Ottawa, Ontario, Canada 28 February 2011 -- (Marketwire) -- Two mills operated by Catalyst Paper in British Columbia will benefit significantly from federal funding through Canada's Pulp and Paper Green Transformation Program.

As part of the CAD 1 billion program Catalyst Paper will receive a total of CAD 18 million for two projects. The Powell River Division, which produces newsprint and specialty papers, will receive CAD 13.3 million to double the volume of renewable electricity the mill generates from wood waste. The Port Alberni Division, which focuses primarily on specialty papers, will receive CAD 4.7 million to improve the performance of its power boiler. This project will increase efficiency and help displace the mill's use of fossil fuels by using more biomass fuel to generate power.

Despite signs of recovery in some segments of the forest sector, there remains a need to find new and more efficient ways of using wood, wood fibre and its byproducts. Today's announcement is part of the Canadian government's plan to improve the environmental performance and competitiveness of Canada's forest industry by focusing on innovation and new product development that will ultimately expand market opportunities for Canadian pulp and paper related products.

"Our government recognizes the important role wood bioproducts, like renewable energy, play in the transformation and renewal of the forest industry in B.C. and across Canada," said John Weston, Member of Parliament for West Vancouver–Sunshine Coast–Sea to Sky Country. "Helping companies extract the greatest value from the wood they harvest and expand the range of goods they produce will sustain jobs in rural communities while responding to market demand for products that come from renewable resources" he said.

"This funding is essential to helping British Columbia's forest industry respond to a range of consumer needs and values — today's investment is good news for our forest workers and their communities," said James Lunney, Member of Parliament for Nanaimo-Alberni.

Today's investment builds on many other initiatives that are helping to sustain and enhance Canada's forest industry and the communities that depend on it. Budget 2010: Leading the Way on Jobs and Growth established the CAD 100 million Investments in Forest Industry Transformation program to promote the development, commercialization, and implementation of advanced technologies in the forest sector — helping create a world-class industry able to compete in the clean energy economy of tomorrow.

Under Canada's Economic Action Plan, the government has committed CAD 170 million to assist the development of next-generation forest products and expand global markets for Canadian forest products. This funding includes CAD 40 million to develop pilot-scale demonstrations under the Transformative Technologies Program.