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It's not common to hear plants described as refineries, but that's what they are. Every tree in New Brunswick's forest is a solar-powered chemical factory, refining nutrients gleaned from the air and soil into fuel (sap) and building materials (fibre).

The next stage in New Brunswick's forest industry may be figuring out what can be processed from these natural refineries - the building blocks of tomorrow's perfumes, medicines, textiles and plastics.

Don Roberts, a forestry expert with CIBC World Markets Inc., believes North American forests have the potential to be used as new sources of biochemicals. The extent of this potential isn't known, because new technologies to unlock wood's component chemicals on an industrial scale are still in development. Roberts sees biochemistry as one aspect of a much bigger challenge the industry must embrace: developing new products and creating new markets.

Forestry is a mature industry. People have been harvesting wood for the same basic purposes for a very long time. As long as mills were profitable, there wasn't much call for innovation beyond improvements to existing processes and technical refinements to traditional products. Now, companies are beginning to look more closely at the industry's raw materials - and some are making major investments in processes that produce refined chemicals rather than paper and lumber.

The AV Group is at the leading edge of wood processing in New Brunswick. The company's two mills convert wood fibre into dissolving pulp, which is used by textile manufacturers to make fabric for clothing. President and CEO Peter Vinall says it's realistic to think AV Group's mills could add bio-refining processes within three to five years.

This is where the industry's need for innovation intersects with public policy.

The chief obstacles to retooling pulp mills for new products are developing effective technology, freeing up enough capital for companies to invest in new processes, reducing the cost of energy and ensuring a stable wood supply. Provincial policy can have a profound impact on each of these factors.

Natural Resources Minister Donald Arseneault has received Mr. Robert's recommendations. It's now up the province to create a business environment for forestry that makes innovation possible.