Energy reforms are eroding trust in governments
Alberta Premier Rachel Notley is planning another tour to Toronto and New York to talk up the Trans Mountain pipeline expansion to business leaders.
It’s certainly good exposure for her re-election campaign. It probably won’t change investors’ pessimistic views of Canada’s oil and gas sector.
Here’s the problem. Aside from Canada’s dysfunctional handling of the Trans Mountain project, governments (including Alberta’s) have burdened energy companies with so much new regulation, so many new costs, and are on a path to make regulatory reviews of big energy projects so much more political, investors have tuned out and moved to jurisdictions where governments aren’t kneecapping their companies to meet commitments on climate change.
The message couldn’t be clearer than in the Canadian Energy Pipeline Association’s recent response to Bill C-69, the Impact Assessment Act, introduced by the federal government in February and now making its way through Parliament.
The group warns that instead of restoring trust in Canadian energy regulation, the bill, one of Prime Minister Justin Trudeau’s priorities, ensures no other major pipeline project will ever be built in Canada.
That’s a bold statement from a lobby group, but no hyperbole. The Alberta-based oil and gas sector is that disillusioned with Ottawa’s relentless energy industry re-engineering.
The organization — which represents historic Canadian companies like TransCanada Corp., Enbridge Inc. and Pembina Pipeline Corp., whose shares are held by many Canadians in their RRSPs — doesn’t mince words in its submission to a parliamentary committee:
“Currently there is profound uncertainty in advancing new major pipeline projects. We now have a significant problem as a sector and as a country in accessing new markets for our products around the world. The development of new projects is grinding to a halt. CEPA member companies that have material assets in other countries are actively pursuing those opportunities because of the uncertainty and potential implications of further potentially seismic regulatory changes that will directly impact the pipeline sector. Our sector is suffocating because of it.”
The group complains that on top of the regulatory “poison” doled out by Canadian governments in the past two years — including the tanker ban off the British Columbia coast, proposed methane emissions regulations, provincial greenhouse gas emissions regulations, B.C.’s restrictions on transporting bitumen, lack of clarity on Indigenous rights — the federal Liberal’s regulatory reforms “double down on the factors that created the toxic regulatory environment for major projects that this regulatory review process was intended to fix.”
Specifically, CEPA says the bill expands reviews to serve the whole buffet of Liberal priorities — climate change, gender-based analysis, Indigenous reconciliation, sustainability tests, making them more rather than less political.
It also sidelines the National Energy Board, which has all the expertise to review big projects, and puts a new agency in charge with no track record and a broadened role to implement the government’s political agenda, CEPA says. Instead of shortening review timelines, as the government promised, the new process extends them to 29 months from 18 months, not including more months required to complete an impact assessment report.
“It is difficult to imagine that a new major pipeline could be built in Canada under the Impact Assessment Act,” CEPA says. “We are concerned that the government has effectively frustrated regulatory reform in order to advance their climate change agenda and has baked broad policy subject matters into an otherwise very technical decision-making process. CEPA does not see anything … that will attract energy investment to Canada.”
That’s not how Ottawa’s sees it. Caroline Theriault, spokeswoman for federal Environment Minister Catherine McKenna, said better rules are needed to review resource projects worth more than $500 million in investment in the next decade.
“Since forming government we have done more to support Canada’s energy sector and get our resources to market in over two years than the Harper Conservatives could deliver in a decade,” she said in an emailed statement.
“Our goal is one project, one review — we will streamline the process and coordinate with the provinces and territories to reduce red tape for companies and avoid duplicating efforts in reviewing proposed projects. We are making the process more predictable and timely, to clarify the process to engage stakeholders effectively, and identify potential issues with project proposals up-front. These better rules will increase regulatory certainty and clarity, encouraging investment in Canada’s natural resources sectors. The environment and the economy go together, and these rules will ensure good projects move ahead.”
Notley has been working with Ottawa to address industry angst over the regulatory reforms by advocating an exemption for pipelines and oilsands from climate assessment tests.
Chris Bloomer, president and CEO of CEPA, said his group would welcome more clarity on how Bill C-69 intends to assess a major pipeline project’s impact on climate change commitments.
However, “we have consistently emphasized that broader policy issues should not be dealt with in project specific reviews,” he said in an emailed statement.
“We also remain concerned that, beyond the climate change test, the proposed changes in Bill C-69 do not provide the certainty that our industry needs. As companies look for jurisdictions to invest capital, they will factor in things like uncertainty, associated costs and potential delays. If Canada is perceived as a place where these risks are too high the capital will go elsewhere.”
Notley’s tour in early May will involve meetings with business leaders, U.S. and Mexican governors, and Canadian premiers.
What’s really needed is a push in Ottawa to send regulatory reforms back to the drawing board so everyone agrees they deliver what was promised: to restore trust in Canada’s regulation of major energy projects.
Financial Post