Sweeping regulatory reform looms over resource sector, evoking NWT pipeline’s fate
I happened to cut my teeth as a biologist on the Mackenzie Valley pipeline. There are communities in the western Arctic that are impoverished because that pipeline wasn’t built due to an environmental process that ran amok and actually killed investment … this is exactly what your government is doing.
– Conservative MP Robert Sopuck to Environment minister Catherine McKenna during last year’s committee deliberations on Bill C-69
The old saying ‘when you try to please everybody, you end up pleasing no one’ should’ve been the moral to the story of Mackenzie Gas Project’s tragic demise, after the $16-billion gas pipeline from Beaufort Sea to Alberta was officially shelved in December 2017.
When hearings began for the project in 2006, confidence was high – the Aboriginal Pipeline Group were players in the proponent consortium that included Imperial, ConocoPhillips and Shell, ensuring Indigenous ownership and jobs.
Due to the project’s right-of-way – through settled and unsettled land claim regions and a patchwork of local review boards – Ottawa created the Joint Review Panel to conduct socioeconomic and environmental hearings, to coincide with National Energy Board proceedings.
The hearings were supposed to run for a year and consider everyone’s concerns from youth to elders and a host of Sierra Club environmentalists from down south, but the witness logjam, compounded by lawsuits and waning proponent confidence delayed regulatory machinations significantly.
In the end it took four years for the MGP to finally get the green light but by then, the price of natural gas had slumped and project costs skyrocketted – the energy world had moved on.
Enter the federal government’s proposed Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act. While Environment minister Catherine McKenna promises it offers greater certainty and streamlines the regulatory regime, it actually combines the worst elements of the MGP process – trying to please everybody – and shoehorns them right into the legislation.
Since the MGP was abandoned, Northern Gateway and Energy East pipelines have also been scrapped over insufficient consultation and lack of political will. This leaves TransMountain as the last shovel-ready project on the table to get Alberta’s bitumen to tidewater. Despite assurances from the federal government who last year purchased its existing infrastructure for $4.5 billion from Kinder Morgan, construction for twinning the line remains in limbo.
Meanwhile, Bill C-69 will turn a vital piece of country’s regulatory regime that evaluates such mega-projects on its head.
As things stand today, any interprovincial or international energy proposals – pipelines, transmission lines and the like – fall under the National Energy Board’s purview. All that is required to move a review process forward is making an application with the board. At this stage, the NEB reviews the proposal and in the case of mega-pipelines, this is guaranteed to trigger one or more environmental assessments via the Canadian Environmental Assessment Act.
The NEB then weighs such assessments against economic benefits, considers input from affected entities and approves or denies the project, decisions for which federal cabinet remains the ultimate arbiter. These processes already take years to reach a determination as MGP and Northern Gateway have shown.
Under McKenna’s Bill C-69 regime, however, the Environment minister becomes the gatekeeper with power to quash project proposals deemed not in the public’s interest. Her bill transplants vetting this public interest from the Calgary-based National Energy Board to an Ottawa body dubbed the Impact Assessment Agency.
Essentially, this makes the energy board’s role subservient to ministerial whims, instead of how it operates today: in concert with the Canadian Environmental Assessment Agency to provide cabinet with informed recommendations.
McKenna claims her regulatory revamp will increase public confidence, but in doing so belies the assessment agency’s longstanding ability to marshal requisite expertise, in its own words “from federal departments and agencies, provinces and territories, Indigenous groups, environmental organizations, industry and others to deliver high-quality EAs.”
The bill also opens the door for virtually anyone to appear at a project hearing, if it ever gets to that stage, by tossing a “standing test” for who can give testimony – currently only those directly affected or with expertise are allowed to participate. Such ‘open door’ policies contributed to the Mackenzie Gas Project’s death; while the NEB could limit participants, the Joint Review Panel became a dog’s breakfast of witnesses, ultimately delaying its final report.
So with these concerns in mind, expressed scores of times by industry and MPs during parliamentary hearings on the legislation, the Senate’s Environment committee decided to go on a cross-country tour to hear directly from Canadians who would be impacted.
Earlier this month in Calgary, senators were greeted by pro-energy protestors demanding they ‘kill the bill’ while in Winnipeg on April 12, a different set of demonstrators called on the Senate to pass the legislation as is, and accused senators of stalling.
This Friday, the Senate committee’s tour wraps up in Québec City, location of the proposed $7.5 billion Energie Saguenay’s natural gas liquifier and export facility, currently under scrutiny by the National Energy Board and Canadian Environmental Assessment Agency.
If the Senate passes Bill C-69 as is, an additional “upstream greenhouse gas analysis” criterion will count emissions related, end-use of LNG produced by Energie Saguenay and any other future resource project’s energy commodity as part of their overall environmental footprint.
Alberta Premier Jason Kenney has declared that if the Trans Mountain Pipeline is not built by Trudeau’s government, he will hold a referendum on ending equalization payments.
The comment comes after Liberal Procurement Minister Carla Qualtrough suggested that equalization payments were on the table for discussions, according to Global News:
“We want to make sure everyone is being treated equally and fairly, and if people aren’t feeling like they’re being treated that way, then, of course, we are going to have to have these really important conversations.”
While many in Alberta are opposed to the equalization payments since Alberta hasn’t properly recovered from the 2014 oil price slump, Alberta receives billions of dollars in other payments from the federal government.
Kenney has long demanded a change to the equalization payment process. He believes provinces that are hit with economic slumps could use the money for themselves instead of equalization.
In response to increasing criticism and outrage from Western Canada, the new Liberal minority government has decided that it’s in their (and the rest of Canada’s) best interests to push through with the Trans Mountain pipeline.
After losing every single seat in both Alberta and Saskatchewan, Prime Minister Justin Trudeau has dialled back his climate policy rhetoric and opted for a more nuanced approach to balance the green push with realistic economic policies.
On October 23, he told a press conference that he will begin his second term as prime minister by working to ensure that oil producers can sell their product abroad at fair prices by moving forward with the pipeline. When asked why his parliament failed to win seats and represent Western Canada, he said that why isn’t the central question but how can the federal government mend the disconnect between West and East.
“We made a decision to move forward on the pipeline because it was in the interest of Canada to do so because the environment and the economy need to go together. We will be continuing with the Trans Mountain pipeline expansion,” Trudeau said.
“Albertans and people in Saskatchewan have faced very difficult years over these past few years because of the global commodity prices, because of the challenges they are facing. For a long time, they weren’t able to get their resources to markets other than the U.S. We are moving forward to solve those challenges.”
According to CBC, the 1,150-kilometre pipeline expansion would roughly “triple the existing pipeline’s capacity to 890,000 barrels a day,” and would allow Alberta to ship oil through B.C. to international markets such as Asia.
The Liberal government has also stated its plans to use the additional oil revenues to transition to cleaner sources of energy, predicting up to $500 million for green energy projects.
In an interview with The Canadian Press, Finance Minister Bill Morneau said that the plan to extend the pipeline isn’t merely a ploy to mollify Alberta and assist negotiations between the minority government and the provinces. Rather, Morneau says that balancing the economy with green energy initiatives is a crucial part of the Liberal’s transitionary measures.
“We purchased [the pipeline] for a reason,” said Morneau. “We now see how it can help us accelerate our clean energy transition by putting any revenues that we get from it into a transition to clean energy. We think that is the best way we can move forward in our current context.”
According to CTV News, construction for the expansion is expected to be complete by the middle of 2022. The Liberal government has forecasted taking up to $125 million in revenue from Trans Mountain Canada each year up to the expansion’s completion and the $500 million each year after.
“My expectation is that we have much common ground between the other parties that have been elected to the next Parliament,” said Morneau.
“We will be seeking consensus on how we can move forward on that common ground. This project we’ve already moved forward on. It’s one that we’ve said that we’re moving forward on, we’ve actually already gone through that process.”
Alberta’s Provincial government has said they will not do anything to arrange a meeting with infamous climate change activist Greta Thunberg. However, Environment Minister Jason Nixon hopes that Thunberg takes time to learn about the province’s oil and gas industry and all the steps they’ve taken to address climate change.
“I think when you look at some of Miss Thunberg’s comments, she doesn’t understand our province, that she doesn’t understand the reality that to accomplish climate change goals worldwide, we need Alberta as part of that solution,” Nixon told reporters Tuesday.
“We have the most environmentally friendly place in the world to produce oil and gas products.”
However, some members of the provincial government, specifically NDP Opposition Leader Rachel Notley, have expressed their discontent over the United Conservative Party’s decision to not meet with the climate activist, saying that Thunberg is an important part of a movement that needs to be acknowledged.
“While I obviously don’t agree with every prescription that Greta is proposing, I definitely do agree that we have a (climate change) problem and we need to take that problem seriously,” Notley said.
“We need to be leaders. We don’t need to be cowards. What’s happening right now, by blaming everybody else, our premier is being a coward.”
Alberta is only the last stop on a larger North American tour that Thunberg has decided to undertake. This time around, rather than going to metropolitan areas where more people will agree with her, she has chosen to head straight to the places where oil production is great, such as Alberta and Montana.
Her expected arrival has also sparked a prospective protest from pro-energy Albertans, specifically a group called United We Roll!, who have called her climate alarmism a giant hoax.
“We’re going to continue to fight for Canadian energy until we get pipelines in the ground.
“And we’re going to rally against any climate activist who comes out and pretends they know more about our environment than we do in Alberta, about our oil and gas industry,” said Glen Carritt, the United We Roll! organizer.
Liberal Leader Justin Trudeau was asked by CBC’s Rosemary Barton, in a longwinded question, if his government’s $4.5 billion purchase of the Trans Mountain pipeline would be the last pipeline he would approve.
“Last fall the United Nations international panel on climate change stressed the need to act quickly to limit further global warming,” started Barton. “A report from Environment Canada says this country is warming twice as fast as the global average. You say you are committed to combatting climate change but your government proceeded with the purchase and approval of a new pipeline to the west coast. Given the timeline, and given what is at stake, should Canada not be moving more quickly away from further development of the oil and gas sector, and to that end, should the expansion be the last pipeline.”
Trudeau gave a similary longwinded answer.
“We absolutely have to move faster. We absolutely have to do more. And that’s why we put forward an ambitious plan to continue—that is reasonable, that is doable, and is going to make sure that we get to, not just surpass our 2030 targets, but go beyond it,” said Trudeau.
“We’re banning single-use plastics, we’re putting a price on pollution right across the country, and we’re fighting those Conservative premiers who do not want to do their part to fight climate change. We recognize that transition to clean energy will not happen overnight. And while we do, we should have less oil by rail, and we need to get to new markets so we can invest all the resources, all the money coming in from this pipeline into that green energy transition into fighting climate change. I know that’s a big piece of the way we move forward, how we invest in the new economy in that transition, and that’s what we’ve done. The choice tonight, do we pick a government that doesn’t believe in climate change or in fighting it, or do we continue on the track we are…” Trudeau said before getting cut off because his time was up.
“Okay, got to end it. I noticed you didn’t answer that last part of that question,” Barton interjected.
Environmentalists have criticized Trudeau for supporting the oil industry, while gas and oil proponents have claimed that the government overspent on buying the pipeline and that the government should not be in the business of buy pipelines.