After years of acrimony over the obvious, the Liberals and the NDP are finally embracing natural resources as a key prong of Canada’s economic future. BC Premier David Eby now unabashedly lauds LNG as crucial, while Liberal leadership contender Chrystia Freeland mentions natural resources as essential to strengthening the economy.
This was overdue, but one major roadblock stands in the way of a renaissance in the resource sector; Bill C-69, also known as theImpact Assessment Act (IAA).
There has never been a shortage of extractable fuels in Canada, nor has there been a lack of demand for it on the world stage. Why is Canada, rich in natural gas, oil, and critical minerals, failing to meet the global demand for energy?
It is surely not for lack of demand, with oil and gas predicted to make up 46 per cent of the world’s energy supply in 2050.
And in recent years, Germany, Japan, South Korea, and Taiwan have reached out to Canada begging (or requesting) natural gas only to be rebuffed or met with disappointment. Infamously, Prime Minister Justin Trudeau’s asserted that there was no “business case” for supplying LNG to the EU.
By stifling the energy industry with more layers of regulation like the IAA, we are denying energy security and a better standard of living to both ourselves and our friends. Even before the stricter regulations of the IAA were introduced by the government in 2019, the deliberate delays and outright hostility to energy development in Canada were evident.
Between 2011 and 2022, there were 18 proposals for LNG export facilities. Only one, the LNG Canada project near Kitimat, has made meaningful progress. Even so, it took seven years for LNG Canada to get through all necessary approvals and its final investment decision.
There have been far more cancellations and failures tarnishing Canada’s record. In 2017, Petronas cancelled the massive $36 billion Pacific NorthWest LNG project. Then in 2020, a year after the IAA received Royal assent, Warren Buffet himself chose to abandon a $9 billion LNG project in Quebec.
In 2021, Chevron and Woodside Energy, both shareholders in LNG Canada’s export facility at Kitimat, pulled their funding and redirected it to other projects, but not before identifying regulatory uncertainty as the culprit.
Compare that to the United States, where seven LNG export facilities were built in the same timeframe, five more began construction, and fifteen more were approved. Germany built its first floating LNG terminal in just one year, during 2022, following the Russian invasion of Ukraine that severely curbed the imports of Russian gas.
Canada’s falling so far behind, despite our vast wealth and nearly two dozen proposals for LNG facilities, is the result of the choices made by the government when it comes to regulating the energy sector, and the resource sector more broadly.
Modern regulations on the natural resource sector have grown since the 1960s when environmental advocacy began to pick up steam. In 1973, the Federal Environmental Assessment and Review Process was established.
Although non-legislative, it was the first step towards strengthening the regulatory regime, leading to developments like the proclamation of the Canadian Environmental Assessment Act which came into force in 1995. This brought the federal government into greater direct involvement in environmental assessments, funding, and licensing, and evolved through continuous amendments until the IAA was passed in 2019.
Resource development projects have historically fallen under provincial jurisdiction, with the exception being projects that span provincial borders. The IAA duplicates the regulatory hoops that developers must jump through — both provincial and federal.
As a result, the IAA has led to redundancy in documentation, consultation, reviews, and ultimately extends timelines for the completion of projects. The overlapping regulations add layers of ambiguity in navigating the maze of provincial and federal demands.
Furthermore, the IAA empowers the Federal Minister of Environment and Climate Change with a disproportionate amount of decision-making power in the project approval process, which brings federal party politics into provincial development plans.
Shortly after the IAA was enacted in 2019, the Alberta government went to court, launching a constitutional reference case in the Alberta Court of Appeal, challenging the IAA on the grounds that it infringed upon provincial jurisdiction under Section 92 of the Constitution Act, which grants provinces authority over natural resources and local projects.
The case escalated to the Supreme Court, and in 2023, the IAA was found unconstitutional due to its enabling of the federal authority to overstep. The IAA was then amended to limit federal jurisdiction over development projects, but one small amendment does not fix the layers of issues it presents.
Canada now finds itself in the embarrassing and awkward situation of being practically begged by our allies to supply them with natural gas and other energy sources that they will pay us handsomely for, only to have the door politely shut in their face. Furthermore, the failure of so many projects to get off the ground has left Canada dangerously unprepared to deal with a more belligerent White House.
As Canadians, we are proud to be host to some of the world’s most environmentally-friendly energy development processes. We need regulations, but shutting down the nation’s energy industry with impossible regulatory challenges is stabbing ourselves in the back.
Remedying that starts with scrapping the IAA and clearing the way for a safer, more secure future for Canada.
National Post