Canada Launches $500 Million Initiative to Modernize Forest Sector Amid Trade Challenges

Federal Government Unveils Major Investment for Forest Sector

The Government of Canada today launched a national call for proposals under a $500-million commitment designed to retool and support the nation's vital forest sector. This initiative, announced by the Honourable Tim Hodgson, Minister of Energy and Natural Resources, on February 25, 2026, is a crucial step in modernizing the industry, protecting jobs, and fostering long-term economic growth.

The investment is part of a broader $1.2 billion aid package initially announced by Prime Minister Mark Carney in August 2025, which also included loan guarantees and worker reskilling programs. The federal government's actions are aimed at strengthening the sector in the face of ongoing U.S. trade measures and promoting a more diversified and innovative future for Canadian forestry.

Key Programs Driving Transformation

The $500 million in funding will be delivered through Natural Resources Canada's forest sector transformation programs, with eligible businesses and organizations now able to apply. The four core programs include:

• Investments in Forest Industry Transformation (IFIT): Supports projects that advance the development of forest bioproducts, advanced biofuels, low-carbon building materials, and diversified pulp and paper products.
• Green Construction Through Wood (GCWood): Aims to expand the use of Canadian wood, including mass timber, in construction projects.
• Indigenous Forestry Initiative (IFI): Designed to increase the leadership and participation of Indigenous peoples in the forest sector.
• Global Forest Leadership Program (GloFor): Focuses on strengthening global engagement and enhancing recognition of Canadian sustainable forest products in international markets.

These programs are intended to help Canadian companies innovate, diversify production, drive domestic demand, support Indigenous participation, and open new domestic and international markets.

Strategic Objectives and Economic Impact

The investment underscores the Canadian government's commitment to the forest sector, which is a significant economic driver, supporting nearly 200,000 workers, including over 11,000 Indigenous people, and contributing more than $20 billion to Canada's GDP annually.

Minister Hodgson emphasized the importance of the sector, stating, 'Canada's forests are more than a resource. They are the foundation for good jobs, affordable housing and sustainable economic growth.' The initiative aligns with broader federal strategies such as the Buy Canadian Policy and Build Canada Homes, which prioritize the use of Canadian materials in construction and infrastructure projects.

Regional Projects and Future Outlook

Alongside the national call for proposals, Minister Hodgson also announced $2.8 million in existing program funding for seven specific projects in New Brunswick and Nova Scotia. These projects exemplify the transformative goals of the initiative, focusing on expanding mass timber construction, supporting Indigenous forestry businesses, increasing manufacturing capacity for value-added wood products, and diversifying export markets.

The government's strategy aims to ensure the forest sector remains a pillar of national strength and prosperity for decades to come, by modernizing the industry and helping companies reach new markets at home and abroad.