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Salmonid alternative production technologies technical working group report and recommendations

Salmonid alternative production technologies technical working group report and recommendations
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Executive summary

On June 4, 2019, Fisheries and Oceans Canada (DFO) announced the creation of an Indigenous and Multi-stakeholder Advisory Body (IMAB) and three technical working groups to develop recommendations related to aquaculture management in British Columbia (B.C.). Among these, the Salmonid Alternative Production Technologies Technical Working Group (TWG) was created to investigate and support the development and adoption of technologies that enhance the sustainability of salmon aquaculture in B.C. to support the protection and conservation of wild fish in the Pacific Region.

While there are a range of technologies that could enhance the sustainability of existing salmon aquaculture production in B.C., the TWG focused primarily on alternative production systems to narrow the scope of the discussion. In contrast to traditional production systems (i.e., marine-based net-pens), the term “Alternative Production Systems” in this report refers to the following:

The majority of the TWG’s discussions focused on the hindrances and obstacles to the development and adoption of alternative production systems in B.C. and solutions to overcome them. These are not unique to the production systems reviewed but also apply to alternative production technologies - technologies that enhance the environmental sustainability of the systems listed above as well as traditional marine-based net-pens. In this regard, this report and its recommendations, while focused on alternative productions systems, are also relevant to these alternative production technologies.

The TWG identified the following themes that form the basis of the recommendations:

  1. Site permitting, licensing and regulatory barriers
  2. Financial barriers
  3. Knowledge, human resource, and seed stock access (biotechnology) barriers

Notably, there was consensus among the TWG that the current outdated and unclear regulatory regime is a significant barrier to investment in alternative production systems and technologies in B.C. The development of a modern and clear regulatory/licensing/permitting regime is essential to help to instill confidence and attract investment to facilitate the adoption of alternative production systems and technologies. This was echoed by several reports that the TWG reviewed.

Investment in alternative production systems is hindered by high capital costs estimated at $5 - $40 per kg of production capacity; permitting risks (e.g., uncertain timing and costs due to an unclear process); the lack of a proven track record at commercial scale; and lengthy times to the first positive cash flow. Given the risk profile associated with the development of alternative production systems, it is extremely difficult for project proponents to access conventional sources of funding. The TWG recommends, therefore, that government lower the risk-profile for early adopters of alternative production systems and open up conventional sources of financing by sharing the financial risk through loan guarantees, offering co-shared grants and contributions, broadening provincial sales tax exemptions and accelerated capital cost allowances, and other innovation financial accelerators.

While the TWG recognized that all of the recommendations are interconnected (e.g., knowledge informs the regulatory framework), it prioritized them as follows:

  1. Site permitting, licensing and regulatory framework
    1. Establish a modern and clear permitting and regulatory framework, with consistent requirements, clear and timely service standards, and licence durations that help provide security to attract investment and facilitate the adoption of alternative production systems and technologies in B.C.
    2. Introduce the concept of developmental licences/tenures

  2. Financial incentives
    1. Lower the risk-profile by having various levels of government share the financial risk for early adopters of alternative production systems

  3. Knowledge
    1. Support science and industry-driven R&D and collaboration at the domestic and international level
    2. Human resources
      Increase support for education and training in alternative production systems and increased access to foreign workers
    3. Seed stock access (biotechnology)
      Improve access to or development of the best performing genetic material (eggs/ova) for each alternative production system

In terms of the TWG’s mandate, it was recognized that all recommendations for facilitating the development of alternative production systems and technologies should be made with due regard to the federal government’s commitment to applying the precautionary approach, particularly with respect to the conservation of wild Pacific salmon. It was also generally agreed that further research is required to fully understand the environmental impacts of salmon aquaculture and the group acknowledged that the Marine Finfish and Land-Based Fish Health TWG was the most appropriate group to focus on these issues.

Moreover, it was noted that while other domestic and international jurisdictions have growth strategies for their aquaculture sectors, B.C. does not. There was general agreement that a growth strategy that provides security, including attracting investment for industry development is required.

The TWG’s recommendations are an important contribution towards enhancing the sustainability of salmon aquaculture in B.C. The recommendations will also inform efforts to deliver on the Government of Canada’s current international and domestic priorities, including the Minister of Fisheries and Oceans’ mandate letter which includes instructions to: develop a comprehensive blue economy strategy; work with the Province of B.C. and Indigenous communities to create a responsible plan to transition from open net-pen salmon farming in coastal B.C. waters; and begin work on an Aquaculture Act.

 

Disclaimer

The Salmonid Alternative Production Technologies Technical Working Group wish to acknowledge the contributions and expertise of the First Nations delegates who have participated in meetings, with the understanding that the contents and recommendations of this report are not endorsed by the First Nations Fisheries Council or any individual First Nations including the First Nations of whom the participants are members.

Context

There are a number of factors that are driving strong interest from government, industry, non-government organizations, and Indigenous peoples to investigate and support the development and adoption of alternative salmon aquaculture production systems and technologies in British Columbia (B.C.) to minimize environmental impacts of traditional marine-based net-pen salmon farming and operational risks (e.g., sea lice, fish pathogens, and algae blooms), while supporting economic growth and opportunities, primarily in coastal and rural areas.

Environmental drivers

There are a number of environmental impacts (e.g., sea lice, fish pathogens, and algae blooms) that have caused mass fish die-off events such as those in Chile (2016 - algae bloom and 2007 - infectious salmon anemia outbreak) and Newfoundland (2019 - warm water temperatures) for traditional marine-based net-pen salmon producers. Climate change is exacerbating these risks and is presenting new challenges that the industry, by applying adaptive management techniques, is working hard to overcome.

The development of alternative production systems and technologies have been largely driven by the need to address these risks, as well as the growing imperative to reduce potential impacts on wild salmon and the marine environment. These systems include land-based recirculating aquaculture systems (RAS), offshore systems, semi-closed containment systems, hybrid systems which include a combination of land-based RAS or floating semi-closed and traditional marine-based systems, as well as technologies that enhance these systems and traditional marine-based net pens.

As noted in the 2019 “State of Salmon Aquaculture Technologies” reportFootnote 1, each system addresses the environmental risks posed to farmed salmon and the risks posed to wild salmon in different ways and to varying degrees. These alternative production systems are also at varying stages of development, which brings its own set of operational and financial risks. Mass die-off and fish escape events have occurred in some of the systems due to poor design, storm damage, mechanical failures, or inadequate maintenance protocols.

International drivers

According to the Food and Agriculture Organization (FAO) of the United Nations, aquaculture continues to grow faster than other major food production sectors. In 2014, global human consumption of farmed fish overtook that of wild fish for the first time; by 2030, aquaculture is expected to provide 60% of the fish available for human consumptionFootnote 2. With most fishery stocks expected to remain at or exceed maximum harvest capacity for the foreseeable future, aquaculture will be required to meet the demand from a growing global population. Moreover, aquaculture is recognized as one of the most efficient animal protein production methods, with the lowest carbon footprint, best feed conversion rates, and lowest consumption of freshwater per kilogram (kg) of protein producedFootnote 3.

Canada is participating on the High Level Panel (HLP) for a Sustainable Ocean EconomyFootnote 4, a group of 14 world leaders committed to developing, catalyzing and supporting solutions for ocean health and wealth in policy, governance, technology and finance. The HLP has commissioned 16 blue papers on a range of topics, including one on “The Future of Food from the Sea”Footnote 5. It is expected that this panel will develop recommendations in 2020 pointing to aquaculture as a key contributor to a sustainable ocean economy.

Major investments in alternative production systems and technologies are emerging in other jurisdictions such as Norway, the United States (U.S.) and China. For example, an October 2019 Rabobank reportFootnote 6 indicates that there are over 50 announced RAS projects (and counting) around the globe for salmon farming, with an estimated production of 700,000 metric tonnes (mt) within the next decade. Though the proposed projects are spread across the globe, the majority are planned for Norway, due to know-how around salmon farming and the existing cold-chain and logistics infrastructure in the region. However, total proposed production volumes are highest in the U.S., followed by China, mainly as a result of the high growth in demand in these regions. According to the Rabobank report, some of the planned projects are at the financing stage, some are working on obtaining the necessary permits, and some are constructing their facilities. Only a few of these projects are harvesting and showing early success. Despite the large volumes of planned production, the current active production volume coming from land-based RAS salmon farming is minor, at around 3,000 mt (or ~0.1% of global production)Footnote 7. Furthermore, according to the same report, none of the projects reviewed had current production that exceeded 1,000 mt.

Domestic drivers

Economic

Aquaculture is a key economic driver for local economies, particularly in coastal, rural and some Indigenous communities. Recent reports have recognized the economic potential of the aquaculture sector and recommended ways to support the responsible growth of the sector. These include the 2016 Standing Senate Committee on Fisheries and Oceans (SCOFO) “An Ocean of Opportunities” reportFootnote 8 and the 2017 Advisory Council on Economic Growth reportFootnote 9, which recognized aquaculture as an industry with growth potential and as a lever for economic development.

Canada has an opportunity to enhance its reputation as a respected food supplier by promoting the development of alternative production systems and technologies. B.C. is well positioned geographically to take advantage of growing global demand, including from one of the world’s largest salmon consuming nations, the U.S. As the low carbon economy increasingly influences the choices consumers make, B.C. and Canada can take advantage of geographic proximity to this major market.

There is currently an opportunity for the B.C. salmon aquaculture industry to increase its global market share using a variety of production systems and technologies. However, while other domestic and international jurisdictions have growth strategies for their aquaculture sectors, B.C. does not. A growth strategy that provides security, including attracting investment for industry development is required for the aquaculture sector in B.C. to meet its potential. A variety of production systems and technologies will help foster trust and growth in the B.C. seafood industry overall and will provide various options for First Nations who will want flexibility in terms of production systems and technologies that align with their social, environmental, and economic goals.

Government commitments

The Minister of Fisheries and Oceans’ mandate letter includes an instruction to develop “[…] a comprehensive blue economy strategy to help guide future government actions and investments that enable Canada to grow its oceans economy to create good middle class jobs and opportunity for coastal communities while advancing our conservation objectives.” The Minister’s mandate letter also includes instructions on aquaculture to “work with the Province of British Columbia and Indigenous communities to create a responsible plan to transition from open net-pen salmon farming in coastal British Columbia waters by 2025 and begin work to introduce Canada’s first-ever Aquaculture Act.” 

Both the Government of Canada and the Province of B.C. are committed to working in partnership with Indigenous communities to create a joint vision of reconciliation based on the recognition of rights, respect, cooperation, and partnership. Moreover, DFO recognizes that fisheries, oceans, aquatic habitat, and marine waterways are of great social, cultural, spiritual and economic importance to many Indigenous peoples. DFO is committed to building renewed Nation-to-Nation and Government-to-Government relationships with First Nations, Inuit, and Métis peoples.

Indigenous participation

Some Indigenous communities are highly engaged in aquaculture as investors, environmental monitors, operating partners, and through a growing share of the aquaculture workforce. The recent Pacific Integrated Commercial Fisheries Initiative (PICFI) report, “Aquaculture Opportunities in the Pacific RegionFootnote 10,” indicates that while controversy remains around the environmental impact of aquaculture production operations in B.C. – specifically traditional marine-based net-pen salmon farming – many Indigenous communities see the potential for investment in sustainable aquaculture both on-land and in-water to create economic opportunities close to home.

In 2018, the Province of B.C. announced a new policy that obligates traditional marine-based net-pen salmon farms to have agreements with First Nations to operate in their territory by June 30, 2022 before provincial aquaculture tenures will be renewedFootnote 11. While most of the current production of farmed salmon in B.C. is produced under such agreements, this announcement has provided some clarity around expectations of the aquaculture industry concerning provincial approvals. This policy shift also provides an opportunity for Indigenous groups to play a larger role in the future development of salmon aquaculture in B.C., and a means to ensure future development is aligned with the social, environmental, and economic goals of individual Nations and communities.

Moreover, in 2007, the United Nations General Assembly developed the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), which includes 46 articles covering all facets of the rights of Indigenous peoples such as culture, identity, religion, language, health, education and community. The UNDRIP emphasizes the Indigenous rights to live in dignity, to maintain and strengthen Indigenous institutions, cultures and traditions and to pursue self- determined development, in keeping with Indigenous needs and aspirations. The UNDRIP has been adopted by 148 countries, including Canada. B.C was the first provincial government in Canada to introduce legislation to implement the UNDRIP; this will form the foundation for the Province’s work towards reconciliation in B.C.Footnote 12  The Minister of Justice and Attorney General of Canada’s mandate letterFootnote 13 includes an instruction to introduce co-developed legislation to implement the UNDRIP, with support from the Minister of Crown-Indigenous Relations, by the end of 2020.

Status of alternative production systems

In 2019, DFO, in partnership with Sustainable Development Technology Canada (SDTC) and the Province of B.C., commissioned and funded a study entitled the “State of Salmon Aquaculture Technologies”Footnote 14 (the Study) to examine the risks and opportunities of the most promising emerging aquaculture production systems as well as technologies for salmon farming in B.C. The Study explored the financial, environmental, and social elements of these systems and highlighted some of the ways to incent the adoption of them, including how other countries have incented such adoption.

The Study explored four production systems: land-based closed-containment; floating closed-containment; offshore technologies; and hybrid systems, which combine land-based closed-containment or floating semi-closed containment with traditional marine-based net-pen systems through the production of larger smolts that reduce the length of time the salmon spend in the marine environment.

The Study concluded that, overall, land-based closed containment and hybrid systems are the production systems most ready for commercial development in B.C., while floating closed containment and offshore systems still require about five to ten years of further development and evaluation. The Study indicated that land-based closed containment, though less financially viable than hybrid or traditional marine-based net-pen aquaculture, provides the most secure protection for the marine environment and hence is the most socially acceptable system to opponents of traditional marine-based net-pen aquaculture in B.C. The Study also indicated that the hybrid system is likely more profitable and the preferred choice for the majority of the established, traditional marine-based net-pen industry in B.C.

Indigenous and multi-stakeholder advisory body

In this context, on June 4, 2019, the former Minister of Fisheries and Oceans announced a number of initiatives to further enhance aquaculture sustainability in B.C., including the creation of an Indigenous and Multi-stakeholder Advisory Body (IMAB) and three technical working groups (TWG), to develop recommendations related to aquaculture management in B.C.Footnote 15 The three TWGs comprise the:

  1. Salmonid Alternative Production Technologies TWG;
  2. Marine Finfish and Land-based Fish Health TWG; and
  3. Area-based Approaches to Aquaculture Management TWG

This report reflects the work of the Salmonid Alternative Production Technologies TWG.

Salmonid alternative production technologies technical working group (TWG)

Purpose and scope

The Salmonid Alternative Production Technologies TWG was created under the auspices of the IMAB to investigate and support the development and adoption of technologies that enhance the sustainability of salmon aquaculture to support the protection and conservation of wild fish in the Pacific Region.

There was consensus among the participants of the TWG that the focus would be on intensive commercial salmonid aquaculture for the production of food. The TWG agreed that it would remain technology-neutral and not evaluate the merits of the different production systems or technologies. While there are a range of technologies that could enhance the sustainability of existing salmon aquaculture in B.C., the TWG primarily focused on alternative production systems, as defined below, to narrow the scope of the discussion.

Definitions

In contrast to traditional production systems (i.e., marine-based net-pens), the term “Alternative Production Systems” in this report refers to the following:

Land-based closed containment (i.e., Recirculating Aquaculture Systems (RAS)):
Land-based RAS involves growing salmon in recirculating tanks in closed production facilities on land. In this system, the fish waste is captured and the water is recirculated using a variety of water treatment technologies. RAS been used for decades in the production of salmon smolts (e.g., 60 to 100 grams). In the last five to ten years, these systems have advanced to successfully produce market-size salmon (e.g., 4 to 6 kg).
Floating semi-closed containment systems:
These systems are marine-based, consist of a walled-barrier, and do not capture all waste. There are different design variations, but all systems involve pumping water from sufficient depths (e.g., 12 metres or deeper) to address temperature regulation and other potential environmental challenges.
Hybrid systems:
The hybrid system involves producing post-smolts weighing from 250 grams to 1 kg in land-based RAS or floating semi-closed containment systems before the salmon are transferred to traditional marine-based net-pens for grow-out to market-size.
Offshore systems:
Offshore production is defined differently across the globe; however, it is primarily defined by a high level of exposure and lack of protection from land masses, rather than a predetermined distance from shoreFootnote 16. The variety of designs include open and semi-closed systems, floating and submersible options, as well as fixed and mobile systems. Existing offshore aquaculture operations suggest that the practical boundaries are limited to about 50 kilometres from shoreFootnote 17.

More information on the different alternative production systems can be found in the “State of Salmon Aquaculture Technologies” studyFootnote 18.

The term “Alternative Production Technologies” in this report refers to technologies that enhance the environmental sustainability of the following production systems:

Guiding principles

The TWG was guided by the following principles:

In addition to these principles, there was consensus that the report/recommendations recognize and/or build-in flexibility to allow for modifications as new information becomes available in this rapidly evolving industry.

As there was consensus on the importance of wild Pacific salmon, which has been highlighted by recent and significant declines in stocks, the group viewed that any new and existing production systems and technologies need to be safe and effective. In terms of the TWG’s mandate, it was recognized that all recommendations for facilitating the development of alternative production systems and technologies should be made with due regard to the federal government’s commitment to apply the precautionary approachFootnote 19, particularly with respect to the conservation of wild Pacific salmon. In the recommendations that follow, this approach applies to (i) the granting of longer-term licences for alternative production systems, (ii) the development of streamlined approval processes, and (iii) the creation of financial incentives for innovation.

Process

The TWG comprised representatives and delegates from federal and provincial governments, First Nations, environmental non-governmental organizations (ENGO), industry, as well as academia and subject matter experts (Annex 1). Five meetings were held between August 2019 and March 2020. Select references and technical reports on a range of themes were reviewed and discussed by the group and are included in the bibliography. Notably, the TWG spent a considerable amount of its time identifying hindrances to alternative production systems development and actions to overcome them; these are reflected in a table in Annex 2.

While there was consensus on the importance of the protection and conservation of wild Pacific salmon, this consensus did not extend to the priority consideration that should be given to the conservation of wild Pacific salmon relative to the development of alternative production systems for salmon aquaculture development in B.C. Some felt that the threat of long-term, irreversible losses of wild Pacific salmon populations warranted a high-level of consideration. Others judged the threat posed by current aquaculture practices to be no more than minimal, and hence that the issue did not warrant priority consideration in the group’s deliberations. This lack of consensus is consistent with the views of the members of the Minister of Agriculture’s Advisory Council on Finfish AquacultureFootnote 20 (MAACFA) that provided a final report and recommendations in January 2018. The MAACFA report notes that some of its members viewed the environmental risk, in particular the potential risk of serious harm to wild salmon populations, is such that it makes traditional marine-based net-pen aquaculture unacceptable. Other MAACFA members held the view that properly sited and managed traditional marine-based net-pen salmon farming poses no more than a minimal risk to wild fish stocks, and they emphasize the positive income and employment benefits generated locally and provincially from salmon farming.

Despite these diverging views, it was generally agreed that further research is required to fully understand the environmental impacts of salmon aquaculture and the group acknowledged that the Marine Finfish and Land-Based Fish Health TWG was the most appropriate group to focus on these issues. Expanding both DFO’s internal research capacity and funding opportunities for independent research scientists to quantify the environmental benefits of alternative production systems and technologies would support the work and recommendations of the Salmonid Alternative Production Technologies TWG.

Recommendations

Several themes emerged from TWG discussions on the hindrances and obstacles to the development and adoption of alternative production systems. These themes form the basis of the recommendations which are based on the substance of Annex 2. While the TWG recognized that all of the recommendations are interconnected (e.g., knowledge informs the regulatory framework), it prioritized them as follows:

  1. Site Permitting, Licensing and Regulatory Barriers
  2. Financial Barriers
  3. Knowledge, Human Resource, and Seed Stock Access (Biotechnology) Barriers

Notably, there was consensus that the current regulatory regime is outdated and unclear and is a significant barrier to investment in alternative production systems and technologies in B.C. The development of a modern and clear regulatory/licensing/permitting regime is essential to help to instill confidence, security, and attract investment to facilitate the adoption of alternative production systems and technologies as well as to advance the other main themes explored in this report.

This is echoed in the “State of Salmon Aquaculture Technologies” study which notes that time required for permitting directly impacts capital costs and project risks. It indicates that any complexity and delay of permitting and approvals is a deterrent to the development of land-based RAS (and other alternative production systems) since financial capital is tied up longer and outcomes (timing and costs) are uncertain. It notes that the locations where large projects are going forward (e.g., in the U.S.) took many years to meet all regulatory requirements, noting that this increases the costs to build a facility, increases the risk to investors, and makes it more difficult to achieve a satisfactory risk-return ratio.

Case in point, it has been reported that Cermaq Canada is currently exploring the installation of a semi-closed containment system in one of its existing traditional marine-based net-pen tenures in B.C. This system, still in the R&D stage, costs approximately $5.5 millionFootnote 21. Cermaq’s application for installation has been under review since September 2018. As the service standards for applications for alternative production systems are unclear and not guaranteed, this uncertainty and delay is eroding investor confidence among Cermaq senior management and risks cancellation of this project.

Similar challenges exist for the adoption of alternative production technologies. There are a number of commercially-available and developmental technologies designed to enhance traditional marine-based net-pens that have not been adopted due to a need for adaptation to existing Conditions of Licence.

It’s important to note that while licences for aquaculture operations in B.C. are issued by DFO, the provincial government and other federal departments play a role in the licensing process. DFO, Transport Canada, and the Province of B.C. work together in a harmonized application process. All applications for new sites and major technical amendments to existing sites for freshwater/land-based and marine finfish aquaculture operations are submitted through FrontCounterBCFootnote 22.

I. Site permitting, licensing and regulatory framework

According to the “State of Salmon Aquaculture Technologies” study, several things need to be aligned in order to promote innovation in Canada and to position B.C.’s salmon aquaculture sector to meet growing global demand opportunities. The report indicates that national legislation and policy needs to clarify the requirements for aquaculture in terms of environmental and social performance and this will send the appropriate signals for investors to develop the systems and technologies that meet the challenge.

Currently the regulatory and permitting processes for alternative production systems and technologies largely are non-existent (e.g., offshore) or long, unclear and convoluted, and require approvals at multiple government levels. Key permitting issues in B.C. include:

Notably, the TWG had significant discussion on the issue of dealing with effluent and solid organic waste from land-based facilities. For example, discharge from land-based RAS consists of a more concentrated effluent than the current regulations were designed to regulate. Moreover, the disposal of solid waste from land-based RAS under the existing solid waste regulations in B.C. (i.e., Code of Practice for Agriculture Environmental ManagementFootnote 23 and Organic Matter Recycling RegulationFootnote 24) does not cover fish, therefore the wet solid waste cannot be used as fertilizer on fields like other forms of manure, requiring more costly forms of disposal.

The regulations regarding discharge from processing facilities are also different from land-based RAS facility discharge. Based on the scale of production that is anticipated, onsite processing will likely become the norm, therefore, an alignment of standards is required.

A clear regulatory pathway will provide a consistent and predictable operating environment for industry and is necessary to attract investment in this area. Other jurisdictions, such as Maine, have created and communicated a clear permitting process that has successfully attracted investment in land-based RAS facilities (Annex 3).

Longer licence durations specific to pilot testing of alternative production systems and technologies will increase certainty and increase the likelihood of proponents being able to amortize or recoup costs of investment, which will decrease business risk and potentially facilitate adoption. Licence durations beyond 10-15 years are required for investment due to the high capital and operational costs and risks associated with alternative production systems.

In some other countries, traditional marine-based net pen aquaculture licences are subject to substantial fees, and licences are exchanged between companies at high market prices. For example, Norway instituted fees for licences in 2002 and licences for the standard 780 mt of capacity have recently sold for over $10 millionFootnote 25. Moreover, Norway is the global leader in R&D in alternative aquaculture production systems and technologies. This is in part due to its licensing regime and investments in R&D and innovation that encourages innovation in systems and technologies that improve environmental performance.

In 2013 and 2014, the Norwegian Government issued 45 new aquaculture licences for salmon and trout called “green concessions”. These types of licences were allocated to producers who committed to use systems, technologies, or operational methods that reduce the environmental risks from escapees and sea lice on wild salmonid stocks. The green concessions were designed to accelerate the commercialization of more environmentally-friendly methods of productionFootnote 26.

To incentivize development of the offshore sector, the Norwegian Directorate of Fisheries launched a new Development Licensing Program in November 2015 that will grant free development concessions for up to 15 years to approved offshore projects. The projects must be large-scale, backed by established teams with operational and development expertise in aquaculture and offshore infrastructure (including deep-water oil and gas), and offer commercially viable technologies to address environmental and health challenges. Successful projects will be able to convert the concessions into ordinary commercial licences at the end of the concession period, at a cost of $1.25 million (well below the $6.5 - 7.5 million needed for conventional coastal licences)Footnote 27.

It is recommended that the concept of developmental licences/tenures be explored so as to further incent innovation in aquaculture production systems in B.C. For example, this is in place in B.C. for issuing Crown land tenures. These “MAP Reserves” have been used for the development of new and emerging aquaculture species in the past.

According to the B.C. Ministry of Forests, Lands, Natural Resource Operations and Rural Development website, “reserves are a particular type of Crown land tenure that grants an agency the right to implement a restriction on the use of crown land. Federal and Provincial government agencies and corporations may apply for the establishment of Land Act Reserves over high value sites required for public purposes, including research and education. Depending on the type of reserve [Order in Council, Map Reserve, Land Act Designation (which can be designated use or prohibitive use) and Notation of Interest] the area is withdrawn from disposition under the Land Act.”Footnote 28

While this could facilitate innovation and research, discussions would be required with the B.C. Ministry of Forests, Lands, Natural Resource Operations and Rural Development, to determine if and how the tenure could be converted to a commercial tenure, once the initial project is complete.

As recognized in the Norwegian Government’s Ocean StrategyFootnote 29, given that technology development in aquaculture is so rapid, flexible rather than prescriptive legislation should be favored to support the development of new solutions. A new Aquaculture Act and the proposed General Aquaculture Regulations could present avenues to address this and other opportunities related to the regulatory framework.

The following recommendation and recommended actions are consistent with recommendation 2 and 6 in the “Scaling Investment into Sustainable Aquaculture in British Columbia: An Indicative Guide for Canadian Policy Makers”Footnote 30 which proposes the creation of an advisory committee to streamline regulations and permitting processes specifically for the sustainable technologies listed in their report (i.e., RAS and offshore) as well as the creation of a development licence program.

Strategic recommendation #1

Establish a modern and clear permitting and regulatory framework, with consistent requirements, clear and timely service standards, and licence durations that help provide security to attract investment and facilitate the adoption of alternative production systems and technologies in B.C.

Recommended actions
  1. In collaboration with all parties, including various levels of governments (i.e., federal, provincial, municipal, First Nations) and relevant stakeholders, develop a clear permitting pathway, that includes: consistent standards/requirements, clear service standards and clear environmental performance expectations, outlining the various stages and timelines of approval by the relevant government agency and the documentation required at each stage.
    1. Identify a federal champion or single-window process in the statutory permitting process to streamline the process and ensure that service standards are upheld.
    2. Align and/or harmonize regulatory requirements between different government and agencies at the local, provincial and federal level.
    3. The permitting process will need to include how the applicant will manage, or demonstrate potential improved performance over existing production systems and technologies in certain, key environmental sustainability areas. The following key areas may include, but are not limited to: water use and waste/disposal/deposition/management, including organic/inorganic and potential pathogen release; as well as acceptable level/impacts of discharge of waste.
    4. The permitting process should take an iterative approach, with each step as part of a clear gated-application process, and be communicated through a clear flow chart process that captures all steps. The example of what has been created in Maine to attract land-based RAS investment could be used as a model (Annex 3). The example of the flow charts that the U.S. has created for its federal permitting and authorization of offshore aquaculture could also be used as an exampleFootnote 31.
    5. Taking into consideration existing conditions of licence to avoid duplication, review and update existing federal, provincial and municipal regulations e.g., DFO’s Aquaculture Activity Regulations (AAR), B.C.’s Land-based Finfish Waste Control RegulationsFootnote 32to develop regulations that are technology-neutral, outcome-based, based on the best available science and evidence, and flexible rather than prescriptive.
    6. Consider that area-based aquaculture management initiatives explore the pre-approval of sites within certain areas as well as environmental thresholds for the various production systems and technologies.
    7. Consistent classification of aquaculture activities as an agricultural activity.
  2. Streamline licence approval times and ensure licence durations are long enough for proponents to have enough time to fully assess the efficacy and financial sustainability of alternative production systems and technologies to warrant their adoption.
    1. Maintain government service standards of up to 1 year to receive licences for alternative production systems and technologies.
    2. Where appropriate in terms of the provisions of the precautionary approachFootnote 33 align licence and tenure durations for alternative production systems and technologies and increase them to 10-15 years.

While a 10-15 year licence duration is recommended to incent significant investment in B.C., the current maximum for licences under the Fisheries Act is 9 years. The proposed Aquaculture Act could provide an opportunity to address this issue.

Strategic recommendation #2

Introduce the concept of developmental licences/tenures

Developmental licence definition

In Norway, the development licence system aims at facilitating development of technology for solving either environmental or territorial challenges for the marine-based aquaculture industry (i.e., developmental licences are not aimed at land-based RAS). The system is a temporary arrangement that offers licences to certain marine-based projects based on innovation and resource requirements, and requires sharing of developed technology in order to generate industry-wide improvements.

 Recommended actions
  1. Introduce a multi-stakeholder/rights-holder advisory board that has a clear gate system for the evaluation and screening of developmental applications based on clear criteria for validity and priority for improvement of sustainability (reducing wild/farmed interaction, waste management/reduction, sea lice management, pathogen presence and prevalence, offshore, inshore, land-based, etc.). The advisory board could develop a set of outcome-based/performance-based measures/thresholds for evaluating the new production system/technology. The Global Salmon Initiative/Aquaculture Stewardship Council standards could be used as models for developing standards.
  2. Allow flexibility or exemption for certain criteria for conditions of licence based on the application. Develop tailored monitoring or inspection requirements based on the design of the alternative production system/technology.
  3. The advisory board could develop tailored performance-based measures and evaluate performance for the transfer from Developmental Licence to conventional production licence based on meeting proposed targets.

II. Financial incentives

The commercialization of alternative production systems is hindered by high capital costs estimated at $5 - $40 per kg of production capacity ($5.5 million - $300 million per system). Other hindrances include permitting risks (e.g., uncertain timing and costs due to an unclear process); the lack of a proven track record at commercial scale; and lengthy times to first cash flow. Most producers are either too small to be able to take on such risks or unwilling to adopt unproven techniques and systems in a highly competitive, international environment. Given the risk profile associated with alternative production systems, it is extremely difficult for project proponents to access conventional sources of funding.

While several DFO federal programs [e.g., Fisheries and Aquaculture Clean Technology Adoption Program (FACTAP), Atlantic Fisheries Fund, Quebec Fisheries Fund, B.C. Salmon Restoration and Innovation Fund] currently exist to support or partially-support the adoption of clean technology and innovation by the aquaculture sector, some are focused on the wild capture fisheries sector and their repayable nature may prohibit many smaller- to medium-sized operators from applying given the high capital costs and lengthy, uncertain rates of return associated with developing and commercializing new production systems. While FACTAP has directed about half of its funding towards aquaculture, the program’s scope is restricted to supporting the adoption of “off-the-shelf” technologies thus precluding it from supporting R&D or innovation-related adoption projects. Other limitations of FACTAP include a maximum funding cap of $1.0 million per year, which is too small to support major capital investments, and there is also a requirement for inclusion of provincial financial support. The province of B.C. has supported small-scale RAS projects in the past but has indicated that it does not have the funds to support the scale of projects associated with comprehensive, alternative production systems. There are also differing levels of support provided by regional associations in the Atlantic and Pacific regions.

In order to attract early adopters of alternative production systems to B.C., financial support to share the financial risk associated with adoption of these systems is strongly recommended. One of the greatest financial incentives would be loan guarantees to help offset capital costs (rather than operating costs), given the high capital costs and lengthy, uncertain rates of return for early adopters. The loan guarantees could be limited to, for example, supporting the first 15,000 tonnes of salmon production that is built using alternative production systems that meet the governments’ objectives. However, during TWG discussions, it was noted that many First Nation aquaculture ventures fail due to under-capitalization, and that significant funding would be required to sustain smaller- to medium-sized operators, including First Nations, in the adoption of alternative production systems in the long term.

Capital and operational cost structure

While there have been costs cited in a number of reports such as “State of Salmon Aquaculture Technologies”Footnote 34, the capital and operating costs of the varying alternative production systems are currently under development as the systems are at varying stages of maturity. Capital and operational costs for alternative production systems are largely linked to costs of land, construction, technology (material and labour), energy, and access to operational resources (inputs and labour). In many cases, the cost structure varies from project to projectFootnote 35 depending on the geographic location and local infrastructure. For example, the cost structures may change dramatically when moving away from larger urban centers.

All new technologies begin with high cost structures. All of the alternative production systems have higher cost structures than traditional marine-based net-pen systems, but through optimization, standardization and scale, the costs of these systems could decrease over time. Furthermore, due to increasing environmental challenges and increasing environmental regulations, the costs for traditional marine-based net-pen systems are increasing.

The following table provides estimated costs between the alternative production systems for illustrative purposes. A range of estimated costs are provided, where possible, as actual data on the capital and operating costs of alternative production systems is limited and/or based on differing assumptions and parameters. Actual data on the cost structures is limited for a number of reasons including:

Estimated capital costs of alternative production systems
Land-based RAS Floating Semi-Closed Containment Hybrid Traditional marine-based net-pen Offshore
Highest capital outlay. $7 to $40 per kg of production capacityFootnote 37 Footnote 38. Capital cost per kg of production capacity decreases with scale. Moderate capital outlay. $5 to $15Footnote 39 per kg of production capacity. Cermaq Canada’s system is reported to cost $5.5 millionFootnote 40. Capital outlay will vary between land-based RAS and floating semi-closed containment, depending on system being used. The land-based RAS cost is dependant on the size of post-smolts produced. $2.5 per kg of production capacityFootnote 41. Capital outlay largely unknown as there are varying technologies under development. Salmar’s Ocean Farm 1 is reported to have cost $300 million USDFootnote 42.
Estimated operating costs of alternative production systems
Land-based RAS Floating Semi-Closed Containment Hybrid Traditional marine-based net-pen Offshore
$5 to $6 per kg of outputFootnote 43
Feed, smolts, and labour comprise the largest costs of RASFootnote 44. Energy costs are a large driver of the cost structure related to water movement, treatment, and temperature controlFootnote 45.
Estimated $4.5 to $12.5 per kg of output, based on stocking density and access to grid powerFootnote 46. Energy costs are a large driver in this technology. If connected to grid power rather than diesel, this system is more cost-efficient and may be similar, or lower in cost to that of land-based RAS depending on the aspects of the technology. Costs will vary between land-based RAS and floating semi-closed containment, depending on system being used. $4 -$5.5 per kg of outputFootnote 47. Depending on the deployment, the operating costs may be similar to traditional marine-based net-pens depending on the level of automation or logistical considerations.

Leveling the playing field for aquaculture

Due to categorization of the industry (i.e., not ‘farmers’), fish farmers also do not have access to the suite of financial tools available to terrestrial farmers such as loan guarantees, income stabilization, and business risk insurance. The Canadian Aquaculture Industry Alliance (CAIA) has long advocated for access to these tools available to terrestrial farmers.

These issues are echoed in the 2016 Standing Committee on Fisheries and Oceans (SCOFO) “An Ocean of Opportunities” report which specifically highlighted the need for access to capital for innovation, business risk management programming, and greater variety of animal care products enjoyed by international competitors and other comparable industries in Canada.

The following recommendation and recommended actions are also consistent with recommendations 2 and 4 of the “Scaling Investment into Sustainable Aquaculture in British Columbia: An Indicative Guide for Canadian Policy Makers” which recommends tax grant programs and government loan guarantees to attract capital and reduce risk.

Strategic recommendation

Lower the risk-profile by having various levels of government share the financial risk for early adopters of alternative production systems

Recommended actions
  1. DFO to work with federal and provincial government departments and regional associations to address financial incentives such as government loan guarantees, broadening provincial sales tax (PST) exemption, accelerated capital cost allowances, co-shared grants and contributions program, Scientific Research & Experimental Development (SRED) tax credits, etc. to share the financial risks associated with early adoption of alternative production systems.
  2. Seed a Community Futures Fund that is specific to the adoption of alternative production systems.
  3. Provide access for fish farmers to the suite of financial tools such as loan guarantees, income stabilization, and business risk insurance available to terrestrial farmers.

III. Knowledge, human resource, and seed stock access (biotechnology)

Knowledge

The alternative production systems discussed in this report are, for the most part, nascent with decades of refinement ahead of them. The major traditional marine-based net-pen salmon farming companies are directly plugged into salmon aquaculture technology development in Norway and Chile, which are the center or nucleus of salmon aquaculture production. These companies are focusing their R&D efforts on marine-based aquaculture solutions and are investing in post-smolt RAS facilities to raise fish from 250 g to 1 kg to support hybrid production systems; they are not investing in full grow-out land-based RAS systems. Until projects, like Atlantic SapphireFootnote 48,  prove that large-scale, full grow-out land-based RAS can be achieved profitably, these large, well established companies are not likely going to be early adopters of this system because of the risk involved. Early adopters will, therefore, have to find ways to access research being done elsewhere and will benefit greatly from support that enables them to trial new innovations. Support for R&D and collaboration will help them build a strong, local nucleus of skilled employees and help them gain or maintain their competitive edge as the technology matures. Collaboration with the international community in this area would be important to prevent duplicating existing efforts.

Jurisdictions, such as Norway, Scotland, and the U.S., have programs that support R&D specific to aquaculture. The Conservation Funds’ Freshwater Institute in the U.S. has worked closely with Norway’s Nofima for years and was subsequently invited to join CtrlAQUA – a Norwegian research centre focused on making RAS aquaculture production technology reliable and economically viable. The Scottish Aquaculture Innovation Centre (SAIC), a collaboration of government and industry created in 2014, focuses on areas such as: fish and shellfish health and welfare; feeding, quality and nutrition; breeding and stock improvement; and engineering to contribute towards increased production of clean, safe and sustainable food. It is reported that the SAIC recently secured an investment from government and industry of over $17 M for the next five years to support innovation in aquacultureFootnote 49.

Significant research capacity exists in Canada. The latest biennial Canadian Aquaculture R&D ReviewFootnote 50, a compendium of the aquaculture research and development projects undertaken by researchers from academia, government labs, or other research organizations, illustrates an array of projects ranging from finfish health, production, husbandry technology, nutrition, and environmental interactions that have been undertaken. Research capacity exists in several universities across Canada and industry-driven research is also being conducted at the Centre for Aquaculture Technologies in Prince Edward Island, the Huntsman Marine Science Centre in New Brunswick, the Centre for Aquatic Health Sciences in B.C., as well as the University of British Columbia’s Initiative for the Study of the Environment and its Aquatic Systems (InSEAS), which was specifically designed to carry out industry-relevant research on RAS.

This research capacity in Canada could be leveraged to improve knowledge of the various aspects of alternative production systems by investing cooperatively with governments, industry, and research institutions as well as by creating a community research body, with shared research resources, either virtual or real, where the innovation and enterprise applications of research elements could be exploited and applied to real world scenarios.

The following recommendation and recommended actions are consistent with recommendation 9 of the “Scaling Investment into Sustainable Aquaculture in British Columbia: An Indicative Guide for Canadian Policy Makers” which recommends the creation of innovation centres to support the development of diverse species and technology that would also provide training to new graduates in the aquaculture field.

Strategic recommendation

Support science and industry-driven R&D and collaboration at the domestic and international level

Recommended actions – immediate
  1. Fund the building of a B.C. aquaculture centre of excellence. This would also support aquaculture education and provide or facilitate training in alternative production systems.
  2. Support R&D that is focused on addressing the barriers that have been identified in the regulatory section of this report as well as the “State of Salmon Aquaculture Technologies” study (i.e., R&D regarding liquid and solid waste discharge from RAS; identifying pathogen reduction results from different production systems, etc.) in order to guide the development of the new permitting and regulatory standards.
  3. Support R&D to address specific challenges or potential improvements. A scientific and social committee consisting of scientists, First Nations, ENGOs and government could learn from the research, which would shape the development of regulatory policy. For example, for RAS systems, do research trials to:
    • reduce/manage off-flavours caused by compounds such as geosmin and 2-methylisoborneol (MIB);
    • better understand fish health and early maturation;
    • increase fish performance;
    • refine harvest processes;
    • improve feed delivery systems and feed conversion rates (FCR);
    • measure pathogen attenuation in effluent; and,
    • measure nutrient discharge.
  4. Establish performance criteria and create key performance indicators (KPI) to benchmark various strategies and systems towards reducing the perceived risks or potential environmental impact concerns and to quantify the benefits/effects of alternative production systems.
Recommended actions - mid to long-term
  1. Provide government funding/grants to offset cost of production improvements and innovation, as well as applied and innovation research, in partnership with industry (e.g., Aquaculture Innovation and Market Access Program).
  2. Provide funding/increase capacity for independent labs (e.g., Centre for Aquatic Health Sciences), learning institutions (e.g., University of Victoria, University of B.C., Dalhousie University, Fisheries and Marine Institute of Memorial University of Newfoundland), and others.
  3. Increase access to market research related to the feasibility, practicality, economics, and demographics around the potential to move to alternative production systems.
  4. Fund an aquaculture alternative production technologies research chair that sits on educational program boards to stay abreast of alternative production systems and technology development.
  5. Expand both DFO’s internal research capacity and funding opportunities for independent research scientists to quantify the environmental benefits of alternative production systems.

Human resources

In its recent report, “Aquaculture Industry Labour Market Forecast to 2025,”Footnote 51 the Canadian Agricultural Human Resource Council indicates that it expects that growing market demand for seafood will boost the demand for labour in the aquaculture sector in Canada. The Council also found that the sector faces unique challenges in finding enough workers, which is often compounded by such factors as the remote locations of operations, with rural depopulation and worker transportation issues affecting the industry’s ability to find and retain workers.

At the same time, seasonal employment insurance (EI) for fishers also has a negative impact on the labour pool available to aquaculture operations in remote and coastal regions, as seasonal EI creates a disincentive to enter the labour market.

To compound the issue of lack of labour, alternative production systems necessitate different skills and expertise than those associated with traditional marine-based net-pen production. Globally, a lack of highly qualified personnel for RAS has been identified as one of the major-limiting factors regarding the adoption and growth of this technology. According to The Nature Conservancy and Encourage Capital’s 2019 reportFootnote 52, it is estimated that there are less than 100 people worldwide with knowledge to build, maintain, and operate a successful land-based RAS project.

Strategic recommendation

Increase support for education and training in alternative production systems and increased access to foreign workers

Recommended actions
  1. Support advanced education/co-op and First Nations aquaculture training programs.
  2. Create incentive programs for internships or co-op programs such as Mitacs, a national, not-for-profit research and training organization dedicated to advancing collaborations between industry, academia, and government in Canada, and to fostering international research networks between Canadian universities and the world.
  3. Support training in B.C. for highly technical positions.

Seed stock access (biotechnology)

The industry in B.C. does not have access to genetic material (eggs/ova) that has been selected and or developed for optimum performance in RAS. This problem is compounded by the scale of the industry in B.C. which is not large enough to start a genetic stock improvement program exclusive to B.C. Without access to the best genetic material, it will be extremely difficult for the B.C. industry to maintain its competitive position and thrive; this acts as a barrier to new investment in conventional and alternative production systems. Support is needed to develop scientifically and socially-acceptable pathway(s) for the import of high-performance genetic stocks. A critical consideration would be the creation of a domestic or B.C.-based broodstock development/egg production/seed stock facility for the purpose of egg production security and further stock enhancement.

Nonetheless, any proposed genetic or biotechnological innovations must be considered with thorough regard for potential environmental risks, such as, the introduction of genetically modified organisms into the aquatic environment or the importation of eggs or live fish leading to the introduction of pathogens.

Strategic recommendation

Improve access to or development of the best performing genetic material (eggs/ova) for each alternative production system

Recommended actions
  1. Create a genetic task force.
  2. Streamline the Canadian Food Inspection Agency’s pathway regarding sufficient compartmentalization and quarantine to facilitate the importation of high-performance genetic stocks.
  3. Provide funding for a broodstock/selective breeding/seed development facility that is run by a third party. This also solves the problem of the existing industry excluding new entrants due to the shortage of genetic material.

Annex 1 - Salmonid aquaculture production technologies technical working group participants

Working group participants
Name Affiliation Role
Jennifer Woodland First Nations Fisheries Council Participant
Dean Trethewey Grieg Seafood Participant
Garry Ullstrom Kuterra Participant
Gary Robinson Whole Oceans Participant
Mike Cunning Miracle Springs Hatchery and Trout farm (Mission) Participant
Rick Routledge Simon Fraser University Participant
Brock Thomson Cermaq Canada Participant
Odd Grydeland Aboriginal Aquaculture Association Participant
Rob Walker Robert K Walker and Associates Participant
Myron Roth B.C. Ministry of Agriculture Participant
Ian Forster DFO, Pacific, Science Ex-officio
Alistair Struthers DFO, NHQ, Aquaculture Policy Directorate Ex-officio, Chair
Administrative
Name Affiliation Role
Nadija Paznar DFO, NHQ, Aquaculture Policy Directorate Secretariat
AJ Fenton DFO, NHQ, Aquaculture Policy Directorate Alternate Secretariat

Annex 2 - Table of hindrances and incentives

Theme Hindrances/obstacles Potential incentives or solutions
Site permitting, licensing and regulatory
  • Uncertainty with the permitting process increases the risk to investors regarding permitting delays and permitting cost overruns.
  • Licence processing time is too long and convoluted:
    • No clear roadmap;
    • Requires both federal and provincial approval;
    • Where the licence has conditions, those conditions are akin to permitting and the same solutions apply:
      • Sea lice management
      • Solid waste handling
  • It is not clear as to what permits are required for each different alternative production system.
  • Inconsistent classification of aquaculture activities (e.g., agricultural, industrial) impacting such things as taxation, permitting, and waste management.
  • Other domestic and international jurisdictions have growth strategies for their aquaculture sectors, B.C. does not.
  • De-risking the permitting process creates an incentive for investors to invest in that region.
  • Clear expectations around the permitting process for each level of government (federal, provincial, and regional/municipal) are needed.
  • A clear flow chart that shows all permitting steps (e.g., the package from Maine (Annex 3), flow chart-ease of use concept) is needed.
  • Permitting should be an iterative approach with feedback of yes and no at each step.
  • The conditions of a licence (net pens/land-based) need to be separated from the permitting process to address any confusion e.g. measuring sea lice or sulphide is a condition of a licence and not a permit.
  • The time to grant licences should be shortened and streamlined. For example, develop service standards for B.C. (e.g. less than 1 year).
    • Q. How do we address gap between ensuring environmental protection and streamlining approval process?
    • A. Advisory committee of impacted Indigenous/stakeholders (e.g., industry, ENGOs) to guide streamlining of licence regime (clearer standards would facilitate streamlining of licensing time).
  • Build a flow chart for approvals of applications. The visuals in the US offshore applications have good examples - https://www.dfo-mpo.gc.ca/aquaculture/management-gestion/reg-offshore-extracotiere-eng.htm
  • Some provinces have clear and concise application processes that could be used as model/template e.g., Nova Scotia and possibly Newfoundland. No sense re-inventing the wheel in B.C.
  • Align tenure and licence duration.
  • Identify a federal champion or single-window process.
  • Creation of a growth strategy for B.C. that includes attracting investment for industry development is required.
  • Uncertainty regarding performance standards that are conditions of licence increases the risk to investors regarding permitting delays and permitting cost overruns.
  • Multijurisdictional issues – it is not clear as to which level of government is responsible for each issue. This will vary with each type of production system and/or where the facility is located:
    • e.g., DFO’s role in terms of land-based aquaculture will be limited (Aquaculture Activities Regulations (AAR) would apply if there is impact on fish bearing waters);
    • may need to involve local municipalities for discussions around their waste water management e.g., aquaculture in city limits accessing public water systems?
  • The effluent discharge from land-based facilities can be very concentrated in order to minimize water use. Existing ocean discharge regulations are based on salmon enhancement flow through hatcheries (SEP) which have highly diluted discharge.
  • The regulations regarding discharge from fish processing facilities is different than the discharge regulations for effluent from land-based salmon farming (RAS) facilities. Based on the huge scale of production that is anticipated, onsite processing is going to be done, therefore the discharge standards need to be aligned.
  • The disposal of solid waste from land-based sites under the existing solid waste regulations in B.C. (i.e. Code of Practice for Agriculture Environmental Management and Organic Matter Recycling Regulation) does not cover fish, therefore the wet solid waste cannot be used as fertilizer on fields like other forms of manure.
  • Discharge from floating closed containment e.g., it may be different than a traditional marine-based net-pen and becomes a bigger issue.
  • Water licences e.g., new provincial groundwater licences are so back-logged, there is a high degree of uncertainty on timeframes for approval.
  • Conditions of licence (traditional marine-based net-pen/land-based RAS) considerations.
  • Set clear performance standards and involve all parties in the process of setting them.
  • How to include flexibility? Require ongoing monitoring. Amend the standards as new information comes in – need a mechanism to do so.
  • Clear targets or standards pertaining to water use, solid waste disposal, effluent discharge, deposition/composition, organic and inorganic matter and potential pathogen release, etc. need to be developed:
    • The target setting process should be an outcome-based process that is technology-neutral and science-based;
    • This will likely involve several levels of government and stakeholders.
  • Review/clarify/update relevant regulations (i.e., (Aquaculture Activity Regulations, B.C.’s Land-based Finfish Waste Control Regulations). The Land-based Finfish Waste Control Regulations in particular need to be updated to support land-based aquaculture.
  • Some R&D should be done with existing land-based RAS facilities to confirm effluent profile and/or acceptable impact levels regarding effluent discharge.
  • Onsite composting and/or biogas trials to deal with the solid waste should be conducted.
  • The Organic Matter Recycling Regulations (OMRR) and Agriculture Environmental Management Code of Practice (AEM Code) may need to be revised.
  • Collecting waste from floating systems is a good idea – but hard to find completely functioning systems, with the exception of Norway.
  • Licence and tenure durations are too short for business plans and trialing of alternative production systems.
  • The current maximum for licences under the current Fisheries Act is 9 years
  • Licensing different based on species:
    • Land based licence - 10 years
    • Finfish - 6 years (i.e., 2 production cycles)
    • Discovery Islands – month to month.
  • Longer licence duration specific to trialing alternative production systems will enable proponent to amortize or recoup cost of investment and decrease business risk.
  • Need more certainty around licence e.g., tenures are rolled over rather than having to get a new licence.
  • The proposed Aquaculture Act could provide an opportunity to address the issue of longer licence durations greater than 9 years as per the Fisheries Act.
  • Licensing linked to the adoption of best available production systems.
  • Longer licensing – 10-15 years – are required for investment due to the costs:
    • 4,000 metric tonne production – cost is $7 million (all in – over 2 years not counting operating expenses).
  • Introduce the concept of developmental licences/tenures. This alone is a signal to companies that B.C. is open for investment and innovation.
  • Introduce a multi-stakeholder/rights holder advisory board that has a clear “gate” system for the evaluation and screening of developmental applications based on clear criteria for validity and priority for improvement of sustainability (reducing wild/farmed interaction, waste management/reduction, sea lice management, disease prevalence, off-shore, inshore, on land, etc.).
  • Flexibility or exemption for certain criteria for conditions of licence based on the application. Tailored and negotiated monitoring or inspection requirements based on the design of the alternative production system or technology.
  • Tailored performance measures for transfer from Developmental Licence to production licence based on meeting proposed targets – may involve 3rd party intervention (same advisory board to evaluate performance).
  • Global Salmon Initiative (GSI)/Aquaculture Stewardship Council (ASC) standards could be used as a model for developing standards.
Financial
  • Long standing issue of lack of mandate/interest, non-permissive eligibility and loan terms from federal government institutions:
    • (e.g. Farm Credit Canada (FCC)/Business Development Canada (BDC)) financial and regional associations (i.e.,  difference in level of support from Western Economic Development Canada vs. Atlantic Canada Opportunities Agency);
    • Agriculture and Agri-Food Canada (AAFC) policy that aquaculture not in their mandate.
  • Some existing funding programs don’t involve land or improvement (restrictions on funding applications).
  • More focus on aquaculture programs similar to terrestrial agriculture from FCC (FCC interest rate 5.75%), etc.
  • An Aquaculture Act may provide some context to what we are. This may also lead to some clarity and security for outside investors as aquaculture is still vague in Canada (are we a fishery or an agricultural product?).
  • An Aquaculture Act could resolve AAFC mandate issue - has to be legal cross link for aquaculture to be considered agriculture for access to AAFC suite of business risk management tools.
  • Tax/additional tax incentives? Provincial?
  • Grants or contribution subsidies to cover the cost of higher capital costs associated with alternative production systems.
  • Change B.C. Gaming Grant rules (fixed assets).
  • High capital costs of alternative production systems and a lack of government programs to reduce the risk/return ratio to an attractive level for early adopters or project proponents.
  • Alternative technology projects have no proven track record at scale and the assets don’t have alternative uses if the venture fails, so the projects have a high-risk profile and are not yet eligible for bank financing.
  • No financial programs as a result of high-risk assessment/categorization of the industry.
  • Government could lower the risk profile for early adopters through a suite of financial incentives, including loan guarantees, income stabilization, and business risk insurance, etc.
    • Government loan guarantees similar to provincial agriculture low interest loans would share the financial risk for the first few projects.
  • Accelerated depreciation - (Norway 78%? rebate, Maine 70% rebate) – this is only effective for companies that have established operations that are already generating profits that could be offset by these tax deductions.
  • Incentives to help offset capital costs (rather than operating costs), given the high capital costs and lengthy, uncertain rates of return for early adopters.
  • Long-term funding for capitalization and partnership development.
  • Creation of programs like Atlantic Canada Opportunities Agency on the Pacific coast.
  • Make all aquaculture equipment eligible for accelerated Capital Cost Allowance.
  • A grants and contributions program and/or incentives focused on alternative production systems would help lower the financial risk for early investors.
  • Modify the Eligible Business Corporation (EBC) tax credit criteria for land-based projects.
Knowledge
  • There are unknowns with land-based and other alternative production systems.
  • Some unknowns impact the ability to develop regulations e.g., presence of or attenuation of pathogens in RAS systems, which impacts the creation of effluent discharge regulations.
  • Some unknowns are opportunities to improve the alternative production systems e.g., opportunities to reduce off-flavours in RAS-produced fish, increase fish performance, refine harvest processes, improve feed delivery systems and feed conversion rates (FCR).
  • Lack R&D in alternative production systems/equipment.
  • Losing suppliers due to low economies of scale.
  • Lack of market research related to the feasibility, practicality, economics, and demographics around a potential move to alternative production systems. This is touched on in a very high level manner in the Gardner Pinfold’s report “State of Salmon Aquaculture Technologies”:
    • Is this the responsibility of the government or the industry?  If mandated to transition to another production system, that decision should be informed by the government completing the above to establish the risk/reality of the decision.
    • If we transitioned to on-land, fully contained, hybrid or other, do we feel we have even scratched the surface on what those realities look like with regards to a timeline for transition, cost, and effect on production volumes?
  • Recognizing that this above will be largely driven by the interpretation of the wording in the mandate letter, does everyone in the decision-making process for that understand the timing and cycles of our business? 
  • Lack of forums for information sharing/conferences to spread new/emerging information regarding alternative technology.
  • Or expensive to attend e.g., Freshwater Institute.
  • More industry driven research and collaboration should be supported.
  • R&D projects with local producers who are using alternative production systems should be initiated.
  • Government should provide funding/grants to offset the cost of production improvements and innovation. This reduces the financial risk if the results aren’t what are expected.
  • To ensure timely advancement in the knowledge base, support more industry-driven research and collaboration by funding a centre of excellence, revitalizing or augmenting science-based programs such as Aquaculture Collaborative Research and Development Program (ACRDP) and the former Aquaculture Innovation and Market Access Program (AIMAP), collaborating with CntrlAQUA, or funding a Natural Sciences and Engineering Research Council of Canada specific program for RAS;
  • Fund applied research in partnership with industry (e.g., Aquaculture Innovation and Market Access Program).
  • Provide funding / increase capacity for third party research testing services.
  • Additional research into acceptable parameters related to alternative production systems.
  • Aquaculture Stewardship Council certification as a model of collaboration between industry and ENGOs.
  • Information/sharing forum/system – industry /academia/government
  • Recommend funding/supporting an aquaculture alternative technologies research chair that sits on educational program boards to stay on edge of alternative technology.
  • How do we make trade knowledge more accessible?
Human resources
  • Lack highly qualified personnel in RAS. Largely linked to the above.
  • Educational institutions do not have updated, well-funded programs for the needs of our industry – funds to build these as centres of excellence to promote a more alternative technology-friendly industry would go a long way. Requires the backbone completed which would be the licensing and permitting framework.
  • For rapidly evolving alternative production systems, require more training of personnel in B.C.; existing industry recruiting from East Coast.
  • Funding for educational institutions.
  • Create a funded First Nations training program for specific technologies so that First Nations can take advantage of emerging opportunities.
  • Continued government support for diploma and degree educational programs, internships, as well as genetic and engineering personnel.
  • Government sponsored internship program.
  • Business advisory committee to upgrade co-op programs.
  • If there is demand, joint program with Aquaculture masters program and the British Columbia Institute of Technology.
  • Incentive programs for internships or Co-op programs e.g., Mitacs - a national, not-for-profit research and training organization dedicated to advancing collaborations between industry, academia and government in Canada, and to fostering international research networks between Canadian universities and the world.
  • More training in B.C. for highly technical positions.
Seed stock access (biotechnology)
  • The industry in B.C. does not have access to competitive genetic material (eggs/ova) that performs the best in RAS. This problem is compounded by the scale of the industry in B.C. which is not large enough to start a competitive genetic stock improvement program, exclusive to B.C. Without access to the best genetic material, it will be extremely difficult for the B.C. industry to maintain its competitive position and thrive, therefore this problem is a barrier to new investment
  • Government could provide access to approved genetic material for different types of alternative production systems, while addressing the concerns regarding the risks of pathogen introduction.
  • Streamline the Canadian Food Inspection Agency’s process for compartmentalization and importation of high-performance genetic stocks while addressing the concerns regarding the risks of pathogen introduction.
  • Reduce the cost of broodstock development (through regulatory regime or partnership agreement) for different types of production systems.
  • Develop internal, B.C.-based genetic selection capacity to avoid dependency on external sources.
  • Form a genetic task force group including all stakeholders.
  • Set up a satellite brood facility in B.C. in partnership with an international company.
  • Have a third-party industry partner come in and run the broodstock program that all local companies buy into. This also solves the problem of the existing industry excluding new entrants due to the shortage of genetic material.
  • Create a centre for genetic advancement for the development of strains tailored to alternative production systems.

Annex 3 - Example of a defined permitting process – Maine’s land-based aquaculture: A guide to successful & timely permitting (separate document)

Maine’s Land-Based Aquaculture: A Guide to Successful & Timely Permitting
(PDF, 1,288 KB)

Bibliography

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