SCION ANNUAL REPORT 2013 HIGHLIGHTS 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 ANNUAL REPORT 2013 PUBLISHED BY Our Annual Report is presented in two parts – Highlights (Part A) Scion and Reports and Financial 49 Sala Street, Private Bag 3020 Statements (Part B). Together Rotorua 3046 both documents fulfil our annual New Zealand reporting responsibilities under www.scionresearch.com the Crown Research Institutes September 2013 Act 1992. © 2013 New Zealand Forest The Reports and Financial Research Institute Limited Statements (Part B) includes the trading as Scion employment and environmental ISSN 1177-1763 (print version) reports, core funding investment, ISSN 1178-5276 (online version) directors’ report, performance targets and financial statements. Cover image: Pinus radiata seeds OUR VISION PROSPERITY FROM TREES MAI I TE NGAHERE ORANGA CONTENTS

05 FROM THE CHAIRMAN AND CHIEF EXECUTIVE 09 RESEARCH PERFORMANCE 11 COMMERCIAL FORESTRY 17 SOLID WOOD PROCESSING 21 WOOD FIBRE, PULP, PACKAGING, BIOPOLYMERS AND BIOCHEMICALS 27 RISK AND ADAPTATION 33 LICENCE TO OPERATE 37 BIOENERGY AND ENERGY SECURITY 38 OUR COMMUNITIES 43 SCIENCE OUTREACH 46 OUR PEOPLE 48 FINANCIAL RESULTS SUMMARY SCION AT A GLANCE

THE NEW ZEALAND FOREST INDUSTRY • New Zealand’s third largest exporter. • Total export earnings were $4.7 billion $45.5m (year ended December 2011). REVENUE • The available volume of wood harvested from planted forests has the potential to increase LAST YEAR: $44.1m from 26 to 35 million cubic metres per year by 2023. • The target is to increase exports to $12 billion by 2022 (from the “New Zealand Forest and Wood $1.7m Products Industry Strategic Action Plan”). TOTAL COMPREHENSIVE INCOME LAST YEAR: $1.6m 274 5.8% ROTORUA RETURN ON EQUITY LAST YEAR: 6.0% 02 WELLINGTON

298 FULL-TIME EQUIVALENT STAFF 21CHRISTCHURCH

01 DUNEDIN 04 SCION ANNUAL REPORT 2013

Our achievements are making an important contribution to the forest and wood products industries’ goals HIGHLIGHTS 05 FROM THE CHAIRMAN AND CHIEF EXECUTIVE

Domestic wood processors have Our successes over the past year, aimed significantly increased production to at increasing the value and productivity meet rising market demand, mostly of forestry, wood and biomaterial driven by the Christchurch rebuild and manufacturing, are game changing. population growth in the Auckland During the year we have been: region. They have however been • Defining how remote sensing negatively impacted by rising log prices technology can contribute to the goal driven by the strong export demand of doubling the productivity for logs. of planted forests by enabling Scion too, has successes to report, precision forestry. and we continue to make excellent • Developing and using the Woodscape TONY NOWELL, CHAIR progress in meeting the objectives of our study for the New Zealand Wood Statement of Core Purpose. Our science, Council so it can evaluate new and technology and thought leadership existing wood processing technologies are helping to strengthen the forest and highlight investment options for industry’s international competitiveness the sector. and develop future growth options. • Working with the Radiata Pine Our role in ensuring that exporters can Breeding Company Ltd to improve expand their global markets and that radiata pine breeding stock and forest growers are protected from risk commenced identification of the is vital to creating economic value for genetic structure of Pinus radiata DNA. New Zealand. Scion’s advances in these areas have been significant for industry, • Refining wood modification with examples such as: technologies to make higher value WARREN PARKER, CHIEF EXECUTIVE products from radiata pine. • Identifying the cause of red needle cast disease and developing tools to • Working with Solid Wood Innovation to New Zealand’s forest industry mitigate its risk to forest health and improve log processing yields through has enjoyed a positive year, log exports. the use of segregation technologies. • Helping MPI to eradicate the Another important milestone was the with export earnings Eucalyptus leaf beetle. successful development of a Primary provisionally up 7 per cent to • Developing a new fire weather Growth Partnership (PGP) investment monitoring system and support proposal, ‘Stump to Pump’, with Norske June 2013 compared to the tools for fire fighters. Skög and Z Energy which may see the commercial production of renewable previous year, and the • Developing, with others, an biofuel products using forest biomass. national log harvest expected improved camera vision system Scion will provide research and for safer and more productive technology support for initial feasibility to exceed a record 26 million steep land harvesting. assessments. cubic metres. • Assessing alternatives to copper In addition to its strong forest industry chromium arsenic (CCA) preservation focus, Scion is also dedicated to of timber. increasing the benefit to New Zealand • Supporting the industry develop from forest ecosystem services and alternatives to the methyl bromide improved environmental sustainability. treatment of export logs. 06 SCION ANNUAL REPORT 2013

A highlight this year was securing a SOUND FINANCIAL PERFORMANCE With respect to a safe work environment, $4.7 million Waste Minimisation Fund in January we were delighted to achieve grant, with Rotorua District Council, to Our financial results are summarised on the tertiary level requirements for build a commercial-scale demonstration page 48. Despite a challenging economic ACC Workplace Safety Management plant for the TERAX™ technology, environment and expenditure constraints Practices. We are maintaining a strong which converts organic waste, such as faced by our main Government clients, programme of initiatives to build a municipal sewage sludge, into energy revenue for the year grew by 3.7 per cent ‘safety’ culture across the organisation. and useful chemical products. The Terax to $45.5 million, with profit of $1.7 million We maintained Enviro-Mark Bronze Limited Partnership between Scion and ahead of the budgeted $1.4 million. This accreditation for environmental the Rotorua District Council has been represented a return on equity of 5.8 per management and are seeking ‘Silver’ formed to commercialise the technology. cent (budget 4.8 per cent) and enabled reinvestment of $975,000 into strategic next year. – Helping Maori grow their cultural, initiatives such as industry secondments, Significant investment was also made social and economic wealth through commercialisation, Ma–ori economic in Scion’s tree nursery to enhance the the sustainable use of their land is development through forestry and security of the genetic modification field demonstrated by our work with Te Tai campus development. trial area, and improve the tree breeding Tokerau in Northland to include kauri and propagation research facilities. and totara in its forestry innovation CAMPUS DEVELOPMENT AND ASSET This infrastructure is critical to meeting project; and with Nga–ti Porou on the MANAGEMENT forest owners’ productivity goals. East Coast to develop an integrated afforestation programme for the Scion implemented a 10-year campus Waiapu catchment. maintenance and development plan in 2011. This year, as part of this plan, we Our achievements are making an commissioned the refurbished Orman important contribution to the forest Laboratory Wing. The wing was officially and wood products industries’ goal of opened by the Minister of Science and more than doubling exports to $12 billion Innovation, the Honourable Stephen per annum by 2022, in turn supporting Joyce, in October 2012. In June, the Government’s target of growing exports refurbished laboratories were awarded as a percentage of GDP, from 30 per cent the international S-Lab 2013 Award for currently to 40 per cent by 2025. an International Laboratory Building. Also, during the year approximately (left to right) Scion Director Chris Insley, half of our staff located into more open, Chair Tony Nowell, CEO Warren Parker and interactive work spaces with improved Hon. Steven Joyce at the opening of the furnishings and equipment. Orman Laboratory Wing. HIGHLIGHTS 07

FUTURE OUTLOOK An increase in the global demand ACHIEVEMENTS AND ACKNOWLEDGEMENTS for bioproducts is encouraging more Markets for New Zealand forest and New Zealand companies to invest This has been another very busy wood products are improving, and in material composites, renewable and productive year for the Board forecasts suggest a global deficit in chemicals and packaging based on and executive team. Scion’s staff are softwood log supply as early as 2020. forest biomass. The Woodscape study continuing to excel and embrace change post the CRI Taskforce, with notable These positive trends, along with a identified several bioproducts as having achievements highlighted on the declining New Zealand harvest volume the potential to generate a step change following pages. We acknowledge their forecast from the late 2020s and the in the economic returns from a log. dedication and enthusiasm to realise need to reduce our greenhouse gas These market opportunities are guiding Scion’s vision Prosperity from trees – emissions, have focussed forest owners Scion’s investments in bioproducts and Mai i te ngahere oranga. and Scion on finding ways to improve bioenergy development. the growth rate, wood properties The forest industry is also undergoing Former director Alison Andrew and disease resilience of radiata pine structural change to which Scion left the Board in August, and we by 2035. Wood processors would must be responsive. In March 2013, thank her for her excellent service to also benefit through improved log forest growers voted to support the Scion. In December, it was a pleasure conversion yields. introduction of a commodity levy. This is to welcome Dr Barry O’Neil and Ms Elizabeth Chambers to the Board. Scion’s core purpose includes expected to be operational by 1 January With the current Board continuing into investigating ways for key stakeholders 2014 and will raise an estimated $6.5 the new financial year Scion is well to increase their benefit from forestry- million per annum, with approximately placed to capitalise on opportunities based ecosystem services, such as half allocated to industry research. arising from further positive change in carbon storage, biodiversity protection, In addition, the Wood Processors the New Zealand science system, land stability and water quality. Association and the Pine Manufacturers forest industry and biomaterials sector. Forest planting and deforestation Association are planning to merge late rates are proving to be very sensitive in 2013, which should assist them to also to carbon prices and this in turn is introduce a levy and help position the impacting the area and age structure forest products industry more effectively of New Zealand’s future plantation with key stakeholders. forests, and greenhouse gas inventory. Scion’s Board and staff are actively Carbon payments assist forest owners’ – involved in these developments and cash flow and are important for Maori assisting the industry to plan for Tony Nowell as they decide how to best use forest sustainable growth and improved returns. Chair land returned through Treaty of Waitangi settlements and their currently under- The new Callaghan Innovation utilised freehold land (an estimated 1.2 presents Scion with a significant million hectares). Payments for these opportunity to boost its inputs into ‘high services would provide a fairer reflection end’ wood and wood fibre manufacturing of the economic value of forestry as a and bioproduct development research. land use and encourage sustainable Four of the Government’s ten land management. Warren Parker National Science Challenges provide Chief Executive New legislation in Australia and the opportunities for Scion to help tackle EU to ban illegally harvested tropical big problems confronting New Zealand. hardwoods, also presents opportunities An eleventh challenge, Building better for New Zealand’s certified plantation homes, towns and cities, is highly forests and the expansion of relevant to Scion’s capabilities and may hardwood plantings. Producing radiata be confirmed by December 2013. The pine products with hardwood-like challenges will influence Scion’s future characteristics and improving other science and investment, but in a manner species with superior wood quality that allows Scion to continue to fulfil attributes, including New Zealand kauri, its core purpose efficiently. totara and red beech, are key examples. 808 SCION SCION ANNUAL ANNUAL REPORT REPORT 2013 2013 MEASURING AND DELIVERING ON SCION’S CORE PURPOSE*

STATEMENT OF CORE PURPOSE OUTCOME 1 OUTCOME 2 OUTCOME 3 OUTCOME 4

Increase the value Protect and enhance Enhance New Zealand’s Increase renewable and productivity of market access and opportunity to benefit energy production New Zealand forestry, improve risk management from forestry-based and energy security wood products and in the forestry industry ecosystem services by growing wood-derived materials to improve both New Zealand’s ability and other biomaterial the global market to produce sustainable sectors to the position of industry bioenergy and New Zealand economy and the environmental liquid biofuels sustainability of forestry production in New Zealand National Outcomes as described in the as described National Outcomes (SCP) Purpose Core of Statement Scion

COMMERCIAL WOOD WOOD RISK MARKET BIOENERGY AND FORESTRY PRODUCTS FIBRE AND MANAGEMENT ACCESS ENERGY SECURITY BIOMATERIAL I01 I02 ECOSYSTEM I06 PRODUCTS I04 Maximise the Improve the Improve SERVICES Increase value and competitiveness I03 New Zealand New Zealand’s I05 profitability of of the solid Expand forest and energy sercurity Ensure commercial wood opportunities in health and through the New Zealand forestry processing the wood fibre, preparedness expanded forest industry’s industry pulp, packaging, for biosecurity utilisation of licence to operate biopolymer and incursion, fire forest biomass domestically and biochemical and climate for energy internationally industries change and enhance environmental performance Intermediate Outcomes (I0s). (I0s). Outcomes Intermediate objectives medium-term describe These

KPI 1 KPI 3 KPI 5 KPI 7 KPI 9 KPI 12 Enhance Improve wood Expand Reduce biotic Forestry – licence Increase forest product exports biorefining risk – forest to operate energy security profitability through forest KPI 4 KPI 6 health KPI 10 biomasss KPI 2 Improve Develop KPI 8 Wood Expand international packaging Reduce manufacturing commercial competitiveness solutions abiotic risk – – licence to forests of wood fire, climate operate manufacturing change KPI 11 Increase wood product uptake Impact Key Performance Performance Impact Key ( KPI s) Indicators

* This is a simple overview to indicate how the activities of Scion align to achieving the SCP Outcomes. All of Scion’s activities impact on each outcome. The above simply shows where the strongest alignment occurs. HIGHLIGHTS 09 RESEARCH PERFORMANCE 10 SCION ANNUAL REPORT 2013

“This strategic and practical application of core funding is making a major contribution to both science knowledge and exciting commercial developments of high value to the forest industry.” Dr John Butcher, CE, Radiata Pine Breeding Company HIGHLIGHTS 11 COMMERCIAL FORESTRY IO1 – MAXIMISE THE VALUE AND PROFITABILITY OF COMMERCIAL FORESTRY

KPI 1: ENHANCE FOREST Designed to work across both swing The camera has also been found to and tower haulers, the grapple’s be beneficial for positioning the grapple PROFITABILITY improved carriage design and control and preventing hang-ups on stumps, will enable more contractors to adopt improving cycle times and reducing Progress to achieve KPI. Increases the technology. damage to the hauler, chokers and ropes. in productivity and wood quality The technology features remotely A business plan has been prepared and through developing and transferring controlled grapple rotation to reduce a company established to commercialise to industry in partnership with loading times and improve productivity the technology. Future Forests Research (FFR) (i) for the hauler. The non-motorised new models that delineate the effect hydraulic operating system also means LINKING WOOD PRODUCT QUALITY the carriage is lighter and more cost TO FOREST MANAGEMENT of forest management upon wood effective than conventional motorised properties and (ii) further advances carriages. The first production unit is Investment: FFR in resource assessment. In addition already in operation in the Bay of Plenty. Scion has developed a novel approach (iii) sequencing the Pinus radiata to predict the key properties that NEW CAMERA TECHNOLOGY IMPROVES genome as a basis for developing affect solid timber performance. HAULER VISION This tool should assist forest growers substantially enhanced germplasm. to understand what combination of Investment: Scion Core Funding, Reducing supply chain costs genetics, environment and management FFR PGP through (iv) developing an Advanced will deliver products that meet Hauler Vision System to improve consumer needs. the productivity of cable harvesting The approach combines new methods operations and increase worker safety; for quantifying the distribution of wood (v) supporting the FFR harvesting properties within a tree (see Shining the light on spiral grain page 18), with programme in developing mechanical numerical modelling to predict the approaches to steep land harvesting. performance of sawn boards, such as stiffness and warp. GRAPPLING WITH THE SAFETY ISSUES Although the true cost of poor wood OF HAULER OPERATIONS quality has not been fully quantified, Investment: Alpine Logging, FFR PGP Harvesting and logistics scientists, in previous estimates suggest it exceeds collaboration with FFR, have developed $200 million per annum. This tool Of the five industry sectors where the an innovative hauler vision system, the will reduce the amount of timber most harm is occurring, forestry has ‘CutoverCam’ that will improve the safety rejected at the mill or by the consumer the highest fatality rate. The ‘breaking- and productivity of steep country forest due to such things as excessive out’ function in hauler operations has harvesting operations. distortion, inadequate stiffness or been identified as one of the main unsuitable appearance. activities responsible for serious harm. Steep terrain often makes it difficult Apart from the human cost, ACC claims for a hauler to get a clear view of the HERBICIDE RESISTANT RADIATA PINE FOR for forestry related accidents in 2011 breaker-outs, crew members who COST EFFECTIVE WEED CONTROL were over $2.3 million. attach the wire ropes to felled trees for the hauler to extract and shift hauler Investment: Scion Core Funding The harvesting and logistics team, ropes once a corridor of trees has with FFR and commercial partner been extracted. Alpine Logging, have built a prototype non-motorised hydraulic-based hauler The CutoverCam uses security camera grapple designed specifically for technology to emit high frequency New Zealand conditions that will images of ground operations back to improve the safety of hauler operations the hauler operator. The camera can in steep areas. be manipulated remotely by the hauler, providing a clear view of operations from a screen mounted in the cab, helping reduce breaker-out related accidents. 12 SCION ANNUAL REPORT 2013

A herbicide resistant radiata pine KPI 2: EXPAND Sawmills now only accept Douglas-fir has been developed that may provide timber of higher stiffness, and many an easy and cost efficient solution COMMERCIAL FORESTS do not accept wood that fails to meet to weed control. Resistance to an their stiffness grade. Outputs from this environmentally benign herbicide will Progress to achieve KPI. Increasing research will allow growers to retain improve the environmental footprint investment in new forests for a their market share. of a planting operation, and help forest range of stakeholders. (i) Working NEW CONTAINER FACILITY EXPANDS growers achieve their sustainability and with iwi clusters such as Te Tai productivity goals, improving efficiencies NURSERY OPERATIONS in both forests and nurseries. This Tokerau to support a business case for Investment: Scion Core Funding will be particularly beneficial for the development of forests for Northland; establishment of radiata pine plantations (ii) improving knowledge of indigenous Scion’s nursery has doubled the capacity in weed prone hill country. species (kauri and totara) through of its containerised tree stocks facility to meet the needs of clients facing Trials in the containment house and in developing approaches, e.g. calculators specific site or species challenges. The the field have demonstrated the efficacy to enhance their ability to be adapted facility now has the scope to on-grow up of herbicide resistance in genetically to 700,000 exotic or indigenous plants, modified pine. It is projected that for commercial forestry and (iii) which increased the nursery’s total herbicide resistance could significantly continued support to stakeholders in capacity to over two million plants, reduce the cost of herbicide treatment Douglas-fir, eucalypts and redwoods to bare-root and containerised. due to lower labour and chemical input. increase confidence in the expanded utilisation of these species. Research at Scion shows that container BORON VITAL TO TREE GROWTH grown tree crops can significantly prolong commercial planting seasons Investment: MBIE DOUGLAS-FIR GENETIC GAIN TRIALS and reduce the stress typically suffered Boron deficiency is the most widespread Investment: FFR, MBIE by bare-root seedlings, resulting in micro-nutrient deficiency in New Zealand faster recovery and a higher survival forests, causing the death of terminal The breeding programme run by rate. Although bare-root technology buds and shoots, and stem malformation. Scion through FFR and the Douglas-fir will continue to be the mainstay of the cooperative, has provided a solution industry, container grown tree stocks Recent studies by Scion’s forest to the shortage of Douglas-fir seed in have a role to play in research and in management scientists indicate that New Zealand. Commercial quantities meeting the challenges of site or niche boron fertiliser may also promote tree of seed from selected breeding stock species situations. growth, having wider benefits than the are now available from seed orchards prevention of shoot tip or leader dieback. around the country. COASTAL REDWOODS SHOW POTENTIAL The application of boron fertiliser in areas where levels are low enough to Scion’s tree breeding scientists have Investment: FFR, MBIE limit tree growth may therefore improve undertaken an extensive selection Scion, on behalf of FFR and industry forest productivity. programme of Douglas-fir based on timber stiffness. Superior germplasm partners, New Zealand Redwood The cost of applying boron fertiliser, from initial selections was grafted and Company and New Zealand Forestry, at a rate of 40 kilograms per hectare, made available to industry from is exploring ways to improve is around $90-$110 per hectare (including 2005-09, producing commercial the certainty of growing coastal fertiliser and application). Trials with quantities of seed in 2010. redwoods commercially, and increase radiata pine showed an average 22 per New Zealand’s acceptance of the cent growth response to boron, with an Large quantities of young plants product. A review of management 18 per cent growth response in Douglas- from current commercial seedlots have practices and marketability is currently fir. A single application of boron is likely been raised along with seedlings from the being undertaken. to be required for most sites. new selections based on wood stiffness. Genetic gain trials have been planted in Further research is planned to determine 2012 and 2013 to establish exactly how if growth response to boron will occur in these new seedlots benchmark against a wider range of environments to those more traditional seedlots (for example, examined to date. seedlots of Washington origin). HIGHLIGHTS 13

Redwood is relatively unknown in LiDAR (Light Detection and Ranging) Tests have shown the ITD software can New Zealand as a product. Redwood technology uses reflected laser beams to count trees in a stand to within a mean is structurally stable and can be used provide data on stand variables including absolute error of 5 per cent. in existing sawmilling operations. height, volume, basal area and stocking. On-going research is looking into the Although more naturally durable than LiDAR is an assessment tool to aid utility of ITD to predict log grade and radiata pine, durability of current forest management decisions and more wood quality. This will reduce inventory plantings appears to be variable. accurately describe the forest resource. error and allow more precise assessment Domestic timber markets hold promise Scion, in partnership with Kaingaroa of forestry resources. due to redwood’s relatively short 37- Timberlands, Silmetra and Interpine, 40 year rotation and its potential to Individual tree detection will also developed a methodology to utilise LiDAR have a higher return than radiata pine. provide valuable input to a planned generated data within an existing forest However there is still a perception phenotyping platform for future management structure. The methodology our domestic product will have to research into genetics, tree breeding translates LiDAR information into area- improve in order to compete with US- and forest management, which is critical based metrics that can be directly used grown redwood. for supporting industry’s productivity within existing software systems to enhancement goal. Currently exported to the US as raw improve the accuracy of assessing logs and timber, confidence is growing stand resources. “These technologies are ideal for with the US market that New Zealand New Zealand conditions where there is Kaingaroa Timberlands plans to timber is comparable to that from their predominantly a single species grown implement the technology to reduce the domestic crop. commercially,” says Dave. “This is not amount of field inventory plots required the case internationally where mixed The Redwood Development Plan and will be acquiring LiDAR for use at species make it difficult to remotely identifies further research priorities Kaingaroa forest, which constitutes assess resources. However, it is likely our to provide more certainty to growing about 10 per cent of the national estate. software can be adapted to solve this redwoods commercially and encourage Their development of this technology, in issue for global clients.” expansion of plantings. It is already conjunction with Scion and other parties, being implemented by industry. The is likely to expedite the uptake of LiDAR report is also being made available to for inventory purposes throughout the GROWING ECONOMIC VALUE FROM regional councils and other redwood forest industry in New Zealand. INDIGENOUS FORESTRY stakeholders. In a step further, Scion’s resource Investment: Scion Core Funding, assessment specialist and software MBIE, MPI, Tane’s Tree Trust PRECISION ASSESSMENT WITH developer, Dave Pont, has refined the TRANSFORMATIONAL TECHNOLOGY methodology to detect, delineate ...the improvement in productivity of and count individual trees. Agathis species by 50 per cent in only one Investment: FFR, MBIE, Timberlands breeding cycle in other countries shows the Ltd, Rayonier; Interpine invested in The Individual Tree Detection (ITD) the methodology. software can generate individual tree potential to do the same for kauri in metrics and maps showing spatial New Zealand...... reliably monitoring individual trees from variation in tree stocking, and allows New Zealand forestry is dominated by remote sensing has been an elusive goal for forest managers to accurately predict radiata pine. An increasing number of stocking and tree dimensions. This level the global forestry industry for years, and forest owners are looking to diversify of detail has not been achievable we have achieved it... in response to market changes and until now. the forecasted impacts of factors such “Reliably monitoring individual trees as climate change. This provides an from remote sensing has been an elusive opportunity to grow the economic value goal for the global forestry industry for from indigenous species. years, and we have achieved it,” says Ma–ori landowners and trusts, in Dave. “Application of the data is the key. particular, are actively pursuing growing Both the resource assessment and the indigenous species for timber or other ITD technologies use the same data from commercial opportunities. Scion is LiDAR; it’s how they analyse it which working with FFR, Te Tai Tokerau is different. ITD can provide detailed Forestry, Tane’s Tree Trust and Northern information that is not available using Totara Working Group to identify the conventional remote sensing technology.” production and management potential of selected indigenous species. 14 SCION ANNUAL REPORT 2013

“Surprisingly one of the greatest KAURI VOLUME COMPARISON GRAPH barriers to wider use of indigenous trees in both environmental enhancement 1400 and commercial planting projects is a lack of easily accessible and understood 1200 information about how to establish and manage indigenous species, and little 1000 is known about which provenance of 800 which species to plant,” says Peter Berg, Chairman of Tane’s Tree Trust. 600

“Collaboration with Scion on a suite 400 of key nursery and planting trials and Volume (cubic metres/ha) (cubic Volume investigating the cost of establishing 200 indigenous forest on marginal lands is one very practical way we are helping 0 to advance the information base. This 0 50 100 150 includes evaluating the performance Age (years) of indigenous tree and shrub species raised as bare-root plants in the Planted-best Planted-median Natural-median nursery against expensive container growth performance grown seedlings on a range of hill growth performance growth performance country and riparian sites from the central North Island to North Auckland Comparison of estimated volume for kauri in planted and natural forests. From age 20-60 years and involving councils, community planted kauri are estimated to produce 16-20 cubic metres/ha/year for medium to best performing groups, New Zealand Farm Forestry forests. A comparative figure for kauri in an average natural forest is 2.0 cubic metres/ha/year. Association and other interest groups. Results are already demonstrating that major cost savings are possible and are attracting wide interest. “In Northland, Scion is providing important leadership to the Northland Totara Working Group where Tane’s Tree Trust, local councils and landowners have established a comprehensive programme of silvicultural trials in naturally regenerated stands of totara on farmland. In this region at least, but probably elsewhere in New Zealand, Growth and productivity models Indigenous forestry specialist, the privately owned totara resource is developed by Scion’s indigenous forestry Greg Steward, says results are very extensive – estimates off aerial specialists have been applied to a range encouraging and kauri in particular is photographs suggest more than 50,000 of natural and plantation indigenous showing good commercial potential. hectares in Northland, making this forests nationwide. The effects of pruning “We’re beginning to realise that a particularly valuable commercial and thinning, and of faster growth rates indigenous species like kauri, can opportunity if properly managed.” on wood properties, are also being achieve commercial yields at harvestable investigated along with opportunities for ages of 50-60 years in good growing early value recovery from companion conditions. Apply good silviculture and crops or commercial thinnings. we get better production, and we haven’t Information from the growth and even looked at genetic improvement. productivity models is being developed into web-based calculators from which real-world estimates on returns on investment and management regimes can be developed and compared. HIGHLIGHTS 15

“The volume of kauri in 50 year-old This genetic snapshot of radiata pine A single tree has been sequenced at planted stands compared to natural provides an opportunity for scientists to this stage, selected by the RPBC for stands is about 12 – 20 times better. unlock the secrets of the genome and its top breeding qualities. The benefits Wood quality is comparable, and density use this information to develop improved for the forest industry will be wide is not negatively influenced by latitude, germplasm and undertake leading- reaching. Genome sequencing has given age or growth rate. Planted kauri also edge research in areas such as disease the RPBC confidence to embark on a responds well to thinning. resistance and biomaterials. collaborative Genomic Selection project, which will be 50 per cent funded by “Data supplied by INRA in France, show The benefits of being able to discover the forest industry. the models of growth and productivity genes responsible for particular traits for New Zealand kauri can be applied to will be enormous for the forestry “The Radiata Pine Breeding Company is Agathis species native to New Caledonia, industry, fast-tracking tree breeding commencing a major research initiative grown in managed plantations. The and facilitating earlier selection at to implement genomic selection in productivity of Agathis in New Caledonia the seedling stage that will accelerate radiata pine breeding,” says Dr John can be improved by 50 per cent in only genetic gain. Butcher, Chief Executive of the RPBC. one breeding cycle. “This will lead to a step-change in the Until recently, costs of whole genome 0 50 100 150 forest growing industry with genetic gain “The results are demonstrating that sequencing were prohibitive. The being doubled, and time for deployment both kauri and totara are viable advent of new big data technologies at being halved. alternatives where radiata pine is New Zealand Genomics Ltd (NZGL) has not the species of choice. Combining helped Scion to become a significant “Scion is the major research provider Scion’s knowledge of growth modelling international player in forest genomics. to this development, and is utilising and INRA’s breeding selection, we will core funding to sequence the radiata “The conifer genome is almost ten times have an indigenous species with highly pine genome. This independent Scion larger than the human genome, and regarded wood properties and a number research will run in parallel with the RPBC could have up to 100,000 genes,” says of natural attributes as a forestry programme and provide data to optimise Dr Heidi Dungey, Science Leader for species that’s also far more productive the development of the molecular tools forest genetics. “Scion’s Pinus radiata than was expected. I believe it is directly required for genomic selection. genome dataset consists of over competitive against our exotic species, eight billion short sequences and we “Information from the genome and as an indigenous species, very couldn’t have done it without NZGL. It sequence will also contribute to appealing to Ma–ori forestry aspirations,” is the assembly and annotation of this research in such diverse applications says Greg. sequence data which poses the next as disease control and development biggest challenge. This will be a huge of biomaterials from radiata pine. This UNLOCKING THE GENETIC CODE OF computational undertaking.” strategic and practical application PINUS RADIATA of core funding is making a major Scientists will assemble the data using contribution to both science knowledge a reference-based approach using Investment: Scion Core Funding and exciting commercial developments work already done in sequencing the of high value to the forest industry.” The benefits of being able to discover genes loblolly pine genome by the University responsible for particular traits will be of California, Davis. This will be the John estimates the gain to the enormous for the forestry industry, largest reference-based assembly ever New Zealand economy from genomic fast-tracking tree breeding and facilitating attempted, and much like doing an selection facilitated breeding to be worth earlier selection at the seedling stage that eight billion piece jigsaw using a slightly up to $12,000 per hectare to forest will accelerate genetic gain. different guiding image. growers from improved volume alone. Results are expected to be available Scion is investigating broader Scion has generated the genomic in 2014 when the first assembly of collaborations using the genome sequence data for Pinus radiata, the Pinus radiata genome will go sequence, with the University of providing a platform for a major into the public domain for further California, Davis and Universidad productivity increase for New Zealand’s collaborative input from the de Concepcion, Chile. forestry industry and for placing Scion international genetic community. and partner, the Radiata Pine Breeding Company (RPBC), at the forefront of IO1 – www.scionresearch.com/impact/ global tree breeding research. commercial-forestry 16 SCION ANNUAL REPORT 2013

Greater onshore processing will provide a significant boost to regional and national economies HIGHLIGHTS 17 SOLID WOOD PROCESSING IO2 – IMPROVE THE COMPETITIVENESS OF THE SOLID WOOD PROCESSING INDUSTRY

KPI 3: IMPROVE WOOD With some existing wood protection While the technology comes with chemicals now unacceptable to higher capital and operating costs PRODUCT EXPORTS many consumers and restricted than traditional wood processing in certain export markets by new technologies, it would complement Progress to achieve KPI. Improve regulations, this technology will help an existing sawmilling operation. wood product exports. (i) Continued New Zealand’s wood exporters meet development of a novel approach global demand for environmentally DEWATERING PILOT PLANT FIRST STEP to developing a high performance friendly high-value building products. TO COMMERCIALISATION wood product using radiata pine; (ii) CREATING HIGHER MARGIN WOOD Investment: Scion CAPEX developing new methods to enhance PRODUCTS FROM RADIATA PINE A much greater understanding of the durability of radiata pine to address the dewatering process has enabled Investment: Scion Core Funding concerns over some preservatives in scientists to scale-up the technology timber; (iii) supporting the industry in in a move towards commercialisation.

enhancing standards; (iv) developing The construction of a supercritical CO2 bio-derived adhesives to provide dewatering pilot plant that can process larger amounts of wood, subject to the alternatives to formaldehyde based success of current trials and capital adhesives as a product differentiator cost, is expected to commence at Scion’s and (v) continued to support industry in Rotorua campus in 2014. The design is their product development activities. already completed and an independent business case prepared. NATURAL ALTERNATIVES FOR Design for the modification of Scion’s timber treatment facility has also WOOD PRESERVATION Scion’s dewatering technology, the been completed to enable chemicals removal of water from within the wood Investment: Scion Core Funding, associated with modifying timber to that enables further modification to MBIE, Abodo Wood Ltd be evaluated as part of the dewatering take place, lays the foundation for the technology. Strong consumer demand for healthy production of bespoke high-value wood living environments, along with products from radiata pine. This may The supercritical CO2 pilot plant would regulatory demand for chemical-free allow radiata pine to sell at prices similar allow the production of sufficient building products, is driving wood to high-value hardwoods. volumes of dewatered material to durability scientists to find bio- further the research programme and The dewatering technology uses CO to based alternatives to chemical wood 2 assist potential licensee companies remove water from within the centre of preservatives. Our aim is to develop to complete market and economic wood cells enabling further modification bioactive wood preservatives to achieve evaluation of prototype products. H3 hazard protection for wood used to a range of exacting stability, hardness, in window and exterior door joinery, colour and durability requirements. cladding and outdoor uses such Successful trials conducted this year as decking. by our wood processing scientists have further optimised the technology. Over the past two years, Scion’s wood preservative team has screened 100 Using CT and MRI scanners, scientists compounds from a range of natural have also been able to gain a clearer sources, identifying 20 with positive anti- picture of comparative moisture fungal properties. distribution patterns inside both dewatered and conventional kiln dried This year, the team has been able to fix wood. These in-depth studies show the two of these compounds in wood so they dewatering process has no negative do not leach out when exposed to water, impacts on the final wood quality. providing resistance to wood decay. 18 SCION ANNUAL REPORT 2013

KPI 4: IMPROVE INTERNATIONAL Our scientists have also confirmed that timber drying schedules can COMPETITIVENESS OF WOOD be optimised to reduce drying costs MANUFACTURING while maintaining product quality and throughput. Application of the kiln Progress to achieve KPI. Assist optimiser system in sawmills has shown industry in effecting costs savings. that up to 11 per cent savings can be achieved in overall drying costs. (i) In association with Solid Wood Innovation, a large scale trial to With about two million cubic metres of timber kiln dried annually in develop a tool to segregate logs based New Zealand at a cost of $50 per on stiffness has been undertaken cubic metre (BERL Economic Impact The technology could also be and is showing promise; (ii) a kiln of Wood Drying, 2004), application implemented for log segregation. optimiser programme to introduce of the technology by only 30 per cent Early segregation will save cost by of the mills would equate to $3.3 million energy efficiencies into sawmills has preventing the drying of inferior savings per year. wood and enabling delivery of a more been installed with indicated savings consistent quality product. of up to 10 per cent of energy use. SHINING THE LIGHT ON SPIRAL GRAIN The technology was developed in Investment: FFR partnership with FFR; PermaPine Taupo REDUCING VARIABILITY IN assisted with disk preparation. Wood PINE PROCESSING Spiral grain is a causal agent of warp, adding considerable costs to the wood quality scientist Mark Riddell and his Investment: SWI, MBIE processing industry and undermining team won the FFR Research Award for the reputation of timber as a reliable Science of International Quality 2012 for Radiata pine is inherently variable in building product. Warped timber results this work. Larger scale automated grain its properties and subsequently, its in the loss of market position and assessment is planned. response to processing. Scion’s wood substitution with steel framing or more processing scientists have worked expensive laminated timber products. IMPROVING PRODUCTIVITY IN THE together with Kaingaroa Processing The warp reject rate from Framing 1 BUILDING SECTOR Plant (KPP), Tui Technology, Falcon grade is estimated to be 28 per cent. Engineering, and Automation and Investment: Scion Core Funding, Electronics to improve efficiencies in, Scion has developed a technique to BRANZ (Building and Construction and outcomes from processing map spiral grain angles on wood disks. Productivity Partnership) radiata pine. The technology transmits short-wave near infrared light through wood disks, An industry-wide review of the building A log segregation system has been which moves in the direction of the fibre. and construction industry by Scion devised and trialled at KPP. The system Image processing algorithms are then and the Building and Construction measures important log characteristics used to eliminate wood features such as Productivity Partnership has identified such as shape and pith location that moisture and density, and calculate the key drivers of change that will help the should be able to predict the quality angle of the grain. sector improve productivity. of the sawn lumber derived from each log. Sawmill trials in 2013-14 seek to The technology has been used to Major construction projects, such as validate that the segregation system generate spiral grain maps for whole- the Christchurch rebuild, intensification can select logs with superior properties tree stems of one clone, which will be of Auckland housing and country- for structural and appearance used to gain a better understanding wide seismic strengthening, among grade products. of the causes of spiral grain and assist others, will seriously challenge a sector in the development of breeding subject to political, economic and social selection programmes. constraints, and dominated by small businesses having to account at many levels. HIGHLIGHTS 19

Scion’s value chain optimisation Our scientists designed a model scientists developed a systems mapping to undertake financial analyses of model to help them gain a better current and emerging wood processing understanding of factors influencing technologies for the study. The productivity across all stages of WoodScape model is able to highlight construction, as well as taking into investment options based on metrics account the vast complexities of such as potential return on capital, job the industry. growth and GDP contribution. Factoring in region-specific information on wood Using the model, 19 critical points quality and volume, the result is a value were identified in the building and chain analysis where variables along construction chain where appropriate the supply chain can be explored and intervention could provide the greatest potential opportunities identified. leverage. The review also contains 29 “WoodScape is a valuable tool for recommendations for improvement “Due to the global financial crisis and investors,” says Colin McKenzie, covering issues such as increased associated low housing starts, the wood Chairman of the WoodScape Board. standardisation of processes, improved processing industry in New Zealand has “The WoodScape study has identified quality management, employee training, had a difficult time in recent years,” a number of promising opportunities and client education and involvement. says Peter Hall, technical leader for the for new wood processing ventures project. “On the other hand a number in New Zealand. The Ministry of Business, Innovation of new processing technologies and and Employment is using the findings “This is of wide-ranging benefit to products look promising. We needed as a basis for their ongoing work on both existing processors and potential to determine how an investor could housing affordability and construction investors, who will be able to further compare all possible options and figure productivity of the New Zealand refine the data for specific proposals, out where to focus resources for construction sector. facilitating additional wood processing the future.” in New Zealand along with employment and value-added opportunities. WOODSCAPE STUDY About half of the country’s 26 million cubic metre annual harvest of logs “WoodScape will also help Scion focus Investment: Scion Core Funding, is exported unprocessed. Greater further research into generating more MPI, WPA, PMA, NZFOA, NZTE onshore processing will provide a value for wood processors by gaining significant boost to regional and national ...the study identifies significant a better understanding of how the economies and is the key driver behind industry’s value chain can be enhanced.” opportunities in primary solid wood Woodco’s strategy. processing of A and K grade logs... The WoodScape model has already been The WoodScape model was used to used for more detailed analysis of one Scion was contracted by the analyse the investment potential of a technology and site specific studies are New Zealand Wood Council (Woodco) diverse range of nearly 40 different being planned. to conduct a nation-wide analysis of technologies; both current and New Zealand’s wood processing sector emerging. They included solid wood Scion conducted the WoodScape study in with a view to expanding onshore products, panel products, pulp and paper, partnership with FPInnovations (Canada) processing operations. The study engineered wood products and and with direction from a technical supports Woodco’s strategic goal of biofuel plants. working group and project board, more than doubling export earnings along with industry and government from the sector to $12 billion by 2022. The study identified significant representatives. opportunities in primary solid wood processing of A and K grade logs. Engineered wood products clustered IO2 – www.scionresearch.com/ with a process residue user, such as impact/solid-wood-processing fuel and chemical production, also look promising. The WoodScape model has significant value in analysing these opportunities in greater depth, with a focus on sensitivity and risk analysis. 20 SCION ANNUAL REPORT 2013

Our unique combination of advanced equipment and capability enables novel packaging solutions to meet market demands HIGHLIGHTS 21 WOOD FIBRE, PULP, PACKAGING, BIOPOLYMERS AND BIOCHEMICALS IO3 – EXPAND OPPORTUNITIES IN THE WOOD FIBRE, PULP, PACKAGING, BIOPOLYMER AND BIOCHEMICAL INDUSTRIES

KPI 5: EXPAND BIOREFINING KPI 6: PACKAGING SOLUTIONS Progress to achieve KPI. Growing Progress to achieve KPI. Supporting revenues by at least 10 per cent the packaging and composite through development of new products industry to grow the products. (i) The Woodforce product value of exports. (i) Supported the is now launched internationally with Biopolymer Network Ltd to enhance progress being made on its uptake and commercialise the ZealaFoam™ in New Zealand; (ii) new chemicals bio-based foam packaging product as from the by-products of the pulp a sustainable alternative to expanded and paper industry are in evaluation; WOODFORCE – GOING FROM STRENGTH polystyrene; (ii) developing enhanced (iii) new plastics from biomass have TO STRENGTH coating systems for packaging; (iii) been made with the first commercial Investment: Scion Core Funding, developed the first, for New Zealand, production of the kiwifruit biospife PSAF, Sonae Indústria Group biodegradation testing facility to assist with ZESPRI; (iii) assisting Biopolymer Successful large scale trials of Scion’s the New Zealand packaging industry Network Ltd in the development of high wood fibre technology for polymer in evaluating their new products; (iv) value chemicals (e.g. personal care) reinforcement have seen global giant working directly with the packaging and from plant biomass; (iv) developing Sonae Indústria extend their licence food products industry to enhance their to commercialise the ‘Woodforce’ lignin based products for application technology to North America. processes and packaging solutions. in very high value markets. Sonae Indústria has held an exclusive FRUCOR PACKAGING OPERATIONS AUDIT European licence for the technology LIGNIN MATERIALS AT NANOSCALE since mid-2011 and has subsequently Investment: Commercial worked with Scion to scale up the Investment: Scion Core Funding, The Scion Packaging Solutions technology for commercial production. Revolution Fibres Ltd Team completed a technical audit of The licence extension will increase Frucor’s packaging line and storage Scion’s Industrial Biotechnology Team Sonae Indústria’s ability to deploy facilities to identify inefficiencies, has been investigating the application the technology into major markets, damage and poor performance of of advanced processing technology generating significant royalties for cardboard packaging on their juice to create nanofibres from lignin. New Zealand. production line. Using Revolution Fibres Ltd’s commercial The technology binds wood fibre in Mr Alistair Sayers, Packaging Manager processing equipment, our team has pellet form to produce ‘dice’ that can at Frucor, New Zealand’s second-largest been able to scale up this technology be used in the manufacture of wood beverage company, says they identified to produce continuous lignin nanofibre plastic composites using existing plastic the need for an independent technical mats. This is the first step towards processing equipment. The resulting organisation with the expertise and developing a product suitable for product has strength and weight analytical facilities to best identify and further processing into carbon fibre advantages with a lower environmental influence future improvements. materials for potential uses in advanced footprint than many plastics. composites, energy storage and Several factors related to box Scion’s agreement with Sonae Indústria filter media. construction, design, packaging robotics maintains the opportunity and markets and moisture content were identified Waste lignin is the world’s second most for local companies to exploit the that contributed to box damage. abundant polymer. New Zealand alone technology and enable added value Frucor has implemented several of produces approximately one million manufacturing, which is now being the recommendations resulting in a tonnes annually as a by-product of the actively pursued. pulp industry, most of which is used for 75 per cent reduction in rejectable energy production by the industry. The carton quality and improvements in the development of nanofibre mats adds proportion of the highest quality cartons. co-product options for lignin, giving On a low margin product this is a great it the potential to become a cost- help to Frucor and the supply chain. competitive and non-food feedstock for carbon fibre production. 22 SCION ANNUAL REPORT 2013

AUTOMATED BIODEGRADATION FACILITY AIDS AUTHENTICATION Investment: Scion Core Funding and CAPEX, ZESPRI, BPN Scion’s new biodegradation test facility will help New Zealand companies differentiate their products in international markets by providing validated evidence of their reduced environmental footprint. OUTSIDE THE BOX THINKING WITH Our scientists have completed the Biopolymer Network Ltd (BPN), MULTI-LAYERED BARRIER COATING first trials using the facility, generating supported by Scion, established an compostability data for internally industrial scale pilot plant in Nelson to Investment: Scion Core Funding developed biomaterials such as mould fish boxes and other products TM ZESPRI’s biospife and the Biopolymer from ZealaFoam for use in packaging, Development of a coating technology Network’s (BPN) ZealaFoamTM materials sporting goods, furniture and insulation. for paperboard packaging that acts (see An eco-friendly alternative to as a high moisture barrier increases Expanded polystyrene packaging polystyrene below). The results will help packaging lifetime and ensures the is a multi-billion dollar industry with with internal product development, product reaches customers in the best world consumption of 5.8 million tonnes; and assist ZESPRI and BPN move possible shape. it is however made from non-renewable towards composting certification petrochemicals and its disposal is an The new multi-layered, latex-based of their products. international problem. As an eco-friendly barrier coating greatly reduces the Built in line with international standard alternative to a world-wide problem, volume of coating required – the industry TM ISO 14855-1, the facility is designed ZealaFoam has the potential to norm is to apply one thick barrier to quantify the aerobic composting generate substantial economic returns coating. These thin layers can be of bioplastics and other materials by providing a significant marketing applied using equipment standard to by replicating industrial composting advantage for New Zealand’s primary packaging companies. Applying barrier conditions. The facility measures exports, in particular fresh and frozen coatings in-house rather than using fish. ZealaFoamTM also supports evolved CO2 levels of a product for up external suppliers, means companies to six months and will help determine New Zealand’s high environmental can supply packaging in response to whether additives impede or accelerate standards. customer demand. composting. Scion has undertaken an evaluation Following laboratory-scale trials TM This unique-to-New Zealand of ZealaFoam , which proves to at Scion, this coating technology biodegradation testing facility will be comparable with EPS in terms of was successfully tested at Karlstad provide companies with an onshore performance and cost, with the added University in Sweden at pilot scale. option for the screening and advantage of being sustainably derived It will be made commercially available authentication of their products. and industrially compostable. to New Zealand’s paperboard packaging companies. Biopolymer Network Ltd, a joint venture AN ECO-FRIENDLY ALTERNATIVE between Scion, AgResearch, and Plant TO POLYSTYRENE and Food Research, is working with Investment: BPN, MBIE packaging and product companies nationally and internationally. It is

New Zealand’s packaging industry also collaborating with CO2 processing now has access to ZealaFoamTM, a experts (a significant part of the revolutionary bioplastic alternative to production process) and bioplastics expanded polystyrene (EPS) that can be manufacturers. manufactured on existing production lines with little modification. HIGHLIGHTS 23

CREATING A FUTURE FOR LIGNIN Investment: Scion Core Funding ...transforming this high-volume, low-value by-product into high-value biochemicals with potential for use in consumer goods... Scion’s lignin research programme has identified enzymes to modify lignin and created potentially valuable chemicals and materials from this abundant by- product of wood processing. Over one million tonnes of lignin is generated as a by-product of pulp and paper manufacture in New Zealand each year, which is used as a low grade fuel for energy production by the industry. Future forestry-based biofuels produced in industrial biorefineries will also produce lignin - one kilogram per litre of fuel. The economics of biorefineries will be greatly improved by the ability to add Many of these pollutants share a number These epoxy resins are typically made value to lignin. of chemical similarities with lignin, via chemical reactions with Bisphenol specifically the presence of chemical A (or BPA), a substance that has raised Scion is focused on transforming this rings in their structures. Based on this, health concerns world-wide. high-volume, low-value by-product into Gareth hypothesised that this class of The objective of our research has high-value biochemicals with potential enzymes could be used to transform been to replace BPA with a bio-based for use in consumer goods, lubricants, lignin. Of the enzymes produced, to date, alternative. Lignin has been broken down adhesives or packaging. more than a dozen have successfully to smaller chemicals which are further broken apart these chemical rings. Scion is tackling the challenge of reacted and formulated to make novel unlocking value from lignin through These enzymes are being tested epoxy resins. industrial biotechnology – using enzymes in Scion’s fermentation facility to The lignin-derived epoxy components and through chemical approaches for determine which of them have the ability can replace up to 75 per cent of the BPA the development of epoxy resins – and to transform lignin at an industrial in a resin and lead to improvements in the creation of lignin nanofibres. scale. Gareth explains, “this is the first mechanical performance, outperforming known application of enzymes involved Our biotransformation team, led by the industry standard in strength in pollutant degradation as tools for Dr Gareth Lloyd-Jones, has developed and stiffness. genetically modified, or recombinant, lignin modification through industrial enzymes to transform lignin. These biotechnology.” Lignin has also been used to produce nanofibre mats which have potential to recombinant enzymes (so-named Chemicals from lignin could also find a be further processed into carbon fibre because they were created from future in epoxy resins, a high-value and materials (see Lignin materials recombinant DNA) were already known versatile polymer. to science where they are involved in the at nanoscale, page 21). remediation of polluted soils. Epoxy resins are used in a range of industries due to their valuable properties. Applications include coatings, castings, electrical components and insulation, reinforced composite materials and adhesives. 24 SCION ANNUAL REPORT 2013

Scion has been working with LignoTech Developments since 2007, testing the mechanical properties of the biomass residue derived materials, such as impact resistance, stiffness and strength. In 2010, a strategic collaborative agreement was established between the two companies. Scion is currently working on further enhancements, such as reducing water uptake of the LignoTech material, which could significantly enhance the properties of the bio-composites. With millions of tonnes of DDGs derived from the production of ethanol from corn each year in the United States alone, this ground-breaking technology is generating considerable interest from North American manufacturers. US- based Fisher Composite Technologies is working alongside LignoTech Developments and Scion to trial the ADDING MILEAGE TO BIO-WASTE LignoTech Developments’ transformation technology with potential North technology converts bio-waste into a American customers, ready for when Investment: Scion Core Funding, replacement for petrochemical and LignoTech Development’s US plant LignoTech Developments Ltd, mineral fillers used in the manufacture comes on-stream. Fisher Composite Technologies of plastics and composites. The patented steam explosion technology ‘pressure ...a transformation technology that cooks’ lignocellulosic residue, such as IO3 – www.scionresearch.com/ converts bio-waste into a replacement dried distillers grains (DDGs), corn fibre impact/wood-fibre for petrochemical and mineral fillers and other biomass resources, opening used in the manufacture of plastics the structure and making it amenable to and composites... further processing and modification. The resulting powder can be used as a filler A three-way collaboration between in the manufacture of thermoset and Scion and industry partners, LignoTech thermoplastic bio-composite products. Developments Ltd and Fisher Composite Technologies, has resulted in a Bio-composites made using LignoTech revolutionary technology that creates treated fillers are lighter and stronger eco-friendly, high-value products from with a Class A finish equal to those agricultural waste. containing conventional fillers such as calcium carbonate. These properties make end products, such as sheet moulded and bulk moulded compounds, highly desirable to the automotive industry in particular, for use in light- weight, economical vehicle parts. Resin transfer moulding, or RTM, is another product showing considerable promise. HIGHLIGHTS 25 SECONDMENTS

CARTER HOLT HARVEY KINLEITH “We see this exchange programme as Linking science and technology offering many benefits to both our at operational level organisations. Scion provides much of our research and development capability, in A three month secondment at CHH addition to often helping us troubleshoot Kinleith pulp and paper mill provided wood and fibre scientist, Sean Taylor, operational problems in a timely way. So we an opportunity to gain a deeper are keen to strengthen our technical links understanding of the operations and with Scion and this staff exchange challenges at one of the country’s programme, which was started in 2012, largest mills. provides an excellent way of doing this. By The secondment also demonstrated the embedding Sean in our pulp mill technical value of collaboration between industry team for three months, he was able to get players and the research community. first-hand experience of the production Pulp and paper mills are vast, complex environment, including the nature of problem solving, and gain a better processes. Immersion in day-to-day Pan Pac’s system needed to handle unit operations, and production and understanding of longer-term improvement variable inputs, and as such, improved marketing meetings, greatly enhanced opportunities. The upcoming, reciprocal control of nutrient addition was required Sean’s overall understanding of the exchange will see a Kinleith technologist or to maintain performance stability and various pulping processes at a site- engineer working at Scion and gaining reduce cost. Suren’s secondment has specific level. research project experience and an also provided the opportunity for two It also shed light on global pulp market understanding of how a knowledge-based further research projects. dynamics and how these impact on our organisation functions.” “The pulp and paper sector solid waste client, Carter Holt Harvey. initiative project is an MfE, pulp and Tom Clark, Manager Technical Services, paper industry and Scion funded project During his secondment Sean was Carter Holt Harvey Kinleith Mill able to observe how the mill monitors for the big pulp and paper mills in and controls kraft pulp quality. In one PAN PAC New Zealand,” says Suren (see Safer situation, where a quality issue arose, waste disposal for pulp and paper mills, his onsite presence assisted the mill Achieving the right balance page 35). “My hands-on experience at Pan Pac has led to me being appointed technical personnel in investigating the Clean technologies scientist Dr Suren ‘site owner’ for Pan Pac in the solid issue through evaluation of process Wijeyekoon proposed a nutrient dosing waste project. This will be an on-going chemistry. Basic analytical tools strategy for the biological treatment relationship with Pan Pac and a good developed by Sean provided insight into of wastewater during a three week opportunity to strengthen the link the mill chemistries at a fundamental secondment to Pan Pac’s pulp mill. level. These could be used adequately between research and industry.” The pulp and paper industry has and independently by mill personnel as “We found Suren’s time at Pan Pac highly future process monitoring options. traditionally treated wastewater using biological oxidation ponds. Increasingly beneficial as his ability to take theoretical Sean was employed full time at Kinleith stringent effluent disposal limits means principles into our practical environment between August and October 2012 as companies are beginning to invest in and communicate them to a range of part of a reciprocal relationship between modern biological wastewater treatment personnel was of great benefit. As a Scion and CHH. plants with better engineering control. consequence he refined aspects of our Suren’s secondment provided support to operation that we now understand better to Pan Pac staff following the mill’s recent ensure a more controllable and logical upgrade of its wastewater treatment plant operational base”. plant to Moving Bed Bio Reactor (MBBR) technology, based on a benchmarking Peter Campbell, Utilities Manager, study completed by Scion. This has led to Pan Pac new challenges for the company. 26 SCION ANNUAL REPORT 2013

Substantial collaborative research is reducing market access risks and has the ability to save $6.1 million per year in fumigation costs HIGHLIGHTS 27 RISK AND ADAPTATION IO4 – IMPROVE NEW ZEALAND’S FOREST HEALTH AND PREPAREDNESS FOR BIOSECURITY INCURSIONS, FIRE AND CLIMATE CHANGE

KPI 7: REDUCE BIOTIC RISK The team has also determined an effective spray programme suitable Progress to achieve KPI. Reducing to the terrain and canopy conditions risk to New Zealand’s forests from of the area, using the AGDISP spray deposition model at Scion. The model new pests. (i) Developed potential uses combinations of droplet size, wind control options to minimise the speed, spray release height and aircraft risk from red needle cast, a foliage speed as input, and then outputs disease of radiata pine; (ii) supported deposition profiles that scientists use to evaluate efficacy and drift. This the industry to show that the causal information is used to develop a agent of red needle cast Phytophthora suitable application method. The log trade is worth $1.7 billion pluvialis does not pose any threat At this stage the beetle is restricted to New Zealand’s log trade; (iii) per year and immediate trading bans due to biosecurity issues are a major to a small valley near Upper Hutt. Our supported MPI in an insect eradication concern to the industry. Research scientists expect it to be eradicated after programme; (iv) developed improved into red needle cast and other foliage treatment in spring. diseases is given high priority by diagnostic tools for pests and diseases; TACKLING BRONZE BUG THREAT (v) continued to collaborate across Scion and the forest industry, with results of the research to date being Investment: Scion Core Funding New Zealand and internationally very favourable. to ensure New Zealand has Scion is undertaking further work to the best capability to address develop a viable chemical control for any biosecurity risks. red needle cast and an experimental programme is in place that will identify NO THREAT POSED BY RED NEEDLE CAST breeds of radiata pine with genetic resistance to the disease. Investment: Scion Core Funding, NZFOA ERADICATING EUCALYPTUS LEAF BEETLE Scion’s forest protection scientists Investment: Scion Core Funding, B3 have identified Phytophthora pluvialis as the causal agent of red needle cast, Scion’s forest protection scientists have a disease which causes defoliation in been working with MPI to eradicate the In March 2012, Scion’s diagnostic radiata pine. The disease is viewed as spread of the Eucalyptus leaf beetle, laboratory identified an insect new to moderately serious by growers; trees Paropsisterna beata. New Zealand that has the potential to be a significant pest of eucalypts. The that experience repeated episodes of The beetle defoliates the tree canopy, bronze bug, Thaumastocoris peregrinus defoliation are likely to have slower negatively impacting growth rate and was discovered in Auckland during growth rates than normal. Defoliation subsequent pulp production. While the routine surveillance conducted by MPI may lead to a 20-40 per cent reduction exact impact of a new invasive insect and partners. in annual diameter increment in the is difficult to quantify, MPI estimates following year, however growth the beetle could cause a reduction in This sap feeding bug causes leaf does recover. pulp production by 1-2 per cent across discoloration, or ‘winter bronzing’ which Research, submitted for publication, has New Zealand, meaning the pulp industry can lead to premature leaf drop and shown that P. pluvialis does not pose could face losses of up to $22.6 branch death. Potential hosts of the bug any threat to New Zealand’s log trade. million annually. include over 30 species of eucalypts, but Despite extensive sampling spores were the most severely affected species to not found to contaminate logs under date appears to be Eucalyptus nicholii, natural conditions, and even when a popular amenity tree. Apart from the logs were artificially contaminated the United States, bronze bug has now been viability of the spores rapidly declined. found in every major eucalypt growing region in the world. 28 SCION ANNUAL REPORT 2013

We have been reviewing biological IMPROVED SURVEILLANCE FOR INVASIVE KPI 8: REDUCE ABIOTIC RISK control options and stem injection FOREST PESTS as a method of reducing populations Progress to achieve KPI. Reducing Investment: Scion Core Funding, B3 on specimen urban trees, and are risk to New Zealand’s forests and continuing to support research on Eradication of pest species such as the rural environment to fire, wind and bronze bug ecology. gypsy moth and painted apple moth, has cost the government tens of millions of extreme rainfall and climate change. WINDOW OF OPPORTUNITY FOR dollars; if left untreated, their impact on (i) Development of operational tools to QUARANTINE TREATMENTS the economy, for example on commercial help a forest growing company reduce Investment: MBIE, STIMBR PGP, forestry, horticulture and international the risk of wind damage associated Scion Core Funding trade, far outweighs that cost. within forest management activities; Scion is leading a collaborative Scion has worked collaboratively to (ii) completion of an assessment of programme to investigate alternatives develop a multi-lure approach options for mitigating the risk of to pest trapping for the simultaneous to methyl bromide in the quarantine post-harvest debris flows resulting treatment of logs. Because of its ozone surveillance of multiple species. depleting properties there is mounting This would provide more efficient from high-intensity rainfall events; global pressure to reduce emissions of detection of invasive forest pests and (iii) development of improved tools methyl bromide to the atmosphere. increase the likelihood of successful for adoption by rural fire stakeholders incursion response. Our forest protection scientists have including updated fire behaviour identified an opportunity to define Surveillance trapping using species- models and a new model that predicts fumigant-free windows during which specific attractants is a powerful method the rate of fire spread in crop stubble. there is little risk of pests on export logs. for the early detection of invasive species. The simultaneous surveillance Using purpose-built ‘separator traps’ MANAGING THE RISK OF WIND DAMAGE that allow the catch to be separated of multiple species will reduce hourly or daily, scientists are able biosecurity risk without substantial Investment: Timberlands Ltd to match insect flight activities with additional cost. This approach has meteorological conditions. the potential to be implemented with existing surveillance activities for A national trapping network has been gypsy moth, a feared defoliator of established at forest locations and ports numerous tree species often intercepted throughout New Zealand to monitor pest at New Zealand borders, for which a species. The network is already having nationwide network of traps is already benefits and data has been used by in place. MPI. Long term, these data will be used to develop a pest prediction model to Results indicate that adding lures establish treatment programmes based may reduce attraction and catch for on risk. some species but that the method is compatible for numerous other target Scion has developed a new decision In addition to a reduction in market species. Our initial work has been support tool to support the scheduling access risks for our export forest published and operational funding from of production thinning that will help products, this programme has the ability MPI has been secured to further develop forest growers mitigate the risk of wind to deliver $6.1 million per year (based on this concept in collaboration with Plant damage. Damage from strong winds 2011 export statistics) of savings through and Food Research. can cause large value losses for forest reduced fumigation costs, if a three growers. Silviculture activities that open month fumigant free period can This work was undertaken with up the stand, such as late thinning and be achieved. our Better Border Biosecurity (B3) harvesting, increase the risk of damage. Collaboration partner Plant and Food As a result, few companies production Scion is working in collaboration with Research, and several organisations thin their stands, preferring instead to Plant and Food Research, the University overseas: FFPRI (Japan), INRA (France), thin-to-waste at an earlier stage. of Canterbury and Bayesian Intelligence Technical University of Lisbon (Portugal), on the project, and with other University of Padua (Italy) and United Production thinning will enable stakeholders, STIMBR and MPI. States Department of Agriculture. growers to capitalise on the increased market demand for pulp and meet silvicultural objectives. HIGHLIGHTS 29

The decision support tool synthesises knowledge from complex models that predict the risk of wind damage based on the location and structure of a stand, to create a set of simple decision rules that managers can use to determine whether or not a stand can be production thinned. Such effective management against wind damage therefore offers considerable financial savings to the industry.

ONE-STOP-SHOP FOR FIRE WEATHER INFORMATION Investment: NZ Fire Service Commission (via the National Rural Fire Authority), MBIE Scion and NIWA have developed a new national Fire Weather-System PREPARING FOR THE FIRE SEASON FIRE BEHAVIOUR MODELS – (FWSYS) that provides a ‘one-stop-shop’ Investment: NRFA, DOC, Local TOOLS AND APPS IMPROVE SAFETY for fire weather information, forecast Government, NZFOA, MBIE data and danger conditions across the Investment: MBIE, rural fire country. The system is the main tool Forecasting the severity of fire season end-users, PSAF used by the New Zealand Fire Service weather conditions last November Fire ‘app’ funding: FRFANZ and rural fire managers to better enabled New Zealand’s rural fire monitor changing conditions and the authorities to be well prepared for the Improved fire behaviour models for potential for fire outbreaks. summer season’s fire risks. estimating fuel loads in grass and shrub vegetation types have been Rural fires cost about $100 million The rural fire research team led the developed along with a new model that per year (BERL The Economic Cost of production of a Seasonal Fire Potential predicts the rate of fire spread in crop Wildfires, 2009). The FWSYS will enable Assessment for the country. Collating stubble. The models were produced fire managers to better target fire information on current and predicted using the latest data collected from prevention activities, such as permit conditions, the team was able to inform experimental burning and other biomass requirements, forest closures and public fire managers, the media and general sampling, and will enable fire managers education, as well as to heighten fire public on fire weather potential over to develop more effective and efficient response readiness. the coming summer. The outlook fire control strategies. was updated in January with revised Provision of improved fire weather The fire behaviour prediction tools, seasonal climate forecasts from NIWA, information to landowners and the the Field Manual for Predicting Fire together with information following the public also increases their awareness Behaviour in New Zealand Fuels and spate of fires in Auckland, Northland of, and response to prevailing fire danger the Fire Behaviour Toolkit calculator and Canterbury. conditions, resulting in fewer fire starts software and smartphone applications and escapes, lower firefighting costs As a result, fire agencies undertook have been updated to incorporate and reduced environmental impact. more targeted fire prevention activities these improved models. and strategically positioned firefighting The system is based on NIWA’s The latest smart ‘app’, developed resources in high risk areas. EcoConnect climate forecasting in conjunction with Haumohio Software, platform and utilises the latest research The project was a collaborative provides firefighters with a further tool for predicting fire behaviour in from Scion’s rural fire research group, effort between Scion, NIWA and NRFA remote field situations. The availability including models of potential fire in association with DOC and Rural of a fire behaviour calculator for behaviour and improvements to the Fire Authorities. smartphones enables farmers and fire danger rating system. landowners to predict fire behaviour more accurately, thereby reducing the risks associated with burn-offs. The toolkit smart app is available in both Android and Apple format. 30 SCION ANNUAL REPORT 2013

BUILDING RESILIENCE TO THE IMPACTS The Waiapu catchment is of considerable OF CLIMATE CHANGE spiritual, cultural and economic significance to Nga–ti Porou. Scion is Investment: MPI working alongside the community to The Waiapu River has the highest level develop an integrated afforestation of sediment loading of any river in the programme that will provide employment country. Previous strategies to re-forest for local people, opportunities for areas of the catchment that are prone to innovation, entrepreneurship and regional economic development, and erosion have not been as successful as – hoped, mainly due to lack of resourcing that embraces Ngati Porou’s aspirations along with wider issues such as the on- for economic independence. going loss of human and social capital. IO4 – www.scionresearch.com/ Scion’s environmental scientists impact/biosecurity-fire-and- are exploring ways to build community climate-change resilience to the impacts of extreme weather events associated with climate change. To design practical strategies, they have focused on the Waiapu catchment on the East Coast, one of the most vulnerable communities in New Zealand. HIGHLIGHTS 31 SECONDMENT

DEPARTMENT OF CONSERVATION Being one step ahead of rural fires Rural Fire Authorities in Canterbury have a better understanding of fire potential under different fire danger ratings as a result of a 10-day secondment to DOC by Scion’s fire scientist, Veronica Clifford. Veronica conducted fire growth modelling scenarios for use in strategic tactical fire management plans (STFMP) using fire growth simulation software, Prometheus. This Canadian software has been adapted by Scion’s Rural Fire Research Team for New Zealand conditions. It estimates fire spread based on fuel type, weather conditions, topography and New Zealand fire behaviour models. The outcome is a set of predetermined response actions based on fire danger rating. Using Prometheus, Veronica ran over 200 fire growth simulations for the Canterbury region. The data are being used to help determine better responses to rural fires. Rural Fire Authorities have been able to use the results to identify resource requirements for different fire danger Fire managers will be able to use the “Prometheus was used to significantly levels and assess the effect of time GIS-based growth model to predict the improve the STFMP process. Predetermined elapsed since ignition, on containment. development and spread of fires in response planning can be done using the New Zealand environment, and to They will also be able to justify simple fire modelling equations, but appropriate fire reduction activities if support operational and strategic fire early response is not possible. management decision-making in such better accuracy was achieved by using things as suppression strategies, spread Prometheus to simulate fire growth across Veronica has been able to demonstrate potential and post-fire assessment. the landscape. It accounted for terrain the effectiveness of Prometheus to and fuel type, enabling response to be “The Rural Fire Authorities in Canterbury are fire managers and develop tutorials for targeted to a specific area or location grateful for Veronica’s secondment as it its use, while testing the software for on the ground.” the developers. was useful to have a specialist from Scion complete the fire growth simulations and maps for each area plan,” says Heather Wakelin, Technical Support Officer at DOC. 32 SCION ANNUAL REPORT 2013

TERAXTM technology could save regional councils approximately $80 million in landfill costs over 20 years HIGHLIGHTS 33 LICENCE TO OPERATE IO5 – ENSURE THE NEW ZEALAND FOREST INDUSTRY’S LICENCE TO OPERATE DOMESTICALLY AND INTERNATIONALLY AND ENHANCE ENVIRONMENTAL PERFORMANCE.

KPI 9: FORESTRY LICENCE Scion resource economists developed The additional costs, time and the Forest Investment Finder (FIF), uncertainty involved to duplicate TO OPERATE a type of spatial economic model, to applications would likely deter estimate the private (to the landowner) further research and development, Progress to achieve KPI. Supporting and public net benefits associated and limit the availability of potentially forestry companies to enable with afforestation. beneficial technologies to industry, particularly forestry. them to implement best practice In collaboration with the University of in sustainable management of Western Australia and AgResearch, the DETERMINING THE LEVEL OF WILDING research team has used the model to their forests. (i) Development of a CONIFER RISK forestry information portal to support identify areas in New Zealand, such as the erosion-prone East Coast, where Investment: SFF, NZ WCMG the sustainable management and afforestation will provide significant environmental certification of New public net benefits through, for example, Zealand’s planted forests; (ii) progress reducing erosion and flooding. Site- on the validation of biodiversity specific policies can then be established for landowners to encourage the measures from LiDAR (a form of provision of benefits. These findings will remote sensing) derived parameters help shape government and industry’s of forest structure and condition; (iii) future afforestation policies, and provide significant progress in supporting the a valuable evaluation tool for investors. forest industry to comply with FSC The FIF model is currently being requirements for herbicide use; (iv) used by MfE to estimate the profitability progress on development and validation of plantation forests in the Waikato, and is gaining interest from other of the spatial economic model known national agencies, regional councils as the Forest Investment Finder, which and forest owners. provides forest growers and policy makers with information on the public SCION APPEALS AGAINST DUPLICATION OF GM REGULATION and private benefits of afforestation; and (v) a highly successful one-day Evaluation of genetically modified forum on integrating forest ecosystem (GM) trees under Environment Protection Authority approved contained field trials services into policy with over 40 is of high importance to forest growers, delegates from central and local who want robust evidence of GM tree government, CRIs, universities, and benefits under New Zealand conditions Many stakeholders are concerned about contributors from the USDA Forest before seeking commercial release. conifer wildings, especially South Island forest growers where the risk of wilding Scion has lodged an appeal with Service and Australia’s CSIRO. spread from managed plantations is the Environment Court against affecting growers’ freedom to operate inclusion of material in Bay of Plenty THE BENEFITS OF AFFORESTATION FOR and could generate potential liabilities. PUBLIC AND PRIVATE USE Regional Council’s Regional Policy Statement (RPS) that would see the Wilding conifers affect the composition Investment: Scion Core Funding, duplication of regulatory processes of vegetation, limiting land use and FFR, MBIE and associated costs involving genetic function. They grow faster and taller modification research. than low-stature indigenous vegetation, New Zealand’s planted forests provide threatening indigenous ecosystems valuable ecosystem services. Some, Council has included provisions such as tussock grasslands, alpine for example, wood, fibre and carbon in the RPS that will likely require ecosystems, wetlands, riparian land sequestration have market value and territorial authorities within the region and coastlands. are accounted for in policy. Others such to duplicate the regulatory framework as erosion prevention, recreation and operated by central government via the biodiversity are difficult to quantify and EPA and Hazardous Substances and their value has been largely overlooked New Organisms Act (HSNO) 1996. until now. 34 SCION ANNUAL REPORT 2013

The extent and severity of wilding affected areas is not well known; it is thought up to 1.2 million hectares throughout New Zealand have some level of infestation. Clear quantitative data are lacking and long-term studies are needed to make informed control decisions. Scion, in partnership with the New Zealand Wilding Conifer Management Group*, is carrying out a nationwide assessment of affected areas using aerial photography to assess the current situation. Our priority is to better understand issues facing landowners in the future, and develop long-term solutions to managing the problem. Subject to increased production of bare- Subject to further testing, this result root natives from nurseries, this would provides the forest industry with possible The work of NZ WCMG this year has provide a cost-effective solution for dairy chemical weed control options that are contributed to the development of a farmers contracted to Fonterra, who may compliant with FSC certification criteria. national wilding management strategy be required to establish riparian zones by MPI. by 2030 as part of their supply contract. KPI 10: WOOD MANUFACTURING *NZ WCMG includes Scion, MPI, DOC, LINZ, Landcorp Farming, regional territorial MINIMISING THE ENVIRONMENTAL IMPACT LICENCE TO OPERATE authorities, and farmers and forest OF WEED CONTROL companies. Some collaboration exists Progress to achieve KPI. Providing with Landcare Research. Investment: MBIE, FSC Cluster Group, tools and technologies to assist FFR, SFF New Zealand’s wood and wood INDIGENOUS TREES FOR FARM Environmental certification by the fibre manufacturing companies RIPARIAN ZONES Forest Stewardship Council (FSC) to meet Best Available Technology requires a reduction in chemical use in Investment: Scion Core Funding, Economically Achievable. FFR, MBIE, Tane’s Tree Trust, plantation forests. This impacts on the forest industry’s current dependence (i) Development and scale-up of Auckland Council on chemicals for cost-effective weed proprietary environmental technology Establishing native forest is expensive, control, critical to forest management. platforms; (ii) addressing generic predominantly due to the cost of In partnership with MPI and FSC Cluster seedlings raised in containers. issues across the pulp and paper Group, Scion implemented field trials industry regarding diversion of organic Planting trials by forest management in spring 2012 to screen a number of scientists, in collaboration with Tane’s herbicide mixes for their potential to wastes from landfills and reducing Tree Trust, Mahurangi Action and other replace chemicals previously rated receiving water impacts; (iii) adoption interest groups, have successfully shown hazardous by the FSC – terbuthylazine of industrial symbiosis concepts to establishment costs can be reduced by and hexazinone. maximise use and re-use of waste up to half using bare-root seedlings of The status of terbuthylazine with selected native shrub hardwood species. streams across regional clusters of regards to the FSC is still in question, industries; (iv) commercial scale-up of The trials compared the performance, and trial results indicate that its use the TERAX™ technology to substantially handling and relative costs between in combination with alternatives to bare-root transplants, seedlings raised hexazinone will potentially provide reduce land fill from organic biowastes. in PB3 planter bags and those in Hillson acceptable weed control. root trainers. Results indicate that bare-root native shrubs have similar survival and growth rates to those in PB3 containers. Smaller root trainer stock showed less favourable results. HIGHLIGHTS 35

SAFER WASTE DISPOSAL FOR PULP Mill sites taking up recommendations Where pieces of timber abut, for AND PAPER MILLS from the research have lowered example, multiple studs, corners and wastewater treatment costs and under lintels, our research shows that Investment: Scion Core Funding, continue to maintain reduced colour two coats of boron glycol preservative Waste Minimisation Fund, CHH, levels, a critical requirement for their brushed on exposed sides, in conjunction Pan Pac, WPI discharge resource consents. with injecting the treatment into the interface between the timbers, meets the Pulp and paper mills are large producers requirements for hazard class timber. of organic and inorganic waste. This is KPI 11: INCREASE WOOD currently sent to landfill. PRODUCT UPTAKE REVISED WOOD TREATMENT STANDARDS This year, Scion’s Clean Technologies OPEN THE DOOR FOR GLOBAL MARKETS Team, with global project management Progress to achieve KPI. Providing firm Sinclair Knight Merz, has robust technical information Investment: Scion Core Funding, Commercial been working with three pulp and to support standards development paper companies to explore alternative and systems innovation in the The wood preservation industry is solutions to landfill disposal for their constantly seeking to develop new solid waste. These companies represent wood and bio-based product treatments that enable radiata pine to five of the seven pulp and paper mills manufacturing sectors. (i) Promoted be used in high hazard areas, such as in New Zealand. harmonisation of standards between exterior cladding or foundation piles, An assessment of the mills involved in Australia and New Zealand by providing that have less impact on people and this study indicates that there is the technical support for the inclusion the environment. potential to reduce solid waste going to of a new method for testing timber The process to introduce new treatments landfill by approximately 25,000 tonnes for H3; (ii) developed a new modified into the market is rigorous. This process each year. Scion has begun exploring is overseen by a committee of technical options for diversion, including novel testing method for H1.2 applications; experts and affected parties, including a agricultural uses for the ash generated (iii) assisted Standards NZ to amend Scion representative. at these sites. the New Zealand Standard 3640:2003 Following a detailed review of standards REDUCING COLOUR FORMATION IN Chemical preservation of round for the chemical preservation of WASTEWATER and sawn timber; (iv) completed sawn timber (NZS 3640), technical the Woodscape study with industry amendments have been made to include Investment: CHH, Norske new benign treatment systems. The Skög Tasman to provide tools to evaluate wood systems will enable New Zealand to processing options for New Zealand. export treated radiata pine to European Scion’s work into wastewater quality for and American markets where regulations the pulp and paper industry has helped previously prohibited many of our reduce the amount of colour released COST EFFECTIVE SOLUTIONS FOR treated wood products. from mill wastewater treatment systems. REPAIRING LEAKY BUILDINGS Colour formed during the treatment Investment: MBIE IMPROVED DURABILITY TESTING of pulp and paper wastewater A method for improving the durability Investment: Scion Core Funding, has been difficult for mills to of untreated or non-compliant timber CSIRO manage despite considerable effort, framing in leaky buildings, onsite, has impacting on the aesthetic values been developed at Scion. This will help Establishing a product’s durability is the of receiving waterways. towards more cost-effective repair of main impediment to the development of new wood protection systems. Industry Detailed analysis of mill wastewater leaky buildings, benefiting both builder relies on test methodologies to provide treatment systems at Scion provided and owner. rapid proof of durability. the foundation for new management Applying boron glycol preservative regimes to reduce the level of colour treatment to three or four exposed faces developed during biological treatment. of timber has proven to be effective in improving the durability of sound timber that is either untreated, or does not meet current treatment requirements. 36 SCION ANNUAL REPORT 2013

A survey of existing H3 (above-ground DEMONSTRATING THE COMMERCIAL TERAXTM technology could save and outdoor) wood durability tests POTENTIAL OF TERAXTM TECHNOLOGY regional councils approximately $80 was conducted by our wood durability million in landfill costs over 20 years, scientists, and various new options Investment: approximately $10.5 and displace about $50 million in were trialled throughout Australia million committed to R&D since 2005 imported engineering services relative and New Zealand covering a range of to purchasing foreign sludge destruction conditions over four years. Demonstration Plant: MfE, RDC technologies. The global opportunity for exporting this technology is much larger. Three new test methods were found to Terax Limited Partnership: Scion be reliable and faster than some existing Core Funding, RDC, PSAF Construction of the demonstration methods. Approval from the Australasian A $4.7 million grant from MfE is plant is due to start in 2014. Scion is Wood Preservation Committee (AWPC) supporting the design and construction now working to extend application is granted for inclusion of the new test of Rotorua District Council’s (RDC) first of this technology to pulp and paper methods and amendment is underway commercial-scale treatment plant using and treated timber waste streams. in the ‘Protocols for Assessment of TERAXTM waste conversion technology. Wood Preservatives’. The process converts sewage sludge into IO5 – www.scionresearch.com/ Scion has also proposed an ‘I’ frame energy and sterile chemical products, impact/market-environmental- test method to replace the current wall and the grant will enable further performance frame cavity test for hazard class H1.2 research into adapting the process to testing. Wall frame cavity method is a treat solid organic landfill waste. Design costly and longer test method compared of the plant, which will be sited at RDC’s to the ‘I’ frame test. The AWPC members wastewater treatment facility, are discussing the findings. H1.2 is an has commenced. indoor hazard where timber is protected TERAXTM technology, developed by from weather but there may be some Scion in partnership with RDC, can exposure to moisture, for example, reduce the organic fraction of landfill framing timber. by 90 per cent and greenhouse gases Reducing product testing time will by up to 70 per cent. At the same time, allow industry to obtain greater and it produces nitrogen and phosphorous faster returns on their investment in rich fertilisers, and acetic acid that can wood protection systems, and increase be used to improve the economics of their response time to changes in wastewater treatment. preservation standards. Faster return An international patent application on investment will also encourage for the technology has been filed, more industry innovation in wood and Terax LP and Terax 2013 Ltd were protection technologies. established in partnership with RDC to commercialise the technology. HIGHLIGHTS 37 BIOENERGY AND ENERGY SECURITY IO6 – INCREASE NEW ZEALAND’S ENERGY SECURITY THROUGH THE EXPANDED UTILISATION OF FOREST BIOMASS FOR ENERGY

KPI 12: BIOENERGY The symposium provided participants the opportunity to understand Progress to achieve KPI. Enabled the biofuel research landscape in at least one commercial partner New Zealand, collaborate with other domestic research groups, receive an to adapt and test to pilot scale a update on global developments from bioenergy technology concept. international experts and network (i) Supported Norske Skög and Z with researchers, government and Energy to develop their “Stump to industry representatives. Technical highlights included Scion’s overviews Pump” initiative; (ii) continued to build of our bioenergy research and international alliances and develop commercialisation experiences. New Zealand relevant bioenergy platforms to support industry and STUMP TO PUMP GAINS TRACTION regional development agencies in Investment: PGP, Norske Skög, evaluating bioenergy options; (iii) Partners in this project include GNS Z Energy, Air New Zealand the concept of biofuels/bioenergy Science, Bay of Connections, Kawerau A $6.75 million investment from the production is now an integrated part District Council, Industrial Symbiosis MPI Primary Growth Partnership will be Kawerau, Ngati Whatua, Norske Skög of wood processing value chains used to co-fund the first phase of the Tasman, Rotorua District Council, Sequel ‘Stump to Pump’ programme to assess and strategies, as evidenced in the Lumber, Te Arawa, Tuwharetoa and the potential for creating biofuels from Woodco Strategic Action Plan. Waikato Regional Council. woody biomass. Equivalent funding from programme partners Norske Skög and TAPPING INTO NATURE FOR ADVANCED BIOFUELS RESEARCH Z Energy will provide total funding of GREATER EFFICIENCY NETWORK GAINING VISIBILITY $13.5 million for the project. Investment: Scion Core Funding Investment: Scion Core Funding The Stump to Pump programme is the most significant biofuels initiative in In 2010, Scion led the establishment of Scion has identified an opportunity for New Zealand’s history. It aims to create the Advanced Biofuels Research Network New Zealand’s wood processing industry new high-value markets for forestry and (ABRN) to coordinate bioenergy research to gain a competitive advantage by wood processing residuals. The business and accelerate technology development integrating with geothermal energy in case for this programme suggests that if across New Zealand. Scion remains the central North Island. this technology can be commercialised, central to this network, co-organising the the estimated economic benefit for Integrated wood-processing clusters annual ABRN Science Symposium and New Zealand over the next 20–25 years will achieve greater efficiency through managing the website that went live is an annual increase in GDP of up to sharing resources and utilising the area’s in December. largely untapped geothermal energy. This $1 billion and the creation of 1,200 Scion sponsored the 3rd ABRN Science will enhance the industry’s potential to direct jobs. Symposium in association with the develop new high-value wood products, Initial funding will be used over University of Canterbury in November. and help realise its goal of doubling 14 months to assess the technical The symposium theme was ‘The Role export earnings to $12 billion by 2022. and financial feasibility of creating of Research in Scale-Up of Technology’ biofuels from forestry and wood Scion is developing a tool to design and featured keynote presentations by processing residues, and determine highly-efficient integrated wood- Kees Kwant from NL Agency (the Dutch the commercial viability of establishing processing clusters. agency for innovation and sustainability) a modular test plant for the process. and Tony Johnson from Beca-AMEC. The tool was used by Scion to provide Scion will be providing research an analysis of the advantages of and technology support for the Kawerau as a wood processing centre feasibility assessment. and the benefits of using geothermal energy. This work currently focuses IO4 – www.scionresearch.com/ on the Bay of Plenty-Taupo region and impact/bioenergy builds on Scion’s energy and techno- economic analysis capability. 38 SCION ANNUAL REPORT 2013 OUR COMMUNITIES

WORKING WITH MA–ORI • In collaboration with Nga–ti Pikiao, a totara planting site was identified on The conclusion of the Treaty of Waitangi the Pukahukiwi-Kaokaoroa block at settlements will see about 40 per cent the northern edge of Lake Rotoiti, of forest land, including some forests, in east of Rotorua, for the establishment Ma–ori ownership. Ma–ori are increasingly of the first progeny trial of totara. interested in exploring a more active role Seedlings were planted by pupils from in forestry, which could see an expansion the nearby Whangamarino School, the of the forestry and wood processing Trustees of the Pukahukiwi-Kaokaoroa industries in New Zealand and an Trust and Scion. Over 1,200 totara increasing contribution by Ma–ori to the were planted and the seedlings each national economy. student planted were recorded as part – MAORI ENGAGEMENT IS ONGOING of the next generation’s connection Scion has a plan in place to help Ma–ori with this totara stand as it develops increase their social and economic • Indigenous forestry specialist over the coming decades. wealth through forestry and sustainable Greg Steward presented to MPI’s land management. Our Ma–ori strategic North Island Indigenous Forest Unit advisory board, Nga Rangatira Ro–pu, and Ma–ori liaison staff on research provides advice on Scion’s Te Papa Tipu and results for kauri and totara. Ma–ori Plan and has reinforced our need • The forest genetics team worked to work with Ma–ori towards greater with APR Consultants (Rotorua) on collaboration with the science sector and advising Nga–ti Whare Holdings Ltd assisting Ma–ori to assume a more active in Minginui (Te Urewera) on their role in managing their resources. plans to develop an indigenous tree We are constantly seeking to foster the nursery. While small at this stage, this exchange of science and technology with is an opportunity to showcase Scion’s that of understanding Ma–ori’s aspirations indigenous nursery expertise and form for their land. Partnerships are of real closer links with iwi. – value and help guide the direction of MAORI INTERNS • Collaborations included ongoing work our science for mutual benefit. This is with Te Tai Tokerau; Central North To encourage more involvement by facilitated by our efforts to improve staff – Island Iwi Holdings Limited (CNIIHL); Maori in science, three summer knowledge of tikanga and proficiency in – the Waiapu Research Team including internships were offered to Maori Te Reo. Nga–ti Porou representatives; and students: Grace Stone, Wiremu Ruru Scion has built partnerships with Maraeroa Holdings Ltd regarding and Sam Nugent. several iwi groups and is continuing to application rates of calcium for After completing a degree in do so with others. For example, we are their ginseng plantations. Scion also Environmental Management at Te Whare working with Te Tai Tokerau Forestry presented at a ginseng seminar day at Wa–nanga O Aotearoa, Rotorua, at the Innovation in Northland to increase Pa Harakeke, organised by Maraeroa end of 2012, Grace Stone joined Scion land value and generate employment C Incorporation, to share new for three months under the guidance through a forestry-based infrastructure. information about developments of social research scientist Lisa Langer. The inclusion of iconic indigenous of the ginseng industry in the central Her research project was ‘Te Ahi I Te Ao species such as kauri and totara, are an North Island. Ma–ori’ or Fire from a Ma–ori perspective, important element of that project. • Scion participated in the hui on Bay and included traditional, ritual and As key stakeholders in the future – cultural use of fire, beginning from of Connections – Maori Economic – of forestry, the decisions Ma–ori make will pre-colonisation Maori to present day Development Strategy held across – help shape the future of New Zealand’s the Bay of Plenty. use. With no detailed studies on Maori economy. Scion’s forestry and wood and fire in the rural landscape more processing science and technology knowledge is required to understand – will help support Ma–ori make decisions Maori and their use of fire, and the that will provide return on investment, risks relating to fire in the landscape or employment and the opportunity to outside the home before an education reinvest in their land while meeting their programme can be designed. social and economic aspirations. HIGHLIGHTS 39

Previous recipient Jamaine Fraser Forest Management Science Leader (2009-10), was awarded a Masters Dr John Moore gave a keynote address in Design from Unitec Institute of to the ForValueNet conference in Technology in Auckland at the end of Montreal. ForValueNet is a strategic 2012. The focus of Jamaine’s internship network in the forestry area funded by at Scion was on the indigenous design the National Science and Engineering of Scion material and engineered Research Council of Canada. biomaterial products. Dr Christine Todoroki was invited onto the panel to review the performance OUR PLACE ON THE and significance of outputs of US Forest GLOBAL STAGE Service staff. Grace’s work provides an understanding Dr Dave Cown was a member of the Scion is adept at building national and of historic and present day use of international review team that evaluated international collaborations. We can fire by Ma–ori, and provides background the Forest Research Institute of assemble large, multi-disciplinary teams knowledge to allow the development Malaysia’s research programmes. with the skills and resources to capitalise of strategies to improve dialogue on opportunities and tackle challenges. Forest Protection Science Leader between Ma–ori and fire managers to By leveraging domestic and international Lindsay Bulman participated in an plan more effective preparedness and networks, our scientists access the latest expert team to develop a strategy to mitigation measures. Grace and Lisa technologies and secure intellectual deal with Dothistroma needle blight submitted a paper on Te Ahi I Te Ao property for the benefit of New Zealand. in Great Britain. Ma–ori: Fire use: Ma–ori in rural areas This is critical if Scion is to remain in Aotearoa, New Zealand to MAI Dr Elspeth MacRae, General Manager innovative and competitive in Journal: A New Zealand Journal of Manufacturing and Bioproducts, was global markets. Indigenous Scholarship. on the organising committee for two international events: Wiremu Ruru was in his final year International recognition in of a Diploma of Forestry Operations 2012/2013 included: • the Agricultural Biotechnology at Rotorua’s Waiariki Institute of Senior Scientist Steve Wakelin was International Conference (ABIC) Technology when he applied for the selected by the Inter-governmental 2012 held in Rotorua in September. internship. He also holds a Bachelor Panel on Climate Change (IPCC) Task ABIC promotes innovation and of Commerce from Otago University. Force Bureau on National Greenhouse the opportunity for continuous Like Grace, Wiremu worked in the Gas Inventories as a Lead Author for learning and networking within the Forest Environment and Economics the writing of the 2013 Supplementary biotechnology community. Scion Team. Supported by team manager Tim Methods and Good Practice Guidance co-sponsored the conference; Barnard and economists Luke Barry and Arising from the Kyoto Protocol. • the International Knowledge-Based Richard Yao, Wiremu’s research project Bioeconomy Forum (KBBE) held in was on alternative land use with a focus Principal Scientist Dr Tim Payn chaired Rotorua in September. The KBBE is on recreational hunting and how the the 13th and 14th Montreal Process a partnership between New Zealand, cultural, traditional, environmental and Technical Advisory Committee meetings Australia, Canada and the European economic values of this pastime can in Russia and Japan focussing on soil Commission and aims to foster impact forestry organisations. and water issues in forestry and on the communication of sustainable forest collaboration and innovation in the Canterbury University engineering management. Environmental planner bioeconomy sectors. student Sam Nugent joined scientists Tim Barnard represented New Zealand working in the Wood Modification Team, at both meetings. guided by research leader Dr Warren Grigsby. Sam’s role was to assist in Also Dr Payn was invited to join the developing novel wood modification reviewers panel of Trees4Future, a technologies using Scion’s supercritical European Commission-funded project carbon dioxide capability. This resulted in that aims to bring together, federate and a wood treatment formulation evaluated structure forest research infrastructures at pilot-scale later in the year. and services across all disciplines. 40 SCION ANNUAL REPORT 2013

VISITS, EXCHANGES AND SABBATICALS Two sabbaticals were awarded that • Luke Barry, Loretta Garrett, Duncan strengthened Scion’s relationship with Harrison and Dr Brenda Baillie, visited Emeritus Professor Ulrich Zimmermann, international research institutions: Edinburgh on an ecosystem services senior professor at the Biocenter of the mission. They completed a paper in • Dr Brenda Baillie hosted Dr Dan Neary University of Würzburg, Germany, visited collaboration with Forest Research of the Rocky Mountain Research Scion. He is an eminent authority on UK and the Technical University of Station, USDA Forest Service, for plant water relations and has authored Lisbon titled: ‘A new holistic ecosystem a month to work on the fate and around 500 publications and more than services assessment and management cumulative effects of herbicides 120 patents. framework for sustainable commonly used in forestry operations development and decision-making Pablo Crespell, a senior researcher in the across a range of forest soils. Their based on experiences with Loch business analysis group at FPInnovations research will assist the forest industry Katrine, Scotland’. They also attended in Canada, completed a three-month and FSC in making informed decisions the ‘Managing Forests for Ecosystem secondment with Scion, during which he on the fate of herbicides in the Services’ conference. conducted research on cross laminated environment. timber and other next generation wood • Dr John Moore spent two months • Dr Lloyd Donaldson spent six weeks on building systems and their potential to at the French National Institute for a reciprocal visit to Dr Ksenija Radotic meet the current and future needs of the Agricultural Research (INRA) looking at the Institute for Multidisciplinary residential and non-residential markets at integrated risk management, the Research, University of Belgrade, in New Zealand and Australia. impacts of forest management on the Serbia, to continue a further aspect of risk of wind damage and the potential The forest genetics team strengthened their joint work on spectral imaging. impacts of intensification of forestry their links with Forest Research UK They explored the relationship on risk. through the visit to Scion in March by between lignin and carbohydrates in Dr Trevor Fenning. He is collaborating the plant cell wall. Dr Donaldson also • Dr Simeon Smaill spent three months with Scion on the development of early attended the International Symposium at INRA adapting an existing Pinus screening technologies for disease on Wood Structure and Ecophysiology radiata nutrient balance model for resistant genotypes, a high priority for in Naples while away. Pinus pinaster and also presented soil New Zealand forest growers. microbial research relevant to forest Two COST (European Cooperation A number of Scion staff completed management to third year students at in Science and Technology) exchange trips with support from the University of Bordeaux, resulting Actions sent young researchers on the European Commission’s International in an invitation to give more lectures science sabbaticals to Scion. They Research Staff Exchange Scheme as part of a formal arrangement with worked on microscopic imaging (IRSES) under the TRANZFOR the university. of polysaccharides in wheat bran cell programme. TRANZFOR is a joint programme of scientific co-operation • Dr Eckehard Brockerhoff visited walls and impregnation of timber Professor Hugh Evans at Forest with bioplastics. and research exchange involving five leading research organisations focussing Research UK to continue work on In addition, Scion participated in COST on forests and climate change. biosecurity risk management and Action meetings relating to packaging, systems approaches. modifying timber, biosecurity risk, forest • Lisa Langer visited the Institute of Agronomy, University of Lisbon, • Three scientists from INRA spent time management decision support systems, at Scion during the year on projects and Dothistroma needle cast. Portugal. She was hosted by fire researcher Maria da Conceição as diverse as conserving Pacific Almeida Colaço, who was previously forestry to soil enzyme activity for the hosted by Scion’s Fire Research biowastes programme. Group in Christchurch. Both are investigating the wildfire risk in urban- rural interface and rural communities and are studying the effective communication strategies and community resilience to understand, inform and educate New Zealand communities about wildfire risk and preparedness. HIGHLIGHTS 41

• Christian Pilaar spent two months in Bordeaux, France, working with the European Forest Institute (EFI) A WELL-CONNECTED to extend their forest productivity computer models. He also spent a ENTOMOLOGIST month with Forest Research UK in Principal Scientist Dr Eckehard Edinburgh helping to migrate their Brockerhoff, an entomologist in the Ecological Classification System to a forest protection team, contributed web-based GIS environment, providing significantly as an international leader forest owners access to this decision in his area of expertise. support tool. He was elected as International Union Other visits included: of Forest Research Organisations • Murray Davis to the College of (IUFRO) Division 7 (Forest Health) Geographical Sciences, Fuzhou Normal coordinator from 2014 – 19. This University, China. includes a seat on the Board of IUFRO. He is also coordinator of the • Dr Michael Watt to the Universities of IUFRO Task Force on Biodiversity Santiago and Concepción and the two and Ecosystem Services. main forest management companies, Arauco and Forestal Mininco, in Chile. Dr Brockerhoff gave an invited keynote address at the International Congress on Planted Forest in Pierroton, • Dr Lloyd Donaldson attended a COST France, and also participated in a workshop on “Globalisation of the Live Action on cell wall nanostructure in Plant Trade: Informing Efficient Strategies for Reducing Non-Native Pest Edinburgh and visited BOKU University Invasion Risk” at the National Socio-Environmental Synthesis Center in Vienna. On a separate trip he spent two weeks in Beijing teaching (SESYNC) of the University of Maryland, in Annapolis, Maryland. students at the Beijing Forestry Four international visitors were hosted by Dr Brockerhoff during University and also visited the Korean the year: Forest Research Institute in Seoul and Kyungpook University in Daegu, Korea. • Dr Hervé Jactel (from INRA, Pierroton, France) working on biodiversity effects on forest pest impacts (two months); • Dr Tripti Singh, wood durability specialist, was invited to South • Dr Massimo Faccoli and PhD student Fabio Chinellato (both from the Korea to present a paper at the University of Padua, Italy) working on bark beetle biology and effects 6th Bioenergy and Biotechnology of climate change (three months); Symposium at Chonnam National University and to give presentations • Dr Andrew Liebhold (from the US Forest Service, West Virginia) to staff and students at Kyungpook working on impacts and management of invasive forest pests University, Daegu. She also (two weeks). gave an invited presentation at Johann Heinrich von Thünen Institute in Hamburg, Germany. • Lindsay Bulman visited the Forestry and Agricultural Biotechnology Institute at the University of Pretoria to strengthen collaboration with Professor Mike Wingfield and his group. • Dr Dzhamal Amishev and Spencer Hill led an international study tour looking at different approaches to managing the risk of post-harvest erosion on steep sites. 42 SCION ANNUAL REPORT 2013

CONNECTING THE BAY Scion actively participated in Bay of Connections, the economic development strategy for the wider Bay of Plenty region. The strategy sets the direction for growth and employment in the wider Bay of Plenty region, particularly in the aquaculture, forestry and wood processing, freight logistics, energy sectors and Ma–ori development. Through the delivery of innovative research and technology transfer Scion helps open up new opportunities for commercial forestry, wood and fibre-based products, bio-energy and environmentally friendly technologies, as well as contributing to the environmental and social wellbeing of the region. Dr Trevor Stuthridge, General Manager Sustainable Design, served as chairperson for the resources sub- committee, Energy Action Group, and as POST-DOCTORAL RESEARCH OUR LOCAL COMMUNITIES a member of the Forest and Wood Action Group, for Bay of Connections. A post-doctoral fellowship was awarded SCION HELPS DRIVE GROW ROTORUA to Juan Rodríguez Gamir to investigate INDUSTRIAL SYMBIOSIS KAWERAU the combined impact of water and Chief Executive Dr Warren Parker was nutrient stress on plant and root appointed to the inaugural Board of Dr Stuthridge also chaired Industrial physiological processes of radiata pine Directors for Grow Rotorua, a Rotorua Symbiosis Kawerau, an industry and clones under future drought conditions. District Council controlled economic community based initiative to develop The research will take place in both development organisation. The new investment opportunities in waste New Zealand and France, co-supervised organisation works collaboratively with management, bio-based products, by Dr Jianming Xue from Scion and the region’s key economic influencers forestry and wood processing and Dr Jean-Christophe Domec from INRA. to drive sustainable economic growth geothermal industries. for the region through forestry, tourism, Scion is helping develop a tool for geothermal and other sources of designing highly-efficient integrated renewable energy and agriculture, and wood-processing clusters that leverage promote Rotorua as a preferred life off the region’s vast geothermal energy style destination. resources. The project focuses on the Bay of Plenty-Taupo region and builds on Scion’s energy and techno-economic analysis capabilities. HIGHLIGHTS 43 SCIENCE OUTREACH AND TECHNOLOGY TRANSLATION

Direct engagement with stakeholders enables Scion to provide leadership in During 2012 – 13, Scion scientists developing new opportunities and accelerates the uptake of new knowledge had 133 papers published in peer- reviewed publications. Listed below and technologies. Scion engages with its varied audiences in a number of ways are the top five papers based on from publications to direct contact. the journal’s H-index, which is an international measure of the impact of scholarly publications. • Analyses of BlueSky Gateway PM 2.5 predictions during the 2007 southern and 2008 northern California fires by Strand, T. M., Larkin, N., Craig, K. J., Raffuse, S., Sullivan, D., Solomon, R., Rorig, M., Wheeler, N., & Pryden, D. Journal of Geophysical Research D: Atmospheres, 117 (2012). D17301. HIGH IMPACT PUBLICATIONS • Habitat filtering by landscape and local forest composition in native Scion provides high-quality science to solve forest industry problems and and exotic New Zealand birds by strategically position the industry for the future. Publication of papers in the Barnagaud, J.-Y., Barbaro, L., Papaïx, top scientific journals confirms Scion’s international standing and visibility as a J., Deconchat, M., & Brockerhoff, E. G. research institute. The annual weighted average H-index for Scion publications Ecology. (2013). In press. during the year was 45.41, which is a little less than the previous two years as shown in the figure below. • Subcellular distribution of metals within Brassica chinensis L. in response to elevated lead and 55 chromium stress by Wu, Z., 50 McGrouther, K., Chen, D., Wu, W., & Wang, H. Journal of Agricultural and 45 Food Chemistry, 61(2013), 4715-4722.

40 • Tight-binding approach to overdamped Brownian motion on 35 a multidimensional tilted periodic

H-Index potential by Challis, K. J., & Jack, M. 30 W. Physical Review E – Statistical, Nonlinear, and Soft Matter Physics, 25 87(2013). #052102. 20 • Key features of the seed germination response to high temperatures 15 by Watt, M. S., & Bloomberg, M. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 New Phytologist, 196(2012), 332-336. Year Ending 30 June THE NEW ZEALAND JOURNAL OF FORESTRY SCIENCE PARTNERS WITH SPRINGER After 40 years of being published in- house by Scion, the New Zealand Journal of Forestry Science (NZJFS) has joined forces with international publishing giant, Springer, to increase global reach and impact. 44 SCION ANNUAL REPORT 2013

The NZJFS is now freely available Forest ecosystem services is a FRUCOR VISIT TO SCION online through SpringerLink, with growing area of research attracting Scion retaining editorial management. widespread interest. To address this Staff from Australasian drinks company Individual papers are published information need, Scion took the lead Frucor visited Scion in December to online as soon as they are ready, with by organising a Wellington-based forum gain a better understanding of the one volume of the journal published in May to identify key issues, roadblocks work we do. Most of the visitors had a each year. and opportunities for enhancing food technology or science background New Zealand’s understanding and use and were particularly interested in our of ecosystem services in decision packaging work. The group toured the OUTREACH TO INDUSTRY making. More than 40 delegates extrusion and packaging laboratories and participated in the workshop Scion’s new biodegradation test facility. FFR WORKSHOPS HIT THE SPOT representing government agencies, They were also given demonstrations of paper-making, packaging treatments A new series of workshops held by Scion regional councils, other CRIs, forest and biofoams. for FFR members proved to be highly industry and end-users, universities successful in putting the latest scientific and foreign institutions. knowledge straight into the hands of commercial foresters. The workshops, FOREST BIOSECURITY WORKSHOP delivered in the first six months of the Over two days in March Scion held the year, were designed to stimulate and 11th Annual Forest Biosecurity Workshop. extend learning. An initiative of the Forest Owners More than 80 people attended the Association and MPI, the workshops practical and highly interactive are an excellent way to engage workshops, which included presentations stakeholders in new approaches to by industry experts, group exercises forest biosecurity issues. This year the where forestry theory was applied to workshop focused on solving foliar real-life situations, and field visits. diseases, and domestic and international speakers had much to offer during Feedback was overwhelmingly positive, discussions. The impact on radiata pine EDUCATIONAL OUTREACH with comments such as “the recent is around $150 million per year in lost CONTRIBUTING TO BIOLOGY TEACHERS’ silvicultural workshop in Christchurch productivity and invasive pathogens are was fantastic and we need more causing new problems globally. PROFESSIONAL DEVELOPMENT events like this”. Another benefit of During May Scion participated in the workshops was recognition by Poster presentations on day one were professional development (PD) days the New Zealand Institute of Forestry a very successful format in enabling run by the Maurice Wilkins Centre as counting towards participants’ in-depth discussions between scientists for Molecular Biodiscovery, University continuing professional development. and end-users, from forest managers to senior executives. The workshop also of Auckland. These days focused FOREST ECOSYSTEM SERVICES FORUM included time for a revision of the forest on content for the new secondary biosecurity research strategy. school curriculum, including human New Zealand’s 1.7 million hectares of manipulation of genetic transfer and planted forests constitute a productive BUILDING PRODUCTIVITY WORKSHOPS its biological implications. Drs Christian ecosystem mainly recognised for the Walter and Glenn Thorlby presented provision of wood and fibre. However, Two series of workshops to examine the on transgenic trees to more than 400 the value of other services such as lifecycle of buildings were jointly hosted teachers in four locations including recreation and habitat provision by Scion and BRANZ. Held in Rotorua, Scion’s Rotorua campus. “Many remains unaccounted for and is usually Auckland, Wellington and Christchurch thousands of students will now be ignored in policy decision making. they collectively attracted 110 attendees. getting taught the realities of GM Input from these workshops helped to rather than the myth,” said organiser identify the types of interventions that Professor Peter Shepherd. can be applied to influence increases in productivity for the construction life cycle. This research is now being used by MBIE in its planning for housing affordability and construction sector productivity work. HIGHLIGHTS 45

REACHING THE COMMUNITY SPONSORSHIP OF MAKING TELEVISION CONFERENCES AND EVENTS A range of events was sponsored during Project Ma–tauranga the year to promote Scion’s science and Science and Ma–ori knowledge combine technology capabilities. Conferences are in Maraeroa C Incorporation’s ginseng a valuable forum for building networks growing trial, which was presented on and exchanging knowledge within and Ma–ori Television’s Project Ma–tauranga between the science and end-user programme in August. The series communities. Scion scientists presented celebrated Ma–ori innovation in the at many of the conferences below and science sector. In an episode that also staffed trade displays. BIOSPIFE IS A LEARNING TOOL ON THE focused on minimising the impact on • 13th International Symposium SCIENCE LEARNING HUB papatuanuku (the land) from forestry on Soil and Plant Analysis Polymer scientist Dr Martin Markotsis activities, Scion scientists Drs Jenny worked with kiwifruit exporter ZESPRI Grace and Haydon Jones showed how • VII Southern Connection and the University of Waikato to produce their science contributed to creating Congress 2013 a series of videos about the development viable ginseng crops within a pine forest that could lead to new revenue streams • Agricultural Biotechnology of an environmentally friendly biospife International Conference 2012 (spoon-knife). The videos are available on and reinvigorate the soil. • Bay of Plenty Science & the Science Learning Hub website, which Rural Delivery is produced by educators, in collaboration Technology Fair In November viewers of TVNZ’s with New Zealand scientists, to provide • Carbon Forestry 2012 resources for students in years 2-10. The “Rural Delivery” programme got to hub is funded by MBIE and managed by see how Scion scientists are using new • International Symposium on the University of Waikato. technologies to see what happens inside Biopolymers 2012 a tree. Funded by FFR, the new sampling approach allows variation in wood • New Zealand Ecological Society FUELLING LEARNING THROUGH Annual Conference SCHOOL VISITS properties to be measured at a scale that drives end product performance. • New Zealand Farm Forestry Throughout the year Scion hosted Association 57th Annual Conference a number of visits from secondary FASCINATION OF PLANTS DAY schools in the region. Scion takes on this • New Zealand Institute of Forestry responsibility earnestly, and programmes Fascination of Plants Day is an 2013 Conference were tailored to the students’ learning international project driven by the European Plant Science Organisation • New Zealand Land Treatment outcomes to provide a real world Collective Workshop context to classroom learning. (EPSO), of which Scion is a member and Examples included: representative of New Zealand’s Crown • New Zealand Wood Timber Research Institutes. Scion developed Design Awards • Over three days in November, 45 new educational resources to mark the students from Rotorua schools’ Gifted event and for two weeks in May, the • Pine Manufacturers & Wood Kids Programme visited to learn about Rotorua District Library featured a Scion Processors Associations’ plant classification and bacterial display on the importance of trees to the Conference 2012 classification techniques. environment, including explanation of • Rural Fire Fighter Challenge the carbon cycle. The display contained • a group from Morrinsville College in hands-on activities for young people to • Plastics NZ Conference March visited our timber engineering explore the natural world around them. and bioplastics laboratories to further • University of Waikato Department their study on the properties of wood of Earth and Ocean Sciences and other materials. Graduate Conference • senior students from Reporoa College • Water NZ Annual Conference and Expo visited in May as part of their work • World Conference on Timber towards the spectroscopy achievement Engineering Biennial Conference standard level 3 in the national chemistry curriculum. 46 SCION ANNUAL REPORT 2013 OUR PEOPLE AWARDS AND ACCOLADES

Dr Dave Cown was named a Fellow of the New Zealand Institute of Forestry. He was also presented with the Distinguished Service Award at the IUFRO Division 5 conference in Lisbon for his outstanding lifetime contribution to IUFRO as former IUFRO Board Member, and his expertise on wood quality and wood processing. Robert Lei was one of 27 future leaders in the Vision 2050 project, run by the Dr Oliver Chikumbo and his Sustainable Business Council. Vision co-authors from BEACON (a centre 2050 is a global initiative to help for evolutionary computing) won the business move towards sustainability. prestigious Wiley Practice Prize at Mark Riddell, Charlie Low and the Multi-Criteria Decision Making Graham West were presented Future Conference, held in Spain, for the best Forests Research science awards by paper describing a real-life application of Nathan Guy, Associate Minister of multiple criteria decision making. Primary Industries.

Dr Jianming Xue received an award SONG OF THE KAURI from the Chinese Society of Forestry for presenting one of 12 outstanding Song of the kauri, a New Zealand- papers at the International Conference made documentary was shown on Sustainable Forest Management during the International Film Adapting to Climate Change in Beijing, Festival followed by general China. The paper “Genetic variation in release in New Zealand. The foliar δ13C in relation to radiata pine movie discusses the science and growth at a dry site – implication for economics behind resurrecting using δ13C signature as a screening planted kauri forests, with an parameter for drought tolerant underlying philosophy that genotypes” was co-authored by Heidi Margaret Dick was awarded the instruments made from kauri Dungey, Peter Clinton, David Henley, New Zealand Plant Protection could become ambassadors for Sylvie Niollet and Alan Leckie. Society Medal for excellence in plant New Zealand’s trees. The movie contains interviews with musicians, protection sciences. Both nationally Scion’s Rural Fire Research Team economists and scientists, and internationally recognised as an was awarded Best Applied Paper by the including Scion’s indigenous expert in forest pathology, in particular, International Association of Fire Safety forestry specialist, Greg Steward. for her work with Dutch elm disease Science. The team’s paper was titled and Phytophthora sp, she was awarded “Fire behaviour prediction tools for fire Emeritus status in May. managers – lessons learned from tools development in New Zealand”. HIGHLIGHTS 47 48 SCION ANNUAL REPORT 2013 FINANCIAL RESULTS SUMMARY

42% 2011 2012 2013 2013 Actual Actual Budget Actual 50% OUR Revenue, $m 43.35 44.06 46.13 45.49 REVENUE EBIT, $m 2.60 2.07 1.94 2.55

EBIT Margin 6.0% 4.7% 4.2% 5.6%

EBIT-R, $m 2.94 2.89 3.09 3.52

EBIT-R Margin 6.8% 6.6% 6.7% 7.7% 8% Total Assets, $m 37.70 40.01 41.02 41.52 MBIE Return on Equity 7. 3% 6.0% 4.8% 5.8% GOVERNMENT DEPARTMENT Equity Ratio 67.6% 68.8% 69.7% 69.6% OTHER COMMERCIAL

Gearing 0.0% 0.0% 0.0% 0.0% 1% 5% 3% Revenue: Includes science research, Return on equity: Net profit after 3% contract work for government tax ÷ average shareholders’ funds, 5% and commercial clients, royalties expressed as a percentage. and licence fees. Equity ratio: Average shareholders’ EBIT: Earnings before interest, tax and funds ÷ average total assets. HOW OUR 54% restructuring costs. Gearing: Financial debt ÷ financial REVENUE IS EBIT Margin: EBIT ÷ revenue. debt plus shareholders’ funds. 20% SPENT EBIT-R: EBIT before reinvestment where (The Minister of Finance and the reinvestment are amounts approved by Minister of Science and Innovation the Minister. each hold 50% of the shares on behalf of the public.) EBIT-R Margin: EBIT-R ÷ revenue. 7% 2% 1%

EMPLOYEE REMUNERATION TRAINING AND RECRUITMENT CONSUMABLES DEPRECIATION AND AMORTISATION EXTERNAL SERVICES AND CONTRACTORS PREMISES COSTS TRAVEL OTHER OPERATING COSTS NON OPERATING COSTS NET PROFIT BEFORE TAX GLOSSARY

ABRN Advanced Biofuels Research Network MfE Ministry for the Environment B3 Better Border MPI Ministry for Primary Industries ALLIANCE Biosecurity Alliance National Institute of Water and BPA Bisphenol A NIWA Atmospheric Research BPN Biopolymer Network Ltd NRFA National Rural Fire Authority CHH Carter Holt Harvey New Zealand Wilding Control NZ WCMG Management Group Commonwealth Scientific and Industrial CSIRO Research Organisation NZFOA New Zealand Forest Owners Association DDGs Dried Distillers Grains NZTE New Zealand Trade and Enterprise DOC Department of Conservation PGP Primary Growth Partnership EPA Environmental Protection Authority PMA Pine Manufacturers Association EPS Expanded Polystyrene PSAF Pre-Seed Accelerator Fund FFPRI Forestry and Forest Products Research RDC Rotorua District Council (JAPAN) Institute Japan RNC Red needle cast FFR Future Forests Research RPBC Radiata Pine Breeding Company FIF Forest Investment Finder RPS Regional Policy Statement Forest and Rural Fire Association Scion Core Crown Research Institute FRFANZ of New Zealand Inc Funding Core Funding FSC Forest Stewardship Council SFF Sustainable Farming Fund (MPI funding) FWSYS Fire Weather System SLUA Soil and Land Use Alliance GM Genetic modification STFMP Strategic Tactical Fire Management Plans HSNO Hazardous Substances and New Organisms STIMBR Stakeholders in Methyl Bromide Reduction INRA French National Institute for SWI Solid Wood Innovation (FRANCE) Agricultural Research United Nations Framework Convention IPCC Intergovernmental Panel on Climate Change UNFCCC on Climate Change International Union of Forest Research Woodco Wood Council of New Zealand IUFRO Organisations WPA New Zealand Wood Processors Association Ministry of Business, Innovation MBIE and Employment WPI Wood processing subsidiary of Ernslaw One

This document is printed on Advance Laser, which is an environmentally responsible paper produced using Elemental Chlorine Free (ECF) pulp sourced from Sustainable & Legally Harvested Farmed Trees, and manufactured under the strict ISO14001 Environmental Management System. SCION, 49 SALA STREET, PRIVATE BAG 3020, ROTORUA 3046, NEW ZEALAND SCION ANNUAL REPORT 2013 WWW.SCIONRESEARCH.COM HIGHLIGHTS