustainable Forest
14) Total Grants
14) Total Contributions	19.0	9.8	11.0	6.9	6.8	0.1
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances:

17) URL to last evaluation:

1) Name of Transfer Payment Program: Model Forest Program (MFP)

2) Start Date: 1992-93

4) Description of Transfer Payment Program: The purpose of the MFP is to increase the implementation of innovative sustainable forest management throughout Canada's managed forested land base.

The activities of the MFP are expected to increase the implementation of sustainable forest management practices throughout Canada's managed forested land base. Through the development, testing and promotion of sustainable forest management (SFM) processes and tools, model forests – and Canada – will be, and will be seen to be a leader in SFM. There will be greater adoption of best management practices by both those involved in model forest partnerships and others.

After 15 years, the MFP will come to an end in summer 2007. Work is underway to finalize the planning and implementation of a successor program to the MFP, the Forest Communities Program (FCP). The new FCP is scheduled to commence operations in summer 2007, and will continue to use a community-based approach to address local challenges, but will shift the focus of activities from sustainable forest management to developing and sharing innovative tools and practices which advance the sustainability of forest-dependent communities.

5) Strategic Outcome: Canadians derive sustainable social and economic benefits from the assessment, development and use of energy, forest and mineral resources, and have the knowledge to mitigate environmental impacts and respond effectively to natural and man-made hazards.

6) Results achieved: In 2006-07, the MFP supported over 250 research, demonstration and outreach partnership projects across Canada, engaging approximately 500 partners drawn from industry, provincial governments, land use planning authorities, Aboriginal organizations, environmental and community groups. The bulk of project activity took place at the 11 model forests sites across Canada and two special project areas in Labrador and Prince Edward Island. Projects ranged from developing knowledge, methodologies and tools to mitigate the impacts on wildlife of timber harvesting to better stewardship of private lands to exploring innovative software applications for forest management planning. At the national level, the program supported national initiatives to advance community adaptability to climate change, Aboriginal youth involvement in forestry, private woodlot management, and carbon accounting at the local or forest stand level. The Canadian Model Forest Network (CMFN) website www.modelforest.net provides a comprehensive overview of model forest activities and research.

The impacts and influence of the MFP can be measured through behavioural change as forest managers in Canada and abroad adopt model forest developed concepts, tools, and practices. Recent examples include the following:

• The adoption of wildlife protection guidelines by a number of jurisdictions based on model forest generated research.
• Changes in provincial approaches to land use planning and protection as a result of collaborative projects led by model forests.
• The uptake, both within Canada and abroad, of an important new modelling tool designed to evaluate the impact of operational-scale forest management decisions on carbon storage and release. This model and its accompanying guidebook are important milestones in in a major multi-year collaborative project between the CMFN and the Carbon Accounting Team of the Canadian Forest Service.

Including Canada, the model forest concept has been adopted, or is under development, at 41 sites in 18 countries around the world. Canada's model forest experience and expertise continues to be in great demand. In 2006-07, mentorship, technical assistance, and knowledge transfer activities were underway between several Canadian model forests and model forests in Latin America, Russia and Europe.

(in millions of $)	7) Actual Spending 2004-05	8) Actual Spending 2005-06	9) Planned Spending 2006-07	10) Total Authorities 2006-07	11) Actual Spending 2006-07	12) Variances
13) Program Activity: Sustainable Forest
14) Total Grants
14) Total Contributions	6.7	6.6	6.0	6.1	6.1	0.0
14) Total Other Transfer Payments
15) Total PA

16) Comments on Variances:

17) Significant audit and evaluation findings and URL to last audit and/or evaluation: http://www.nrcan.gc.ca/dmo/aeb/aeb-rpts-2006-E05002-e.htm

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