SOMBA K'E/YELLOWKNIFE - The territorial government should implement a carbon tax, and head to the woods in search of renewable energy sources, according to a report released late last month by a committee of MLAs and bureaucrats who are investigating climate change.

According to a report released Sept. 24 by the territorial government's joint committee on climate change, the "key area" to developing a "biomass industry" is a change in public policy. The report says new practices, such as implementing a carbon tax, is something the territorial government needs to develop in order to "facilitate and drive adoption of the biomass and other renewable energy sectors."

Biomass refers to living creatures, such as trees and plants that could be harvested and converted into wood pellets to heat homes and buildings in the territory.

Weledeh MLA Bob Bromley, a member of the committee, said forcing the market to shift from a reliance on fossil fuels - and the volatile prices associated with them - to more environmentally-friendly forms of energy would be a positive step forward, as many European countries have already done by implementing a carbon tax to force a shift.

"In Europe they put environmental taxes on fossil fuels and didn't on renewable fuels," said Bromley, adding Sweden is the best example of this, where 270 of its 298 communities are on district heating systems using a bio-energy component.

"That was a huge policy decision, and they made that as early as the 1990s," said Bromley.

"There were very strong incentives to convert and the response was incredible."

Bromley, along with Mackenzie Delta MLA David Krutko, travelled to Scandinavia last spring on a $54,000 tour of heat plants and wood pellet factories to see if it were possible to build those kind of facilities here.

Their report says Denmark will cap fossil fuel use at 600 litres of oil per year, per household, by 2013. Bromley said offering strong incentives to shift from fossil fuels to a biomass system would develop a new source of income for the territorial government.

With 32 communities in the NWT, many in heavily forested areas, there is also an opportunity to decrease energy costs, greenhouse gas emissions, and improve local economies.

"Right now with fossil fuel we're shipping those dollars outside our economy" to places like Calgary and Houston, he said.

"In contrast, we'd be spending it locally and getting some dollars into government coffers through forms of income taxes. We'd be laughing all the way to the bank and helping with the cost of living."

Cost is always a major factor when the government undertakes such an extensive project, and Bromley admits they would be quite high in the beginning. In the long run, however, benefits would far outweigh initial costs, he said.

"The recovery times are pretty quick compared to the maintenance cost of diesel generators or fuel storage tanks ... I can't believe how much we spend on them," said Bromley.

"The seemingly high cost of converting to biomass might actually be very favourable and show very quick pay back times."

One obstacle the territory faces with the prospect of such an industry is the underdeveloped, practically non-existent forestry sector. In Scandinavian countries like Sweden and Finland, where forestry is a major industry, finding wood scraps to convert into wood pellets is relatively easy.

The report says this model could be reversed in the NWT, creating a forestry sector rooted primarily in biomass harvesting."

"It would be an absolute steady business, reliable and year round," said Bromley.

"We have a lot of people trained up in heavy equipment operation and people with forestry skills. The challenge is going to come with the business models."