G.

Annual Report  Highlights Industry focus

Added value

Regional development

Annual Report  Highlights

Presented to the House of Representatives pursuant to section 44 of the Public Finance Act 1989.

Our Annual Report is presented in two parts – Highlights (Part A) and Reports and Financial Statements (Part B). Together both documents fulfil our annual reporting responsibilities under the Crown Research Institutes Act 1992. The Reports and Financial Statements (Part B) includes the employment and environmental reports, core funding investment, directors’ report, performance targets and financial statements. Our Annual Report is also available in digital format at www.scionresearch.com/annualreports

Published by: Scion, 49 Sala Street, Private Bag 3020, Rotorua 3046, New Zealand. www.scionresearch.com

September 2015

© 2015 New Zealand Forest Research Institute Limited trading as Scion.

ISSN 1177-1763 (print version) ISSN 1178-5276 (online version) G.

Contents

Scion at a glance Chair and Chief Executive review: Strong confidence in forestry’s future  Our science plan  Research performance  Working with Māori  Reaching out  Research collaborations  Financial results summary  Glossary 

OurProsperity from trees vision Mai i te ngahere oranga Scion’s purpose is to drive innovation and growth from New Zealand’s forestry, wood product and wood-derived materials and other biomaterial sectors to create economic value and contribute to beneficial environmental and social outcomes for New Zealand.

Scion at a glance

$ $ m . m . Total comprehensive Operating revenue Last year: $ .m income Last year: $.m

% . full-time equivalent staff Return on equity Last year: . %     Rotorua Wellington Christchurch Dunedin  published papers annual weighted average  . commissioned reports H-index accepted by users citations per paper (rolling . 10-year average)

Strong confidence in forestry’s future

Tony Nowell CNZM, Chair Dr Warren Parker, Chief Executive

Chair and Scion has completed another busy, streams and how our investment in stimulating and challenging year publically funded science is made. This Chief Executive pursuing its core purpose to provide the has involved significant work engaging review science that helps drive innovation and with five National Science Challenges growth from New Zealand’s forestry, relevant to Scion’s future, and towards wood product and wood-derived year end, an extensive Four Year Rolling materials sectors. Our focus has been Review of Scion. Our resources were on increasing the contribution of challenged, and we have been required plantation forests to national and to adapt, to change and to upskill regional economic development, driven accordingly, while also seeking to grow by our vision of creating “Prosperity income from the private sector. from trees” for New Zealand and To address these changing dynamics New Zealanders. and the opportunities they present, we Our work has had an increased added exciting new talents during the emphasis on harnessing sector year to enhance our capabilities in value complementarity. Specific initiatives chain optimisation, market analysis, will assist the integration of forests with informatics and ‘big data’, human other land uses in order that more factors research (for improved health stringent environmental requirements and safety in the forest industry), are met, and more products are used biopolymers, biotechnologies, biofibres in supply chains. This will benefit and green (or ‘clean’) technologies. environmental and social outcomes, At Scion, we have a strong confidence support regional job creation and help in forestry’s future, supported by the Māori achieve their aspirations. re-elected government’s ongoing We have carried out this work within commitment to achieving business dynamic industry, business, science growth agenda targets, with specific and political environments, with aims to lift GDP growth in intense review of our future funding under-performing regions that all have

large forestry sectors. Also, global or biofuels. Notably, our Woodforce for small forest owners. Also, our work trends are driving resource-efficient technology for thermo-plastic wood with Solid Wood Innovation on log and renewable economic growth; and composites is now undergoing segregation technologies continues. domestic imperatives are in force to industrial-scale commercial testing During the year we refined and reviewed improve freshwater quality, address within the automotive and other Scion’s values, consistent with our climate change and enhance the built sectors. changed work environment, and our environment. These are opportunities Weather events and heightened changing customer and stakeholder for Scion to contribute to, and have concerns about biosecurity risks over needs. Ingenuity, Collaboration, further sharpened the focus of our the past year have reinforced the Excellence, and Manaakitanga express research. forest owners’ need to adapt their tree the refreshed approach of Scion to A record harvest of 30 million tonnes genetics, forest management and its work and purpose. We retained of logs in the past year, expected to forest protection for more extreme Scion’s ACC tertiary Workplace Safety reach 32-36 million tonnes per annum weather and biosecurity incursions. Our Management Practices accreditation. over the next decade, augurs well for science programmes strive to double Revenue of $47.34 million was below the forestry sector and the positive forest productivity, reduce forest budget of $49.12 million, reflecting both economic impact it can make to New biosecurity, wind and fire risk, and delayed and reduced public sector Zealand. However, with deforestation secure licence to operate in areas funding. However, EBIT of $3.27 million of some 100,000 hectares in recent such as new genetic technologies, and NPAT of $2.43 million were above years, the wood processing sector alternatives to methyl bromide for log budget of $2.50 million and $1.77 million faces major concerns over the security fumigation and steep land harvesting. respectively, mainly reflecting timing of log supply from the late s if Demand for up to 30,000 new houses related savings in personnel costs as planting levels of both harvested and per year in New Zealand over the next staff capability was built in the new new forests are not substantially decade, and an imperative to improve fields identified above. Return on equity increased. housing affordability through was 7.3 per cent above budget of 5.6 Iwi aspirations to plant up to 1 million mechanisms like pre-fabrication, better per cent. Capital expenditure of hectares of forests on under-utilised standards and gains in supply chain $4.44 million, including $1.73 million land, including indigenous and efficiency, has increased our focus on carried forward from the prior year non-radiata pine exotic species, is an the development of better building approvals, maintained our momentum important opportunity for both solutions and establishing closer in modernising and improving the reforestation and regional development links with BRANZ and the construction safety of our facilities, plant and that is being supported by our science. sector. We continue to develop our equipment, and in strengthening With impending global shortages of understanding of how the both campus and cyber security. The the long fibre softwood used as an characteristics and structure of our 10-year plan for the Rotorua campus essential ingredient for packaging and timber can best contribute to stronger, was updated in preparation for a major lightweight material substitutes for more innovative and more cost- refurbishment and consolidation of fossil oil products, and with the new effective engineered wood products our wood engineering laboratories global impetus for addressing climate for structural solutions and modified and pilot plant facilities over the next change by the setting of meaningful wood products to replace tropical two years. 2030 individual country commitments, hardwoods. We thank Scion staff for their hard work we see New Zealand’s radiata pine Scion’s technology focus is enabling and ingenuity; and our industry, iwi plantation forests facing a very positive productivity gains and essential and policy stakeholders for their advice future by providing excellent mitigation improvements to worker health and and support. Brian Rhoades completed and value creation opportunities. safety across the forestry value chains. his final year as a Scion Director - we Our science continues to make We are supporting the rapid uptake of thank him for his wisdom and ground in international and domestic ‘smart connected products’ for wide-ranging input over the past six ‘bio-economy’ research and precision forestry, including the use of years. The remaining Directors will development opportunities, whether unmanned aerial vehicles with LiDAR continue into the new financial year they be for packaging and coatings, capability, mobile tree scanners, providing continuity through a period of lightweight wood-plastic composite robotics for mechanised pruning and substantial change in the New Zealand components, industrial heating options harvesting and decision support tools science sector.

Tony Nowell CNZM Dr Warren Parker Chair Chief Executive

Our science plan

Increase the Protect and Enhance Increase renewable value and productivity enhance market access New Zealand’s opportunity energy production and of the New Zealand and improve risk to benefit from energy security by growing forestry, wood products management in the forestry-based ecosystem New Zealand’s ability and wood derived forestry industry services to improve to produce sustainable materials and other both the global market bioenergy and liquid biomaterial sectors, position of industry biofuels to create economic value and the environmental OUTCOMES and contribute to beneficial sustainability environmental and of forestry production social outcomes for in New Zealand New Zealand STATEMENT OF CORE PURPOSE CORE OF STATEMENT

Grow forest and Māori investment New Zealand has Increased Support wood product exports in forestry realised at least another the contribution of improvements in to $12 billion by 2022 will have at least $870 million p.a. bioenergy to New Zealand Natural YEARS doubled to of revenue from New Zealand’s Capital through forest $4 billion by fibre, pulp and consumer energy system ecosystem Over 70% of logs  biochemical products production and services (National processed liquid fuels by 16% index) greater onshore by 2026 and 9%, respectively, than 100 (2011) by New Zealand by  2026 packaging industry has grown by at least an additional NATIONAL KPIs - KPIs NATIONAL $140 million p.a.

     6 Maximise the Increase the Expand opportunities Increase New Protect and Ensure licence value and profitability of solid in the wood fibre, Zealand’s energy enhance to operate profitability of wood processing pulp, biopolymer, security through market commercial forests through customer packaging and the use of forest access and and their ecosystem solutions and supply biochemical and waste biomass improve risk YEARS services chain innovations industries for bioenergy management - Protect and enhance market access and improve risk management in the forest industry including forest  health and preparedness for biosecurity incursions, fire and climate change Ensure forest industry and bioeconomy businesses’ licence to operate (and reputation) through workers’ safety and capabilities, INTERMEDIATE OUTCOMES (IOs) INTERMEDIATE 6 verifiable environmental performance, product traceability and modern standards; and by anticipating long-term change

 6    Sustainably increase New value chains Develop new Improve Ensure Sustain forest productivity for speciality wood industrial readiness New Zealand New Zealand YEARS products bioproducts for for bioenergy forests are forest industry  existing and liquid resilient and  and emerging biofuels in to current and bioproducts Extract value from manufacturing New Zealand future natural manufacturers’ dispersed forest holdings Expand industries threats licence opportunities in New Zealand to operate  for wood products and building Increase socio-economic systems IMPACT KEY PERFORMANCE

INDICATORS (KPIs) - INDICATORS (KPIs) and environmental outcomes from forests

This plan (from our 2015-2020 Statement of Corporate Intent) shows how Scion’s activities align to achieving the Statement of Core Purpose (National) Outcomes and the inter-dependency between National and Intermediate Outcomes and performance measures (National and Impact KPIs respectively).

Commercial forestry and ecosystem services

IO – Maximise the value and profitability of commercial forests and their ecosystem services Impact KPI- : Sustainably increase the productivity of New Zealand forests. By 2019, tools, novel forest management approaches and new plant material will be embedded into New Zealand’s forests and forestry practices to support the industry’s target to increase radiata pine Mean Annual Increment from an average of 20 m³ ha-¹ yr-¹ to 35 m³ ha-¹ yr-¹ and in a way that enhances the sustainability of forest growing in New Zealand.

On-going: the Forestry Library, Permanent Sample Plots (National Forest Tree Database), and Tree Genetic Archives remain viable and provide valuable information about the national forestry position for New Zealand.

By 2016, Scion will have A phenotyping By 2016, at least By 2018, Scion will have quantified the gap platform has been two new biotech developed a systems model between current used to identify trees are evaluated of the current forest products productivity and outstanding individual for traits (e.g. value chain to determine potential productivity trees for at least one productivity and where to intervene in order that could be achieved if key trait with superior herbicide resistance) to maximise benefits from key limiting factors could germplasm and is and reported to the existing forest resource. be overcome. This will be being deployed by 2016. stakeholders. This will have created better informing industry connectivity between strategies to sustainably growers and processors, and

LEADING INDICATORS improve productivity, better connectivity between including breeding for small-scale forest growers. growth and quality.

     

The process-based Early evidence for the A contained field trial Several value chain systems model CABALA now has phenotyping platform of biotech trees with models are being assessed. parameters for radiata at industry scale, is modified lignin was Detailed processed based pine in New Zealand. The promising. LiDAR may established in March discrete event simulation initial calibration/ be used for inventory 2014. The tools have been developed to validation process for and/or understanding modification will assist industry with logistics CABALA provided new forest resource reduce the energy planning and capacity insights into productivity characteristics. A cost of processing for utilisation challenges. A more limitations at case study genetic trial is underway pulp or biofuels aggregated tool helps sites and identified to match remotely production. researchers to identify productivity levers to sensed individual tree Herbicide resistant inconsistencies across the increase productivity. data with ground-based plants underwent supply chain. Factors limiting individual tree final growth productivity included phenotyping data. First measurements; this nitrogen availability and steps in developing the trial is due to end in soil water holding GCFF phenotyping 2015 in line with EPA’s PROGRESS capacity. Analysis of platform were approval conditions. existing radiata trials demonstrated at the revealed a real (not GCFF annual conference simulated) productivity in March 2015. gap for radiata pine that can be exploited. Development of a nationwide productivity map in 2015-16 is on track with the initial results to be presented to New Zealand Forest Owners Association in October 2015.

Data from the Permanent Sample Plots supported at least five publications and were used to identify opportunities at specific forests to change silvicultural regimen to maximise productivity.

6 wood processors. It also focuses on possible to obtain data on wood Boosting forestry ensuring that future intensification is properties from an earlier stage than environmentally and socially acceptable. is currently possible.” productivity and Our GCFF research team has already The GCFF programme is building on the made a number of important legacy of trials that were established economics achievements since the programme more than 25 years ago to study the commenced in October 2013. effects of stand density and seedlot on growth and wood properties. Results Growing Confidence in Forestry’s Future By more fully utilising site potential, from these trials are guiding forest (GCFF) is a joint research programme scientists have calculated that managers in developing silvicultural between industry, Scion and MBIE productivity can be increased by 5-8 regimes for the next rotation. Data from that aims to boost the productivity and m³ ha-¹ yr-¹. In today’s log market, this two of the Long-Term Site Productivity economics of forestry, and provide a would yield a further $13,000 per trials have provided new insights into stable supply of quality timber for hectare (gross) over a 30-year rotation. Scientists are using process-based the productivity and sustainability of models to estimate the level of planted forests over multiple rotations. productivity that is possible, which has These data are being fed into the highlighted the impact of soil water nutrient balance model (NuBalM) to holding capacity. enable forest managers to take a more targeted approach to forest nutrition. By 2019, at least two major forest growers In today’s log market, this “The programme has helped us gain a have changed their better understanding about the role of management practices and are applying new would yield a further $13,000 soil micro-organisms on productivity,” treatments designed per hectare (gross) over a says Peter. “The development of new to increase productivity assays for profiling microbial of mid-rotation stands. 30-year rotation. communities in soils enables us to analyse the use of nutrients on seedling “To complement this modelling work, performance. We are currently we are establishing the first of our planting new trials to examine the accelerator trials this winter to provide effects of different treatments on data on the levels of productivity that microbial communities and ultimately, are possible,” says Science Leader Dr tree growth and health.  Peter Clinton. “These trials contain “We’ve also made huge advances in different genotypes and site using both terrestrial and airborne modification treatments aimed at LiDAR, as well as multispectral satellite Industry cluster group improving productivity. imagery, to obtain productivity metrics meetings revealed gaps and opportunities for “We will also use these trials to study and information on tree characteristics. new treatments. the effects of increased productivity on At the same time, we’re exploring Workshops with a soils wood formation. As part of this work, unmanned aerial vehicles as possible focus were put in place to address this gap and our scientists have developed a new platforms for these remote sensing will be completed in micro-coring technique that makes it technologies.” September 2015. Trials were planned to screen a range of treatments to improve forest nutrition, stimulate site processes, boost crop health and reduce site losses using new techniques; trials will be implemented from September 2015 focusing on assessments of risk and cost effectiveness.

Further advancements have also been committee to ensure that the work is as land-use, water quality and made to the Forest Investment Finder achieving the desired impact. biodiversity protection. Research has spatial economic model to include As a result, forest growers now place increased awareness by forest owners different forest ecosystem services and a greater focus on productivity as a and government policy makers of the timber values to support decisions management goal and recognise the value of forest ecosystem services, around integrated land management. importance of site occupancy as a such as flood and erosion protection, This work has contributed to driver of productivity. Most companies and recreation. discussions at the national and regional refer to stand density index when levels around land-use policy. evaluating silvicultural regimes, and have a far greater understanding of Landcare Research, Waiariki Working with industry to how these regimes, site and genetics Institute of Technology, University achieve our goals affect wood quality. of Auckland, Oregon State University (US), US Forest Service, The GCFF programme relies on a strong LiDAR and other remote sensing University of Canterbury, CSIRO level of engagement between scientists technologies are increasingly becoming (Australia) and industry. Four innovation clusters part of mainstream forest management with forest managers seeing new uses have been formed as a means of MBIE, FGLT creating greater impact from our for these technologies. science and to provide a forum for Furthermore, there is a greater http://gcff.nz/publications discussion. Our scientists regularly evidence base that can be used in www.scionresearch.com/ meet with an industry technical debates on environmental issues, such ar15boostingproductivity

Breeding technologies for the future

Scion’s Biotransformation Team has been working with the University of Wisconsin- Madison to make radiata pine and other softwoods easier to process into such things as pulp and biofuel. Easier to process softwood offers both economic and environmental benefits. Needing less energy, the pre-treatment will be faster, more efficient and less wasteful, yielding improved feedstock for pulp, paper and biofuel industries. Led by Dr Armin Wagner, the team published its work in the Proceedings of the National Academy of Sciences proving the concept that it is possible to change the makeup of lignin polymers in softwoods. This is just one example of plant biotechnology being investigated by Our research provides scientific and present. Scion has demonstrated Scion in conjunction with other commercial evidence to industry, genetically improved radiata pine for international and national research government, Māori and other a number of traits. Most recently, we institutes. stakeholders in readiness for the have streamlined the production of Scion is the leading centre for pine necessary regulatory changes that will improved trees and developed an biotechnology globally. For over 10 years give industry the freedom to adopt efficient field trial testing platform. This we have been showcasing, to the technologies already deployed by has enhanced our ability to showcase forestry industry and other stakeholders, international competitors, and to meet proof-of-concept experiments with high transgenic radiata pines that climate change challenges. scientific rigour. demonstrate measurable phenotypic Metabolic engineering allows a single, A field trial of the lignin-modified radiata improvements developed through clearly identified desirable trait to be pines has been planted to demonstrate genetic engineering. introduced where it is not normally easier processing and pulp-ability.

Also, some 3000 plants will be planted in Scion field trials in 2015-16, with traits including productivity and altered biochemical composition. The value of long term trials Business cases have been developed for a number of these traits. For example, in demonstrating genetic gain infertile Douglas-fir to support the profitability of growing a species where Analysis of an extensive dataset from a series of large-plot the cost of wilding control inhibits radiata pine trials, indicate that genetically improved tree planting. Also, the adoption of herbicide stocks have increased the present value of the national radiata tolerant trees that will complement pine estate by an estimated $3.5 billion. the use of environmentally sustainable A further switch to highly improved stocks is underway, with an and cost-effective herbicides. estimated value uplift to the industry of $8.5 billion compared to Although several existing genetic using unimproved material. engineering and emerging Scion established the first genetic gain trials in 1978. These trials biotechnologies are ready to be have been monitored for over 30 years and represent one of the deployed, the regulatory routes to most extensive datasets of its kind internationally. Additional release these biotechnologies are data has recently been included from a major forest grower. not yet available. Scion is continuing Our analysis has shown a strong relationship between the level of engagement with regulatory authorities, genetic improvement and the increased volume that is grown, and Crown entities and other stakeholders that the magnitude of realised genetic gain increases over the life to define clear pathways for safe and of the plantation. environmentally responsible deployment of biotechnologies in the Quantifying realised genetic gain is a major focus of the Radiata future, and the benefits they will offer Pine Breeding Company. New Zealand. “Although genetic-based gain in tree breeding can readily be demonstrated in controlled breeding trials, it is very difficult to University of Wisconsin-Madison show the benefit of improved genetics in long-term commercial (US), University of British Columbia forestry operations,” says John Butcher, Chief Executive of the (Canada), University of Aachen Radiata Pine Breeding Company. “This work makes a major (Germany), Plant & Food Research, contribution to providing credible scientific evidence that links University of Waikato genetic improvement to productive gains in volume and density in 30 year stands. This is the evidence that gives our shareholders, Scion Core, two post-doctoral representing all major national forestry companies, the confidence researchers to invest in genetic improvement”. www.pnas.org/content/112/ www.scionresearch.com/ar15longtermtrials 19/6218.full.pdf www.scionresearch.com/ ar15breedingtechnologies

Impact KPI- : Extract value from forests and dispersed forest holdings. By 2019, tools developed by Scion and its partners will be used by New Zealand forest growers and harvesting companies to reduce harvesting costs, improve safety of tree extraction and improve supply chain logistics, leading to growth in regional tree planting.

Prototypes of new harvesting Remote sensing technologies are Supported at least one iwi owned and supply chain tools have being used by forest growers to forest and land holding cluster to been demonstrated by 2016 obtain quantitative information realise at least a 20 per cent that have the potential to save on the performance of their increase in returns from their land the forestry industry at least forests and which is being used to over 2014 values by 2016. $50 million per annum over inform management practices. 2010 costs. LEADING INDICATORS

 

The current PGP-funded FFR Timberlands acquired LiDAR for The Sustainable Farming Fund Harvesting programme will be Kaingaroa Forest and is currently Waikura Valley Land Restoration complete by end of 2016 using this information to update project (on the East Coast) was having achieved: inventory. This LiDAR information initiated with the Whangaparaoa A 6 to 25 per cent increase in will also be used by Timberlands 2L Trust. This project addresses efficiency in logging operations in a review of silvicultural the critical environmental risks using grapples. This equates to practices. Blakely Pacific acquired associated with large scale, 150 fewer breaker outs LiDAR data for its Douglas-fir active gully erosion, and will exposed to hazards associated forests in southern Canterbury actively involve Waikura Valley with manual breaking out. and Otago. Height maps landowners, comprising iwi and generated from this LiDAR were non-iwi, in the development of A 1 to 20 per cent increase in used to optimise the timing of their own land management plan efficiency of mechanical felling final thinning. through research, trials, operations on steep country, vegetation planting and meaning 60 fewer fallers will assessment. be exposed to falling hazards. The first fully teleoperated

PROGRESS steep slope feller buncher, which will lower steep slope tree felling risks. A new remote controlled twin winch tailhold carriage that will reduce rope shifting time. A new quick coupling device, ideal for small steep country forest owners. Development of a prototype remote controlled mechanical felling wedge that will improve safety by allowing the faller to exit the high hazard zone.

engaged to carry out harvesting and dislodged debris. In 2013, eight No worker on the research projects. Scion’s research of the 10 loggers who lost their lives team, led by Spencer Hill and Dr Paul that year were involved in either slope, no hand on Milliken, is looking at ways to improve breaking out or tree felling. the productivity and safety of steep The introduction of winch-assisted slope harvesting. the chainsaw mechanical felling machines, matched Future Forests Research data indicate with grapple extraction, has New harvesting technologies developed that approximately 44 per cent of the undoubtedly improved safety. Since by Future Forests Research Ltd (FFR), current harvested area in New Zealand the programme began, the proportion as part of its Steepland Harvesting is from steep terrain (slopes over 20 of operations mechanically felling on Primary Growth Partnership programme degrees). This is forecast to rise to 53 steep country has increased from less with the Ministry for Primary Industries, per cent by 2016 and to over 60 per than one per cent to 16 per cent, are paving the way for a step change cent by 2025. Felling and breaking which means 50 fewer tree fallers are in steep slope harvesting operations. out are the highest risk jobs in such exposed to felling hazards. However, The Steepland Harvesting programme conditions with workers constantly while the machine operators are was initiated in 2010 with Scion exposed to falling trees, swinging stems protected by a reinforced cab, they

 Photo: FPNZ Ltd.

are now operating on slopes often over buncher and field tested by harvesting it will lower the risk of steep slope 50 degrees and as such, there is still contractor Ross Wood, of Wood tree felling even further and eventually a risk of machine rollover and harm to Contracting Nelson 2014 Ltd. remove the need for feller bunchers to the operator. be built with cabs. “At the start, I was a bit dubious about the advantage of remote controlling The combination of steep country felling The combination of steep my machine,” says Ross. “As a result and bunching including FFR’s remote of the work done by Paul and Spencer controlled technology, matched with country felling and bunching and the team, my mind has been grapple yarders, could save the including FFR’s remote opened to a whole raft of opportunities. industry $10 million in harvesting costs by the end of this year, and this is just controlled technology, “There is no doubt in my mind this will the beginning. matched with grapple yarders, improve safety of steep slope felling operations more than what we have The remote controlled feller buncher could save the industry already achieved with our winch-assist has received excellent feedback from $10 million in harvesting costs system, and I see it really expanding FFR’s Technical Steering Team and has been presented to a supportive by the end of this year, and the pool of potential employees for logging.” audience at the HarvestTECH 2015 this is just the beginning. conference. The next step will be installing full teleoperation to Ross Wood’s feller One objective of the Steepland buncher, allowing his operator to Machine manufacturers, Wood Harvesting Programme was to introduce successfully operate the machine Contracting Nelson 2014 Ltd, industry contractors remote control and then full outside the line of sight. The first fully teleoperation of a steep slope felling teleoperated unit is expected to be FFR, PGP machine. In June this year, remote completed and commercially available control with video feedback was by June 2016. While the technology www.scionresearch.com/ successfully installed into a feller itself is unlikely to lower felling costs, ar15ontheslope

Impact KPI- : Quantify the role of forests in increasing economic, environmental and social outcomes for New Zealand. By 2019, Scion and its partners will have compellingly demonstrated to key stakeholders (e.g. Māori, regional councils, policy makers) the role of forests in creating resilient landscapes through forest contributions to regional economies and provision of ecosystem services.

By 2016, at least one business By 2017, key stakeholders will be By 2019, Scion’s information will have case for expansion of new forests using Scion’s evidence-based contributed to New Zealand’s national onto un-developed land will have information that quantifies forests’ and international reporting obligations been developed by Scion with a economic and natural capital and the New Zealand Freshwater regional authority and/or an iwi. contributions to New Zealand’s National Objectives Framework (NOF). growth, regional development and environmental performance strategies. LEADING INDICATORS

   

The final report for the Te Ecosystem services assessment Staff involvement in the NOF experts Taitokerau SFF/Māori Agribuisness capability has been applied to group continued. Our input was critical project was submitted to MPI in planted forests and their to ensuring forestry needs and June 2015 – “Building the Business neighbouring ecosystems in two conditions are well represented. Case for Economic Resilience in catchments: Ōhiwa catchment and Work on herbicide residues in forest Northland: A New Forest Waikato catchment. A desktop soils directly influenced international Industry”. The report found: study on the complementarities herbicide rules under FSC and the 1. Economic forests that comprise between dairy and forestry in the removal of two chemicals from the species other than radiata pine. central North Island wood supply banned list. 2. No one scenario optimally fits region was done for a firm and a Worked with MPI/MfE to help set all areas. regional council. Results of the climate change targets by the 3. Scale of forest operations and study gave stakeholders discussion Government ahead of the Paris Climate proximity to processing and points on how forestry and dairy Conference in December 2015, and markets significantly affects lands can spatially co-exist in contributed to the 2015 forestry profitability. order to optimise environmental, greenhouse gas reporting under New PROGRESS 4. Kauri and mānuka species land productivity, economic Zealand’s obligations to the UNFCCC. provide positive economic growth and community outcomes. returns. 5. Planting and management of new forests can lead to participation in associated businesses. 6. Investment and cash flow challenges to develop new forests can be mitigated through various transition approaches.

each land use will provide the council Adopting a more Exotic forestry with a framework for land management that will see the potential of each service environmentally friendly has positive realised. technology or farm practice ecosystem “We define ecosystem services as the that reduces nutrient flow of benefits people gain from leaching in the waterways ecosystems, such as food, fibre, carbon service value sequestration, recreation and avoided could double the overall erosion,” says resource economist Dr ecosystem services value in In 2014, Scion’s Economics, Ecosystems Richard Yao. and Climate Team was contracted by the catchment. “Food and fibre have traditionally been the Bay of Plenty Regional Council to considered more important than the evaluate the ecosystem services values, which make them less clearly other groups because of their monetary relevant to different land uses in the understood. value. Services such as recreational Ōhiwa catchment. walking and avoided sedimentation “The development of non-monetary Identifying, and attributing a value to, in waterways, are already recognised valuation techniques now makes it the key ecosystem services provided by in policy but have non-monetary possible to estimate the value of these

 services and include them in land the highest value per hectare, followed values, but provide a good starting management discussions, alongside by indigenous forest and scrub. point from which council can begin those services with monetary values. The research team used several comprehensive land management This allows better policy to be made.” scenarios to demonstrate the potential planning for the Ōhiwa catchment that will deliver beneficial ecosystem The team identified seven major land profitability of various productive services, particularly around water uses in the catchment, both productive land uses, and the environmental and management. Good planning will (dry stock, exotic forests, dairy and social values from both productive sustain and enhance the provision of horticulture) and natural (indigenous and conservation land. This exercise illustrated ways in which the overall those services for economic prosperity forest, scrub, and wetlands and and improved human well-being.” mangroves). Researchers also applied economic, environmental and social Scion’s Forest Investment Finder values of the catchment could be The final report was completed in economic model to analyse the value of improved. October 2014 and will contribute to key ecosystem services such as timber, “Our results suggest that shifting to a the Bay of Plenty Regional Council’s carbon and avoided sedimentation. more sustainable productive land use planning and policy discussions in can raise the overall ecosystem land use management. These data have Of the productive land uses, horticulture services value in the catchment,” says also benefited other Scion-wide projects and dairy were found to provide the Richard. “For example, converting 320 such as the Growing Confidence in highest monetary values (i.e. profit), hectares of dry stock to exotic forestry Forestry’s Future and other related with exotic forestry and dry stock the could provide a net gain of $8,906 per projects. lowest. The monetary value of hectare per year, and increase the horticulture was over five times higher ecosystem services value in the than dairy, and 18 times higher than catchment by $2.8 million. Adopting a BOPRC exotic forestry. more environmentally friendly BOPRC However, when services with technology or farm practice that reduces non-monetary values were included, nutrient leaching in the waterways www.boprc.govt.nz/media/ exotic forestry was found to be the only could double the overall ecosystem 395767/ecosystem-services-in-the- productive land use with a positive services value in the catchment. ohiwa-catchment.pdf ecosystem service value. Among “The monetary values we are reporting www.scionresearch.com/ natural land uses, wetlands provided here are indicative, not absolute dollar ar15ecosystemvalue

 Solid wood processing

IO – Increase the profitability of solid wood processing through customer solutions and supply chain innovations Impact KPI-: New seed-to-market value chains for specialty wood products. By 2019, Scion and its partners will have provided tools, new product options and plant material that will have supported the aspirations of growers and manufacturers to invest in new manufacturing facilities and expand plantings of Douglas-fir, eucalypts, cypresses and indigenous species based on increased confidence of securing highest possible value for their products along the entire seed-to-market value chain.

By 2016, Scion’s technical By 2016, Scion and its partners will By 2019, Scion will have provided tools, outcomes will have input into the have identified the economic new plant material (e.g. germplasm) development of at least one opportunity for utilisation of some and technologies along the market ready product from indigenous species, and have seed-to-market value chain that will Douglas-fir or a eucalypt capable external investment supporting increase the confidence of growers of for uptake in an international realisation of the commercial Douglas-fir, eucalypts and cypresses market. opportunity associated with those to increase plantings of these species species. Particular focus will be by at least 5 per cent over 2014 given to support the economic and plantings. social development of Northland,

LEADING INDICATORS East Coast/Hawkes Bay and central North Island.

   

An MBIE proposal, Specialty Five presentations were made at The new 7-year FFR-led Specialty Wood Wood Products Partnership (to the inaugural East Coast Mānuka Products Partnership will focus on the be led by FFR) was submitted Coalition (ECMC) hui at Ruatoria in development of high-value wood and accepted. The partnership April. The proposed coalition sees products from eucalypts, Douglas-fir with industry will focus on the significant economic growth and cypresses. development of high-value wood opportunities for Māori and products from eucalypts, industry to work together to realise Douglas-fir and cypresses. Total the potential of natural resources, investment in the programme such as mānuka for oil production. over seven years is $13.8 million. The vision is that ECMC will partner Key issues relating to drying with industry stakeholders who are eucalypt were confirmed, and keen to engage with Scion. PROGRESS potential solutions to be A business case peer-reviewed by explored are being identified. PwC was completed indicating quantified, real opportunity for tōtara in Northland. Planning completed for assessment of wood quality in existing tōtara stands (including provenance trials), scheduled to start post June 2015.

A new forestry industry based on industry based on the extensive tōtara New Zealand tōtara could provide a resources growing on private land. substantial lifeline to a struggling An earlier study by TTT and NTWG Tōtara’s Northland economy. suggests there may be over 100,000 A multi-disciplinary team of Scion hectares of tōtara (Podocarpus totara economic scientists has been working with Ministry D.Don) regenerating in the presence of for Primary Industries, Northland Inc., grazing, in privately owned forest and potential for Tane’s Tree Trust (TTT) and Northern scrublands in the region. These resources Tōtara Working Group (NTWG) to explore have, until recently, been largely Northland the feasibility of establishing a new ignored and considered of little worth.

 The region could benefit from the The majority of the few remaining industry and end-users, and has taken creation of a sustainable wood products old-growth stands of tōtara are a whole of region approach. industry developed around this protected, however, the species’ ability An independent market research resource provided the commercial to thrive under a range of conditions company was contracted to review opportunity can be properly developed has meant individual trees and stands industry’s perceptions of, and and demonstrated. Such an industry have readily regenerated on farmland. would involve the development and requirements from, a possible marketing of high-value wood products tōtara-based industry. As Scion’s from tōtara to replace imported A preliminary business case indigenous forest specialist Greg products, and the generation of new shows a potential value of at Steward says, industry involvement has been vital to the project, contributing business opportunities along the value least $11 million by 2017 and chain. A preliminary business case their requirements for both volume shows a potential value of at least $11 $110 million by 2021, based on production projections and quality. million by 2017 and $110 million by 2021, timber values alone. This could “End-users have indicated a willingness based on timber values alone. This leverage subsequent to substitute tōtara products for could leverage subsequent investment imported resources,” says Greg. into expanding the tōtara resource. investment into expanding the “Regulatory bodies have shown a “Due to the advanced age of a significant tōtara resource. willingness to review legislation and portion of the regenerating forest, policy around the management and payback from initial investment would utilisation of the resource, adding scope be more or less immediate,” says Peter Previous research conducted by Scion for further development. Berg, Chair of Tane’s Tree Trust. "What’s has focused on both protecting and “Industry and stakeholders now have more, forestry with native species will be utilising tōtara as a commercial a much greater understanding of the based upon continuous cover forestry resource. While the growth rate of true potential both in managing the practices. This means that harvesting tōtara is unlikely to reach that of fast will involve individual stems but the growing exotic species such as radiata tōtara resource and the financial forested landscape will be permanent." pine, the increased value of the wood outcomes, with the involvement of may compensate for its lower level of independent consultants adding rigour Tōtara is a resilient species able to productivity. Scion is confident there and a level of impartiality to the project.” establish and grow vigorously in various is an opportunity to increase the soil types under a variety of climatic productivity of tōtara through a genetic conditions, and is also plentiful in other improvement programme and parts of New Zealand. It produces improvements to silviculture. MPI, Northland Inc., TTT, NTWG hard, straight grained wood and durable heartwood that is inherently resistant to The recent review of tōtara’s economic MPI, MBIE (PSAF), Scion Core, fungal degradation when it has reached potential for the region involved Northland Inc. an appropriate age and diameter. Its industry-wide engagement by all versatility and properties give the stakeholders, from government www.scionresearch.com/ timber considerable economic value. regulatory organisations to landowners, ar15totarapotential

 in our emerging indigenous forestry datasets and to explore genetic- Genomic portfolio. environment (GxE) interactions. “As part of our collaboration with Genomic selection for the alternative selection for AgResearch we will be testing new species, including eucalypts and ‘genotyping by sequencing’ Douglas-fir, is currently aligned to the alternative technologies,” says Heidi. “This will new MBIE Specialty Wood Products involve the creation of ‘skim’ genomes Partnership. This Future Forests species adds for Eucalyptus regnans, fastigata and Research-led programme aims to nitens. We’re hopeful this new create a high-value wood products pace technology will create a more industry from planted forest species economical genomics model that will other than radiata pine. Scion’s Forest Genetics Team is building benefit breeding programmes. This seven-year research programme a number of new genomic technology “This year, we have already undertaken represents a total of $13.8 million platforms to support the genetic extensive phenotyping to initiate this investment comprising $710,000 per improvement of indigenous and in E. nitens.” annum from MBIE’s Biological Industries alternative forest species. Genomic Fund, $710,000 per annum from the selection of forest trees has not Scion’s Forest Industry Informatics Team has helped develop a forestry industry, $550,000 per annum previously been applied in commercial from Scion Core Funding and support platforms in New Zealand. sophisticated data storage and management system capable of from the School of Forestry, University handling the expansive datasets now of Canterbury. “This makes it possible for being generated by these new genomic technology platforms. The new tree breeders to select for FFR, AgResearch, University of database is capable of integrating Canterbury multiple traits early in a phenotypic data with the new waves breeding cycle and removes the of genomic information. Integrating MBIE, Scion Core, FFR need for expensive, long-term the vast array of phenotypic and genotypic data in these databases www.scionresearch.com/ field trials.” makes it possible to create virtual ar15genomicselection

“The new platforms will build on our experiences with radiata pine to introduce genomic selection into breeding programmes for these species,” says Science Leader Dr Heidi Dungey. “Genomic selection increases the rate of genetic gain and accelerates the breeding cycle by using DNA markers to predict tree characteristics and genomic breeding values. “This makes it possible for tree breeders to select for multiple traits early in a breeding cycle and removes the need for expensive, long-term field trials. “We are developing one such platform in collaboration with AgResearch, which will be to international standards. This will include the collection of relevant sample populations, testing experimental protocols, and developing collaborations to generate genomic resources, such as genome sequences and genomic breeding values.” Scion has been developing genomic resources since 2012, building on more than 40 years of research into alternative forest species. Our geneticists have successfully developed DNA extraction methods for a number of recalcitrant tissues and species that are included

 Impact KPI- : Expand opportunities for wood products and systems. By 2019, Scion will have supported wood processing and manufacturing companies by delivering new productivity enhancing tools and technologies that assist them to meet their growth targets and encourage increased investment in wood-based manufacturing in New Zealand.

By 2015, Scion will have By 2015, Scion will have By 2016, Scion will have By 2019, the Woodscape demonstrated the potential demonstrated and demonstrated to a methodologies have been to maximise recoverable secured external pre-commercial stage adopted and underpinned, yield, minimise waste, and investment to enable at at least one new wood at least to business case manage variability between least one new engineered preservation/ protection stage, the development of and within radiata pine logs. wood product with system that meets the a new or substantially demonstrated potential needs and ability to enhanced wood to compete in high margin support New Zealand manufacturing operation. market segments. wood products in New Zealand’s most LEADING INDICATORS environmentally discerning markets.

    

Scion led a trial for Solid Scion continues to Scale-up trials were set up In 2014-15 the Woodscape Wood Innovation (SWI) at provide support via to test the leading bioactive model was used to assess the Kaingaroa Processing testing and consultancy preservative with radiata a range of primary solid Plant (KPP) to measure and services to New Zealand pine. The outside trials are wood processing and select appearance logs for wood and building testing for decay and ultra remanufacturing options an algorithm development sectors, e.g. we assisted violet light resistance both for a client with a dataset. Scion also assisted a new prefabricated in and above ground. No hardwood resource. The SWI to extend this building company launch decay was observed in the initial analysis has led to warp-prediction dataset to its residential building first year. A quantification the client undertaking structural logs with a trial in system. solution was identified, further work, including Australia. Results of the KPP more work is needed to sawing and peeling studies. trial were analysed and develop a spot test. Other

PROGRESS algorithms found that samples were sent to the potentially can remove the US for termite resistance worst warp-prone logs. The testing. algorithms need to be applied to the Australian structural dataset and validated by independent trials.

further modification. The liquid extracted processes (in some cases displacing Extracting during this process contains a range of petroleum-based chemicals), bio-based chemicals that also generate pharmaceuticals and nutraceuticals. valuable an additional revenue stream. Until recently, our work in the dewatering “These discoveries offer chemicals from field has focused on sapwood and exciting possibilities in the heartwood predominately from radiata future for ‘whole-of-tree bark, leaves and pine. Scientists are now turning their attention to other species, and to other biorefining’ where virtually needles parts of the tree that traditionally go none of the tree is left behind to waste – bark, leaves and needles. in the forest, and the tree’s Scion scientists are using transformative As a result, our chemists are making wood dewatering technology to total resources are more fully some exciting, and unexpected, investigate new specialty wood products scientific discoveries about bark and utilised.” says Research Leader and wood-based chemicals from tree other tree tissues as a potential source Dr Stefan Hill. species other than radiata pine. of valuable phytochemicals. Dewatering uses supercritical carbon dioxide to extract water from wood, Phytochemicals are naturally occurring “Extracting organic components from resulting in wood that is receptive to chemicals that can be used in industrial plant tissues is usually done using

 traditional organic solvents, and is chemicals in addition to timber and that is still a valuable source of energy difficult to scale up,” says Research other wood products, from both radiata due to its inherent calorific value. This Leader Dr Stefan Hill. “We used pine and alternative forest species, reinforces the whole-of-tree concept.” Callaghan Innovation’s extraction including native tree species.” We are expanding Scion’s metabolomics equipment to run trials on bark and Stefan and his team have developed a platform with some of the latest other plant tissues, such as needles metabolomics platform over the past technologies that will take us to the and leaves, using supercritical carbon few years for analysing dewatered next step in the development of dioxide as the solvent. This works in sap extracts. This foundation was used alternative species extractives and much the same way as Scion’s and expanded to characterise specialty wood products. supercritical dewatering plant with dewatered sap extracts from alternative the additional capacity to extract Beyond the traditional sapwood and tree species, including Douglas-fir, other compounds. The results were heartwood from the forestry industry, tōtara and eucalypts. surprising – and very exciting. there is a large resource of bark already in existence and the possibilities of “Further investigation of these Some of the phytochemicals recovered are highly functional chemicals that what is hidden in leaves and needles extractives here at Scion, using nuclear are not yet fully explored. Considering magnetic resonance and other can be used to link polymers together to make bioplastics and bioadhesives, the diverse range of tree species analytical techniques, has identified a available, this equates to a huge group of chemicals that were previously thus providing a source of naturally occurring ready-made polymer untapped potential within the forestry not easily obtainable. With a high industry. percentage of bark burned for energy precursors. or dumped, some valuable chemicals “Considering just bark for the moment, are currently going waste. the volume of phytochemicals “These discoveries offer exciting extracted using supercritical carbon possibilities in the future for dioxide and hot water would equate Callaghan Innovation, University ‘whole-of-tree biorefining’ where virtually to over 40-50 per cent of the original of Würzburg (Germany) none of the tree is left behind in the dry mass of bark,” says Stefan. “These chemicals could be used as sustainable forest, and the tree’s total resources Scion Core are more fully utilised. It could lead to chemical feedstocks for many industries. the creation of new onshore processing “What would be left in the bark after www.scionresearch.com/ plants for the recovery of high value this process is an insoluble residue ar15extractingchemicals

 Impact KPI-6: Cost effective and resilient buildings using New Zealand wood-based materials. By 2019, Scion product solutions will be embedded in new constructions to support the New Zealand wood products industry to increase the use of wood and wood-based products in residential and light-commercial applications and help grow their projected revenues to an additional $115 million per annum by 2022 through exploitation of off-site building processes.

On-going: supported the industry and Government in developing standards to enable greater uptake of wood products in the New Zealand building sector. (Refer KPI .)

By 2016, Scion, with industry, will By 2019, Scion’s new innovations in have developed new systems that wood-based building products will can be incorporated into New Zealand be embedded in new industry buildings, improving affordability and/ building innovations for domestic or building performance. and export applications. LEADING INDICATORS

    

Urban Equilibrium, a Scion-developed Two new wood modifications strategy to address climate change, developed a clear and light- aims to utilise the built environment coloured formulation, targeting components to mitigate cities’ enhanced durability, stability and greenhouse gas (GHG) emissions. hardness in radiata pine. Patent Application of this strategy to Auckland and IP positions are currently under demonstrated that Auckland’s target of investigation. 40 per cent carbon emissions reduction compared to 1990 levels could be

PROGRESS achieved 25 per cent faster than planned.

We participated in the revision of the timber structure standard NZS3603, provided sections on solid timber grades, plywood, poles and laminated veneer lumber (LVL); participated in the pre-standards committee meetings around the potential revision of the timber treatment standards; and played a role in the ongoing development of the Standard Operating Procedures for timber grading and timber treatment.

timber, glulam and laminated veneer carbon sequestered within the built Storing carbon lumber, as opposed to conventional environment, starting with the volume technologies, compounds the amount of timber used in solid timber buildings. of timber used in construction, thereby within the urban “Evaluating the environmental benefits increasing the environmental benefits of using timber in construction is not contributed by wood. environment new, but studies have only been done on single dwellings until now. The Urban Equilibrium is a strategy to Substituting building materials novelty of this project is to evaluate address climate change by using would reduce manufacturing those benefits at an urban scale. timber-based building materials that sequester and store carbon, and emissions by 38 to 65 per cent, “With the move to more, and larger, help reduce greenhouse gas (GHG) and prefabrication would cities it is becoming more important emissions. The strategy aims at for the built environment to balance maintaining a balance between reduce construction emissions its greenhouse gas emissions. The humanity and the natural environment, by up to 13 per cent. urban equilibrium strategy allows for which in New Zealand, is reflected in future urban development to be considered as a resource to mitigate the traditional Māori kaitiakitanga “Urban Equilibrium presents a strategy those emissions. We used Auckland principles of stewardship. to help greenhouse gas mitigation while as an exemplar of what is possible.” In 2013, Scion was engaged by Sequal meeting a city’s future growth need,” Lumber in Kawerau to evaluate the says Andrea Stocchero, a sustainable About one-third of the country’s contribution made by ‘massive timber architect with Scion’s Built Environment population currently live in Auckland construction’ technologies to balance Team. “There is scientific evidence on with this expected to increase by about urban carbon emissions, within the the carbon sequestration rates of one million over the next 30 years. urban equilibrium model. The use of forests and long-term carbon storage Auckland Council’s Plan also sets a solid wood technologies and engineered rates in timber products. We can target to reduce the city’s GHG wood products such as cross-laminated therefore calculate the amount of emissions by 40 per cent by 2040.

 Scion’s research team compared the example, substituting building materials values need to be the starting point Auckland Plan’s GHG emission would reduce manufacturing emissions from which we design how we choose mitigation rate with what could be by 38 to 65 per cent, and prefabrication to exist,” says David. “Scion’s research achieved using urban equilibrium would reduce construction emissions shows that achieving these values development principles over a 30-year by up to 13 per cent. Other emissions and urbanisation do not need to be period. Calculations were based on savings would be made at end-of-life mutually exclusive, and the use of the forecast growth of residential, by landfilling the timber waste or timber is central to achieving both social and commercial buildings laid using it as a substitute for fossil fuels outcomes simultaneously. Their out in Auckland Council’s Unitary Plan. to generate energy. findings affirm what the timber industry “Our study showed that council could “Our study showed that while there is a has promoted for some time - that achieve their emissions reduction need for a top down approach to urban timber means more than wood.” target 25 per cent faster than planned equilibrium from central government, The case study was completed at the by applying urban equilibrium to their urban decisions can play a significant end of 2014 with a scientific paper forecast growth,” says Andrea. “By role in achieving a more sustainable pending publication. year 30, sustainably managed forests environment.” supporting new urban development Executive Director of Sequal Lumber, would be sequestering carbon at a rate David Turner, says the urban equilibrium equivalent to 6.6 per cent of Auckland’s concept provides an analytical 2009 GHG emissions, with the amount framework to discuss how we urbanise, of timber needed to sustain this level and elevates the discourse on the Sequal Lumber of growth, providing long-term carbon structural nature of urbanisation from storage for a further 6.6 per cent. a set of products to a set of values. Scion Core, Sequal Lumber “Using massive timber technologies “If we value sustainability, co-existence www.scionresearch.com/ would provide other benefits too. For and intergenerational equity then these ar15storingcarbon

 Wood fibre, pulp, biopolymers, packaging and biochemicals

IO – Expand opportunities in the wood fibre, pulp, biopolymer, packaging and biochemical industries Impact KPI-: Develop new wood and fibre-based manufacturing industries in New Zealand. By 2019, new capital investment will be occurring in new manufacturing industries in New Zealand as Scion’s developments in new high-value products derived from forest materials are being adopted.

By 2014, at least one By 2015, Scion will have By 2016, Scion will By 2018, at least six By 2019, new high manufacturer will be assisted at least one have developed to new extruded products performance commercially industry partner in prototype stage at with renewable content composites evaluating a new producing transport least one new high- have been developed developed by Scion packaging application fuels from woody value co-product to prototype stage and are supporting the developed by Scion biomass to develop a arising from wood by 2019 at least two of development of new and Scion’s partners. business case to enable processing that has these are incorporated industries in New informed decision for been reviewed by a in new product offerings Zealand and providing their further investment. commercial by firms. direct revenue to (Refer KPI 8.) partner for potential New Zealand. investment. LEADING INDICATORS

    

Completed trial with Technical support was A new biospife Proof-of-concept for one partner. A second given to industry formulation was retaining, accumulating trial is planned. partners (Z Energy and developed; first scale-up and incorporating PHA Norske Skög) within the trials are underway. containing biomass Stump to Pump PGP The development of resulted in a material programme ($3.6 million). biodegradable vine that could be the basis The programme was guards containing of a thermoformable halted after the technical renewable components composite panel. evaluation stage owing to commenced. The aim Thermoformed the prevailing economic is to produce a product composites are climate, particularly that protects the vine growing exponentially, declining crude oil prices. for the required time offering short cycle then degrades naturally times, tailored into the environment. properties, recyclability, First prototypes of our and are applicable in Two companies were engaged to scope vine guards were the aerospace or product development from the lignin produced and are automotive sector. nanofibre/carbon nanofibre platform currently undergoing

PROGRESS developed at Scion. Establishment of a environmental exposure spin-out company is being explored to tests to confirm the further commercialise development degradability and of the lignin nanofibre/carbon nanofibre performance profile. platform. A bioadhesives product was assessed for commercial production and its potential in the market with involvement by a commercial company. Planning for scale-up trials at a commercial plywood facility was completed. The Biopolymer Network Ltd (BPN) was supported to develop a new biobased product, with a pathway to commercial implementation defined by BPN.

 The project is a result of a collaboration superior surface on the final moulded Transforming between LignoTech Developments Ltd, product. This is a boon for the research partner Scion and Reichhold automobile industry in particular, where bio-waste into Inc, one the world’s largest suppliers high quality paintable surfaces are a of unsaturated polyester resins for requirement. valuable composites. LignoTech’s patented The LignoTech - Scion partnership has steam explosion technology ‘pressure been running for over seven years. composites cooks’ lignocellulosic (woody) residue, During this time Scion has helped such as dried distillers grains and corn LignoTech optimise their material and A revolutionary technology, developed fibre, making it amenable to further develop thermoplastic and thermoset by Ashburton-based company LignoTech processing. composites for property testing. We Developments Ltd, is attracting The powder produced from this process have also adjusted their process to interest internationally for its ability can then be incorporated into both produce a less moisture absorbent to transform agricultural waste into thermosets (sheet moulding compound material. eco-friendly ingredients used to make SMC, and bulk moulding compound After fire destroyed their Ashburton bio-plastics and composites. BMC) and thermoplastics, such as facility in December 2012, LignoTech The technology transforms bio-waste high density polyethylene compounds. took the opportunity to build a plant into a replacement for petrochemical The end product is lighter, stronger and with increased capacity in the US, and and mineral fillers that are used in the more durable than those made with with access to an abundant supply of manufacture of plastics and composites, dense, heavy calcium carbonate. raw material. The corn-ethanol adding considerable value to what The powder particles are also smaller industry in the US alone, generates would otherwise be livestock feed or go and uniformly sized so can be more over 40 million tonnes a year of dried to landfill. evenly distributed, resulting in a distillers grains and solubles as a by-product. The process adjustments developed at Scion have been incorporated into the design and construction of the new production facility in Kearney, Nebraska. Scion continues to support LignoTech with their US plant design and trialling our new technologies with their industrial clients.

LignoTech Developments Ltd; Reichhold Inc. (US) LignoTech/Xylemer Bio-Products www.scionresearch.com/ ar15transformingbiowaste

are exposed to fluctuating humidity. printing press. This enables multiple New barrier This can cause changes in moisture thin layers to be applied, which reduces content and premature failure of the both total volume of coating required coating adds boxes, resulting in costly product loss. and the costs incurred. It also provides Scion’s Packaging Team has developed superior barrier performance with value to a new moisture barrier coating fewer cracks on the coated surface designed to increase the lifetime of than conventional coatings. packaging paperboard in humid conditions. Scion has been researching moisture Applied over ink, the coating also coatings for paper for many years. The Horticultural exports are worth an provides a high level of gloss that challenge has been to come up with estimated $4.7 billion to New Zealand, protects package branding and offers a coating that could work on both a with a large majority distributed through good scuff resistance so the visual conventional coating line and a the chilled supply chain in cardboard impact of the product is maintained flexographic press, due to the boxes. Ensuring these products reach right through to the end user. fundamental differences between the the consumer in good condition is an Key to its success is the flexibility of its two technologies. ongoing challenge for the chilled goods application. The coating can be applied Conventional moisture coatings supply chain, where cardboard boxes using an industry-standard flexographic normally consist of mineral pigments,

such as clay and talc, in a polymer latex. These are traditionally applied in a single, thick layer on packaging coating lines, which are not available in New Zealand. Packaging companies therefore need to maintain a stockpile of imported coated packaging material on hand. Conversely, flexography is a simple printing method often used to print directly onto packaging such as sacks, bags or boxes. The inks used are very fluid so they can be used to print images and text. A single printed ink layer is much thinner than a barrier coating, and presses are normally equipped with 4-10 inking units making it possible to apply multiple layers at once. Due to its flexibility of application, Scion’s new barrier coating will now make it possible for packaging companies to apply barrier coatings have confirmed that Scion’s formulation This research opens up further in-house as required, without the can be applied without damaging opportunities for packaging need for further investment in costly commercial equipment. The first trial manufacturers who have an in-house equipment. It will also mean less was application on to paper and the printing press to add value to their product loss and happier customers. second more recent trial directly on to packaging. For a $4.7 billion industry, The barrier coating technology has been corrugated cardboard boxes. even small savings in product loss successfully tested at pilot scale at “Scion’s new barrier coating was run through less box failure will amount to Karlstad University in Sweden. Scion’s successfully on a flexographic press a considerable saving for the industry. investment in an in-house printing press and the results were quite promising has now made it possible to conduct for a first up trial,” says Gerry Lenting, further trials on site, and test packaging Key Segments Manager at Carter Holt performance in our purpose built Harvey. “We would expect performance CHH coolroom box compression creep improvements to be achieved with facility, which stimulates conditions in further trials as the interaction between Scion Core the chilled supply chain. the coating, the application machinery Trials run recently on two commercial and the substrate being coated is better www.scionresearch.com/ flexographic presses in New Zealand understood.” ar15newbarriercoating

plugs previously used in meat This new attribute of benign rapid Cost-effective processing, which required employees dissolvability distinguishes Adept to extract them. As a result, the plugs Plastic’s products from others and, with solution helps our were often overlooked with renderers the new custom extrusion line, has and pet food manufacturers having enabled them to generate new sales by customers grow to recover these items further making tailored dissolvable products. downstream. This has supported on-going The soluble compound is lightweight employment with further expansion of In 2012, Scion was engaged by New and inexpensive to formulate, making the company planned. Zealand plastics manufacturer, Adept it commercially viable to process and Adept Plastics won a gold award for these Plastics, to advance their non-toxic, the end product a cost-effective products at the 2014 New Zealand Plastics dissolvable injection moulding option for Adept Plastic’s customers. Industry Design Awards in October. compound for water soluble animal/ Adept Plastics since built on their meal processing devices. Adept Plastics research and development investment is a pioneering leader in the meat by installing their own specially Adept Plastics processing and medical sectors, designed extrusion line, in consultation supplying 95 per cent of Australasia’s with Scion’s Biopolymers and Adept Plastics abattoirs. Composites Team, followed by a short The soluble processing devices secondment by one of our scientists to www.scionresearch.com/ replaced the non-degradable plastic provide practical assistance. ar15adept

 Energy security

IO – Increase New Zealand’s energy security through the use of forest biomass, clean technologies and industrial symbiosis Impact KPI-: Diversify the products of existing firms in wood processing, pulp and fibre production in New Zealand. By 2019, Scion’s product and process developments will be embedded in existing wood processing industries to support them build greater economic and environmental resilience through diversification of their product offerings and reduced environmental impact.

By 2015, Scion will have delivered By 2016, Scion will have By 2018, Scion will have supported at least one commercial solution supported the pulp industry in a group of firms in one region to to a firm or waste material evaluating at least one new develop a value proposition, treatment entity for the high-value co-product from based on industrial symbiosis, conversion of liquid or solid rich their operations. outlining the benefits/risks across organic wastes into recoverable economic, social and products to maintain BATEA environmental criteria, enabling (Best Available Technology them to make an informed

LEADING INDICATORS Economically Achievable). decision for action.

    

TERAX™ technology was Contract lab-scale trials were The MBIE-funded Industrial demonstrated at pilot scale at carried out for a client to modify Symbiosis project began analysis Rotorua Lakes Council (RLC) a pulping process to produce for two case studies and wastewater treatment plant. A paperboard with improved identified five opportunities for decision from RLC on the strength when exposed to a further analysis with the deployment of the technology at cycling humidity environment. co-funders. commercial scale is awaited. This work was successful and is An electro-separation process to ready to scale-up.

PROGRESS remove resin from pulpmill liquid streams was successfully developed. Next steps are to scale up to process and complete the business viability assessment.

 Market access and risk management

IO – Protect and enhance market access and improve risk management in the forest industry including forest health and preparedness for biosecurity incursions, fire and climate change Impact KPI-: Ensure New Zealand forests are resilient to current and future natural threats. By 2019, new tools and technologies will have been developed to quantify and mitigate impacts from the increasing risk to New Zealand’s forests from pests, fire and wind, and climate change, and will have been adopted by forest industries, land owners, and central and regional government.

On-going: the National Forest Herbarium and the Forest Health Collections and Databases remain viable and provide valuable information on the national forestry position for New Zealand.

By 2016, Ministry for By 2016, Scion will By 2016, rural fire By 2017, there will By 2018, options to Primary Industries have identified radiata stakeholders through be at least two reduce the impact will have adopted a pine germplasm with the Rural Fire Research examples of policy of Phytophthora new tool or method improved resistance Advisory Committee makers or forest on radiata pine, developed by Scion to at least one foliar will have adopted new growers using kauri and one and Scion’s research disease. fire behaviour models Scion’s models and horticultural partners to enable or adopted enhanced tools to quantify species have been early detection and/or data collection systems and mitigate the identified. eradication of a pest that lead to both impact of climate LEADING INDICATORS to New Zealand’s enhanced fire fighter change or severe forests. safety and intelligence weather. for fire fighting decision making.

  

The forest biosecurity Laboratory-based Wilding conifer burning One forest manager Laboratory studies surveillance system testing of Pinus radiata trials have been is already using showed that both was re-designed to germplasm from the prepared for ignition Scion’s models to phosphite and expand coverage from RPBC’s Elite Clone lines this coming spring. The assess the risk of copper oxide are plantation forests to has identified lines trials will provide data wind damage when promising all areas where forest that are either more to improve the conifer scheduling thinning chemicals pests could first susceptible or more burn models utilised in operations. The to control red establish. Prototype resistant to the Fire Behaviour impacts of future needle cast on pest establishment Phytophthora pluvialis, Calculator and climate change on Pinus radiata. and surveillance the causal agent of red Prometheus Wildland the risk of wind Preliminary studies optimisation models needle cast. This Fire Growth Model. damage were looking at were developed. In finding augers well for Prometheus was used assessed and chemotaxis 2015-16 these will be the eventual operationally at several recommendations (chemical stimuli tested with the aim of deployment of wildfires during the past made on how forest that could attract or full operational resistant lines on summer to assist fire growers need to repel Phytophthora deployment in 2016-17. disease prone sites. management decision modify their zoospores) also making (e.g. fire silvicultural regimes showed good

PROGRESS suppression resource to mitigate this risk. promise as another allocation, community method to reduce evacuations). A impact of prototype UAV fire Phytophthora in hot-spotting system for both natural locating areas burning, ecosystems and not visible to the naked plantations. eye, was developed and is being tested.

Herbarium now offers high resolution images of specimens online. Gaps in the collection of New Zealand cultivated woody species were identified and are being addressed with the help of external partners. During the year, >700 specimens were added and >300 requests for identification or botanical information were addressed.

 that swept through 600 hectares of received real time advice on a complex Innovative fire forest at Onamalutu, in Marlborough. fire, with multiple fuel types on rough The fire destroyed forest and farms, terrain. behaviour tools and threatened numerous homes and “We used Veronica’s predictions to make properties. It took the efforts of 15 decisions as to where to concentrate prove their worth aircraft, 180 fire fighters plus an NRFA firefighters and aerial support, and national incident team to bring the when evacuations might be necessary. As a result of over 20 years of fire under control, with an estimated “The wind changing direction was collaborative research between Scion cost of $1.4 million. especially concerning. When we knew and New Zealand’s National Rural Fire Using the Prometheus fire behaviour a southerly change was on its way, Authority (NRFA), rural fire managers model and the New Zealand Fire Veronica and I tracked its progress have access to a range of innovative Behaviour Toolkit, Veronica was able closely. The fire crews were working fire behaviour tools that have been to provide fire weather forecasts, and amongst tall timber at the time and developed or adapted specifically for fire behaviour and growth predictions there was a risk of weakened trees New Zealand conditions. for the Marlborough/Kaikoura Rural Fire toppling when the wind changed.” Authority (MKRFA). These predictions Following a post-event review of the “We work closely with fire formed the basis of operational fires, Veronica used Prometheus to managers, rural fire authorities decisions made around resource demonstrate the likely behaviour and deployment and possible evacuations. magnitude of the fire without and other research “By taking into account weather suppression, and illustrate the “values organisations to ensure the conditions, the lie of the land and saved” by the firefighting efforts. models and tools we develop vegetation, and the way they interact, Prometheus is Canadian software that we can go a long way to predicting the has been adapted for use in New are relevant and validated by behaviour of most fires,” says Veronica. Zealand and validated against a number rigorous science,” says Scion “I used up-to-date weather forecasts of historical New Zealand wildfires. fire scientist Veronica Clifford. for the area and other information to The model can be used for a range of predict what the fire was likely to do applications including forecasting over the next 12-hour period. Then I wildfire growth, providing post-fire These were put to the test in February briefed management and the fire support for wildfire investigations, by Scion fire scientist Veronica Clifford. crews at twice daily shift changes.” and planning prescribed burns. It can Veronica served as technical specialist Richard McNamara, Principal Rural also be used to conduct “what if” for the National Incident Management Fire Officer for the MKRFA said having scenarios to support readiness and Team deployed to manage wildfires Veronica on the team meant fire crews reduction planning as part of the

 Strategic & Tactical Fire Management Planning process. In the case of the Onamalutu fire, it was used to develop evacuation plans by identifying threatened communities and possible egress. The Prometheus model was also used in a post-fire review of a wildfire that threatened the South Canterbury township of Twizel in January. This demonstrated the effectiveness of fire suppression efforts taken and the values saved by comparing actual fire spread with modelled potential fire spread. Results from this modelling have sparked interest from the community to establish a green break around the town for future fire protection. “We take a hands-on approach to fire research,” says Veronica, who is also a volunteer rural firefighter. “We work closely with fire managers, rural fire authorities and other research organisations to ensure the models and tools we develop are relevant and validated by rigorous science. The results of this collaborative research help support the critical decisions made by rural fire managers.” The Prometheus adaptation project was initially funded by DOC in 2009-10, followed by a 10-day secondment by Veronica at DOC to further investigate the use of Prometheus for strategic planning purposes. In 2010, Scion’s Rural Fire Research Team trained DOC staff to use Prometheus. Last year a further 46 New Zealand fire personnel were trained in Prometheus with fire managers using it for a range of operational and strategic planning purposes. Due to ongoing demand, Scion will be continuing to run training and refresher courses to ensure there are sufficient skilled operators around the country.

Alberta Sustainable Resources & Development; Heartland Software Solutions (Canada) Rural fire users including DOC, NRFA, NZFS, LGNZ, NZFOA, NZ Defence Force www.scionresearch.com/ fpsciencereport2014 www.scionresearch.com/ ar15firebehaviourtools

 Licence to operate

IO – Ensure the forest industry’s licence to operate (and reputation) through workers’ safety and capabilities, verifiable environmental performance, product traceability and modern standards; and, by anticipating long-term change Impact KPI-: Sustain the New Zealand forest and wood product industry licence to operate. This is an underpinning group of activities with broad impact across the forestry and forest products (and related) sectors. By 2019, Scion has supported the industry to enhance its licence to operate.

On-going: support the New Zealand export industry by developing new options for products such as packaging to enhance acceptance of New Zealand products in international markets.

By 2015, Scion and the By 2016, Scion with its By 2016, the benefits and By 2016, Scion will have forestry industry will research and industry risks of genetic modification (i) supported forest industries have identified those partners, defined a strategy research will have been to maintain access to cost specific activities where to reduce the use of quantified and presented to effective herbicides and Scion can assist the phytosanitary treatments, the forest industry, management options for the industry in meeting its specifically methyl bromide, government and other key environmental certification of targets for improving by at least 30 per cent, and stakeholders for an informed New Zealand forests, and LEADING INDICATORS worker safety. this will be presented to the decision on its future. (ii) agreed with stakeholders’ Ministry for Primary research priorities for reducing Industries for evaluation and wilding conifer impacts. subsequent adoption by industry.

 

A human factors A prototype landscape Input was made into the Two papers describing the scientist was recruited model of forest insect growing biotechnology environmental fate of to expand Scion’s abundance was developed debate occurring in New terbuthylazine and hexazinone research capability in and presented to STIMBR and Zealand around the in a planted forest human performance MPI. The model will support potential benefits of environment were published and systems safety the case for a potential biotechnology and current in 2015. They indicated little to across the forestry future phytosanitary road-blocks in the no impact to soil and water value chain. This treatment free winter period. regulatory framework on quality in Pumice soil. This capability has facilitated A national network of forest biotechnology. This is work was key to supporting engagement with insect traps collected insect occurring through continued use of forestry stakeholders population numbers within interactions with schools, terbuthylazine and hexazinone across New Zealand the forests and at key export the public, government, on FSC certified land and and alignment with the ports over 2.5 years. A new regional councils and possibly supported their latest research in online data visualisation tool industry. Examples include removal from the list of FSC human factors, safety now makes data available in interactions with NZFOA, prohibited herbicides. Results and performance a secure format to CHH, NZBio workshop on GM were used in development of across numerous stakeholders. Data from this technologies and best operational practice

PROGRESS industries. Development network led to a provisional contributions to regional standards for use of of safe work methods extension of the post council submissions. terbuthylazine and hexazinone in motor-manual tree fumigant exposure period at in the Auckland Council felling progressed, Northport to 21 days in drinking water supply along with several other winter, bringing consistency catchments. strategic initiatives, to to post fumigation log help solve identified handling procedures safety issues within the throughout New Zealand. forest industry.

Staff participated in workshops and EU programmes on developing standards for bioproducts. This included Open-Bio and KBBPPS (Knowledge Based Bio-based Products’ Pre-Standardization) workshops and meetings. Open-Bio is the follow-up project to the EU-wide research project, KBBPPS.

 “A key goal of all forest growers is to nutritional factors. The results will Crucial insights maintain or increase productivity,” be used to develop models relating says microbial ecologist Dr Simeon wood formation to a wide range of from long-term Smaill. “This becomes more important environmental factors, and provide as some radiata pine plantings are now forest managers with new information productivity trials entering their third or fourth rotation. on the wider impacts of manipulating “Information from the long-term trials site nutrition. Scion’s forest systems scientists are will be used to refine the nutrient The GCFF programme has been running demonstrating the value of long-term balance model NuBalM, improving since October 2013. Early results are research to the sustainable the precision of nutrient management in already addressing the knowledge gap management of planted forests. existing and future forest rotations and that currently exists around what “A series of long-term productivity providing for long-term nutritional happens to soil resources over multiple trials established some 30 years ago sustainability.” rotations. Results from the Woodhill offer us a unique opportunity to assess The long-term productivity trials were trial were presented at the GCFF annual changes in soil nutrient status over established between 1986 and 1994 conference in March this year, which was successive forest rotations,” says soil on sites across a range of climates, attended by industry and government scientist Loretta Garrett. “These data soils, and physiography to study the representatives. Sampling of the will help address the uncertainty impacts of harvest and fertiliser Tarawera trial is also well underway. around the ability of many planted activities on productivity of the second “The programme is providing crucial forest soils to supply nutrients over rotation of trees. As part of the Growing insight into the future productive multiple rotations.” Confidence in Forestry’s Future (GCFF) potential of our planted forests,” programme, our scientists are currently says Loretta. “Early results from this “This is a globally important measuring nutrient pools in the forest programme are already raising the ecosystem at the Woodhill and awareness of forest growers about question that we are Tarawera trial sites. These tests were the nutrients that are required to contributing to, while also initially conducted prior to harvesting maintain the long-term sustainability ensuring that New Zealand the first rotation at these sites. of these planted forests. Comparing nutrient pools at the end “This is a globally important question forestry’s licence to operate is of the first and second rotations will that we are contributing to, while also maintained under new intensive provide valuable data that can be ensuring that New Zealand forestry’s implemented in NuBalM to better management practices.” licence to operate is maintained under predict the effects of harvest removals new intensive management practices.” and fertiliser application on productivity Understanding how forest management over single or multiple rotations. University of the South, Sewanee, practices affect a site’s resources is The effect of fertiliser addition on Tennessee (US) critical to long-term sustainability. wood quality is also being examined. Given the rapid growth and short The Woodhill trial site received large MBIE, NZFOA rotation times of our forests, this amounts of nitrogen fertiliser and will issue is of particular relevance to the provide valuable end-of-rotation data www.scionresearch.com/ New Zealand forest estate. linking wood properties to variations in ar15productivitytrials

 Our research has played a key role in Scion’s research on minimising the Minimising supporting the continued use of environmental impacts of forest terbuthylazine and hexazinone under herbicides has supported the forest environmental derogation on FSC-certified land industry’s licence to operate as FSC- between 2012-15, and likely supported certified. Certification is a powerful impacts of forest their removal from the list of market access tool without which, FSC-prohibited herbicides in 2015. With the forest industry’s access to global herbicides terbuthylazine and hexazinone being wood and wood products markets the most effective and widely used could be restricted. Since 2012, Scion’s Weeds Team has herbicides in New Zealand planted This work was presented at the New been studying the long-term effects forests, this is a very positive outcome Zealand Forest Owners Association that a number of key herbicides used for the forestry sector. (NZFOA) Annual Conference in 2014, and also at the Growing Confidence in in New Zealand planted forests have “We have also been able to apply our Forestry’s Future field day in March 2015. on the wider environment. The knowledge about the movement of Scion’s Weeds Team received the research programme is based around these active ingredients through the NZFOA Award for Sector Communication maintaining the forestry industry’s soil profile and across the recently and Engagement in 2014. licence to operate and includes planted environment to help Auckland identifying acceptable herbicides, Council establish streamside reducing spray volumes and management zones in the Hunua investigating the fate of herbicides in Ranges,” says Carol. “This allows different forest environments. terbuthylazine and hexazinone to be applied to forest land adjoining “Continued use of herbicides sensitive water catchments in the area AgResearch, FSC Cluster Group, depends in part on whether while young growth is still establishing. FGLT they break down in forest soils “This was an excellent opportunity for https://www.youtube.com/ or leach into waterways. The our scientists to use the fundamental watch?v=i9zabK1SR1A knowledge we have gained through FSC-certified forest industry process research, to an applied www.scionresearch.com/ needs robust data that shows outcome.” ar15forestherbicides what impacts key herbicides have on the environment,” says pest management scientist, Dr Carol Rolando.

“Forestry companies that are Forest Stewardship Council (FSC) certified need to demonstrate that they are using herbicides in an environmentally acceptable manner,” says pest management scientist, Dr Carol Rolando. “Continued use of herbicides depends in part on whether they break down in forest soils or leach into waterways. The FSC-certified forest industry needs robust data that shows what impacts key herbicides have on the environment.” This information can be used to make independent assessments of the environmental risks associated with operational management programmes involving herbicides. If the risks to water quality are shown to be negligible, the evidence can be used to support grant applications for their continued use. This approach was used for terbuthylazine and hexazinone, which were prohibited for use on certified forest land between 2007 and 2015.

 Working with Māori

Success for Māori is also success for New Zealand. As substantial land holders of commercially forested land, Māori are a critical part of the New Zealand forestry story and will continue to become even more so as Treaty settlements return more land and forests to iwi. The future of New Zealand’s forest industry, and the types of products the industry will be producing in 10 or 20 years’ time, will increasingly be influenced by Māori as either active participants in commercial forestry or by the decisions they make on how their land will be used. In 2014, Scion revised its Māori plan in conjunction with our Ngā Rangatira. We set our leading indicators of success clusters are developing their own are working together to monitor the to be: forestry development and management health of a local stream. The programme 1. Scion and Māori are actively strategies; and the Toitu Te Waonui is now being extended by the school to partnering and jointly investing to initiative is looking at ways to increase include other science areas from Scion. support Māori economic development forestry on currently under-utilised through their forestry assets. Helping to protect tāonga species and land with the help of third party support community resilience is a 2. Māori and Scion staff are working in investors. Direct investment by Māori each other’s organisations and special focus for Scion. During 2014-15, was also made into a new national we continued to help East Coast Māori learning from each other. programme to realise greater value 3. There is increased investment into protect the endangered ngutukaka from eucalypt species, Douglas-fir and species, developed forest strategies Scion research programmes that cypresses, and into evolving directly support Māori aspirations. to build community resilience in the programmes in indigenous forestry fragile environment of the Waiapu Scion’s programmes in partnership with and products. Special focus is being Catchment area, and worked with iwi are continuing to grow with a placed on tōtara and manuka (and Northland Māori through the Tangata greater involvement between Scion staff their product value chains), and the Whenua Rōpu of Te Tai Tokerau to help and our iwi partners. Some examples commercial propagation of these and find solutions to kauri dieback disease. are listed below. other indigenous species. A hui was held in collaboration with Crown research institutes are www.scionresearch.com/scion- Te Puni Kokiri and the Forest Growers collectively partnering with Māori. maori-plan Levy Trust, where research and Examples include: a partnership with www.scionresearch.com/ar15maori development being co-funded by the Maniopoto Māori Trust Board to support levy was shared with Māori trusts and land-based economic development incorporations that are involved, or options for Maniopoto; and with the aspiring to be involved, in forestry. In Centre of Integrated Biowaste Research, return, those groups shared their an ESR-led programme, to engage the experiences and plans for forestry, community over re-use options for with all parties able to identify areas biosolids. In June 2015, the CRIs in of mutual interest and future focus. collaboration with Māori, hosted the The hui provided valuable insights on Te Ara Pūtaiao hui to help re-connect iwi what is important to Māori in research and hapu with science and technology. programmes in New Zealand. We Scion entered into a partnership with plan to continue hui in the regions in local Te Kura o Te Whakarewarewa 2015-16 to build direct links with primary school to introduce Māori trusts and incorporations, and transfer children to science. At the same time, forestry research findings. the children are challenging Scion’s Iwi are investing more in forestry scientists to understand their world programmes. For example, two iwi view. Our scientists and the students

 Reaching out

Collaborations >  formal collaborations with Māori

 National Science Challenges universities and research institutes internationally www.scionresearch.com/ar15collaborations

commissioned programme 86 reports  newsletters

Tech Translation conference  papers (written  Forest Health & verbal) News

magazine videos articles 

events issues of Scion external presentations  sponsored  Connections

www.scionresearch.com/ar15techtranslation

school students Future Scientists 6 interns hosted >  visited lab coats  sponsored for  winning students a local school hosted for a day

 university students employed in summer Futureintech 6 student interactions month Year -8 science teacher secondment to Scion

www.scionresearch.com/ar15futurescientists

 Outreach ,8 unique visitors to our website

, views on YouTube

, followers on LinkedIn Gallipoli pines raised and donated to RSAs , subscribers to Scion Connections for Gallipoli Centenary www.scionresearch.com/ar15outreach

Publications .6 average weighted value of publications

.66 citations per paper

papers published in Vol 44  New Zealand Journal of Forestry Science scientific6 papers published plus supplement

www.scionresearch.com/ar15techtranslation

Awards and Accolades Dr Katherine Challis  other scientists received grants to received a further their research

$ scientists appointed to national and ,  international professional bodies Marsden Fast Start grant to explore molecular energy www.scionresearch.com/ar15achievements

Research collaborations

Scion’s networks extend around the A joint proposal with FPInnovations identified for further validation. These globe. Over the years, our scientists (Canada) was submitted to Forest and genotypes will be used in the MBIE have developed strong international Wood Products Australia Ltd (FWPA) Healthy Trees, Healthy Future (HTHF) and national linkages with universities for assessing wood processing options programme. and other research institutes with the for different regions in Australia. A We continue to collaborate with common goal of extending scientific review of wood modification AgResearch under its MBIE Enabling knowledge and developing innovative technologies was conducted for FWPA Technologies programme for next technologies to overcome some of the and a webinar given to present the generation sequencing and genotyping many and complex challenges facing technology options. in species other than radiata pine. today’s societies. A joint work plan between Scion and An MBIE contract is in place to further Such collaborations keep our scientists VTT in Finland will involve a jointly investigate industrial symbiosis with at the forefront of scientific achievement funded postdoctoral project to the first partner meetings held. The and technological advances, and investigate either bark biorefinery or initial focus is on gathering the dataset help to make Scion an attractive career food from wood. This project fits to use the Kawerau and Fonterra case destination for leading international current Scion initiatives and will speed studies as a model. Scion has helped scientists. up progress. Other projects include with the commissioning of the new bark Scion adapting VTT’s hemicellulose briquette plant as part of the industrial technology, which is used to make new Overseas collaborations symbiosis complex at Kawerau. A collaboration agreement between packaging products, to radiata pine Scion and VITO (Belgium) will see both in New Zealand. As part of our commitment to the organisations explore exciting Bioresource Processing Alliance (BPA), opportunities to exploit lignin. The Collaborating at home a hydrothermal project on wool project will involve separating Scion’s carpets with AgResearch is complete, Our Forest Genetics Team continues to showing good potential to develop an lignin hydrogenolysis oils with VITO team up with the Radiata Pine Breeding technologies, with both organisations alternative to landfill and the possible Company (RPBC) and Scion’s Forest development of new IP. able to explore the development of new Protection Team to screen the next products using these. tranche of RPBC’s elite germplasm for Dr Daniel Gapes has developed a The Scion side of the collaboration is resistance to red needle cast. Preliminary strategy for our engagement with BPA, led by Dr Kirk Torr (below right) with results indicate that genetic variation identifying Scion-led projects for: the the support of Dr Florian Graichen who does exist, and some initial ‘resistant’ development of slow release fertiliser recently joined Scion from VITO. and ‘susceptible’ genotypes have been from lignin; extracting and modifying sawdust for the animal and pet food industry; cross sector resource/value chain analysis systems; and biopolymer production from low-value resources.

More examples of our research collaborations are found at www.scionresearch.com/ ar15collaborations www.scionresearch.com/scionvito

 Financial results summary

Revenue: Includes science research, contract work for government and commercial clients, royalties and licence     fees. Actual Actual Budget Actual EBIT: Earnings before interest, tax and restructuring costs. Revenue, $m . . . . EBIT Margin: EBIT ÷ revenue. EBIT, $m . .  . .  EBIT-R: EBIT before reinvestment where reinvestment are amounts approved by the Minister. EBIT Margin .% .% .% .% EBIT-R Margin: EBIT-R ÷ revenue. EBIT-R, $m . . . . Return on equity: Net profit after tax ÷ average shareholders’ EBIT-R Margin .% .% . % .% funds, expressed as a percentage. Total Assets, $m . . . . Equity ratio: Average shareholders’ funds ÷ average total Return on Equity .% .% .% .% assets. Gearing: Financial debt ÷ financial debt plus shareholders’ Equity Ratio .%  .%  .% .% funds. Dividend, $m - - - - (The Minister of Finance and the Minister of Science and Gearing .% .% .% .% Innovation each hold 50% of the shares on behalf of the public.)

6% Ministry of Business, Innovation and Employment Where our % Government department revenue comes from % Other commercial % Interest

% Employee remuneration % Training and recruitment % Consumables % Depreciation and amortisation How % External services and contractors our revenue is spent % Premises costs % Travel % Other operating costs % Non operating costs % Net profit before tax

 Glossary

BOPRC Bay of Plenty Regional Council MfE Ministry for the Environment BPA Bioresource Processing Alliance MKRFA Marlborough/Kaikoura Rural Fire Authority BPN Biopolymer Network Ltd MPI Ministry for Primary Industries CHH Carter Holt Harvey NRFA National Rural Fire Authority CRI Crown research institute NTWG Northern Tōtara Working Group CSIRO Commonwealth Scientific and Industrial NuBalM Scion’s Nutrient Balance Model Research Organisation, Australia NZFOA New Zealand Forest Owners Association DNA Deoxyribonucleic acid, genetic hereditary NZFS New Zealand Fire Service material PGP Primary Growth Partnership DOC Department of Conversation PSAF Pre-Seed Accelerator Fund EPA Environmental Protection Authority PwC Pricewaterhouse Coopers EU European Union RLC Rotorua Lakes Council FFR Future Forests Research Ltd RPBC Radiata Pine Breeding Company FGLT Forest Growers Levy Trust Scion Core Scion Core Funding FIF Forest Investment Finder SFF Sustainable Farming Fund FSC Forest Stewardship Council STFMP Strategic Tactical Fire Management Planning GCFF Growing Confidence in Forestry’s Future research programme STIMBR Stakeholders in Methyl Bromide Reduction GM Genetic modification SWI Solid Wood Innovation LGNZ Local Government New Zealand TTT Tane’s Tree Trust LiDAR Light detection and ranging UAV Unmanned aerial vehicle MBIE Ministry of Business, Innovation and UNFCCC United Nations Framework Convention on Employment Climate Change

Collaborators Investment Website YouTube

 Scion Chair Tony Nowell CNZM (left) and Directors Sheldon Drummond, Judith Stanway and Elizabeth Chambers (in front). The Directors’ Report is available in Part B of this Annual Report on our website www.scionresearch.com/annualreports www.scionresearch.com