The Standing Committee on Environment and Sustainable Development - March 27, 2018.
By: Chris Bloomer - President and CEO - CEPA (Pipeline Association)
PART 1 – STATE OF THE UNION
The Canadian Energy Pipeline Association appreciates the opportunity to speak to Bill C-69. I am here to talk about this bill today. But, I have to start by giving you a brief “State of the Union” for the energy sector. It is not good news.
In the two years leading up to this bill you can pick your poison: Policies including a tanker moratorium off of British Columbia’s northern coastline. Proposed methane emission reduction regulations. Clean fuel standards. Provincial GHG emissions regulations. B.C.’s restrictions on transporting bitumen. A lack of clarity regarding the government’s position on the implementation of UNDRIP and FPIC. And fierce competition from energy-supportive policies in the United States.
The cumulative effect of these policies has significantly weakened investor confidence in Canada. It is seriously challenging the energy sector’s ability to be competitive.
We are already in a time of profound uncertainty: New projects are at a grinding halt and we have a major problem as a sector and a country accessing new markets for our energy products to the world.
The reality is that CEPA member companies with material assets in other countries are actively pursuing opportunities in those jurisdictions and investment capital in the oil and gas sector is moving out of Canada. This is due in large part to the current regulatory policy uncertainty, and the potential implications of any further seismic regulatory changes directly impacting the pipeline sector in Canada. So, the consequences are real – and sector is suffocating because of it.
We believe that a majority of Canadians still appreciate the significant contribution the oil & gas sector makes to Canada’s economy. We also hold firm in the belief that continued growth in the oil and gas sector is completely consistent with Canada’s 2030 GHG emissions targets.
In the consultation process leading up to the tabling of this Bill, CEPA took some comfort and assurances from this government that any new legislation would reflect shared values focused on a strong regulatory regime, relationships, safety, environmental stewardship, public confidence, competitiveness and the kind of certainty and clarity for a reasonable prospect of actually building a new major pipeline in Canada.
In its current form, this Bill cannot achieve that greater certainty, clarity, and predictability for projects that can extend hundreds if not thousands of kilometers across provinces, communities and Indigenous communities.
In fact, it is difficult to imagine that a new major pipeline could be built in Canada under the Impact Assessment Act much less attract energy investment to Canada.
We are concerned that all this Bill has done is frustrate Regulatory Reform in order to advance this government’s climate change agenda and has baked too much broad policy subject matter into an otherwise very technical decision-making process.
PART 2 – BILL C-69
With respect to the specifics of this Bill, this process started with the Prime Minister’s mandate letter to the Minister of Environment and Climate Change. The Minister was asked to review environmental assessment processes to achieve three objectives: (1) to restore public trust; (2) to introduce new, fair processes; and (3) to get resources to market.
With the all due respect, CEPA does not believe the proposed Impact Assessment Act would accomplish ANY of these objectives.
Over the course of a year and a half of consultations, CEPA’s 200 plus pages of submissions were meant to provide thoughtful and practical recommendations to address the Government’s three objectives.
Our recommendations were premised on the underlying need to stem the erosion of Canada’s competitive position in the natural resource sector. They were guided by key principles that we believe would have set the framework to meet all of these goals:
1. A process that ensures that broader public policy issues are addressed in more appropriate venues, outside of project reviews;
2. A science and fact-based process that is coordinated, efficient, and provides clarity and certainty; and
3. The National Energy Board as the best-placed regulator with technical expertise and full life-cycle responsibility for project reviews, operations and maintenance.
Regrettably, the Impact Assessment Act does not address these concerns. CEPA is really disappointed that the proposed process appears to double down on the very factors that created the toxic regulatory environment for major projects that this regulatory review process was intended to fix.
The Impact Assessment Act does not address the pipeline sector’s most fundamental concern: A process that is expensive, lengthy, polarizing and ends with a discretionary political decision.
Bill C-69 has not addressed the need to find an appropriate venue to debate and resolve broader public policy issues. The Bill is flavored throughout with the government’s commitment to meeting climate change objectives, gender-based analysis, Indigenous reconciliation, and subjective and inherently unpredictable sustainability tests.
Despite CEPA's very strong recommendation to remove broader public policy from project specific reviews, these issues are now explicitly included in the review process as factors to consider.
The Impact Assessment Act will not achieve greater certainty, clarity, and predictability. Instead, it introduces a new regulatory agency and unique new processes and information requirements that have never been tested.
The public participation standing tests have been removed. Science and fact-based assessments will now be obscured by the layering of other policy-based assessments that are ill defined, fluid and open to potential strategies of delay and obfuscation of the process by groups opposed to a or any project. In short, we cannot see that timelines will improve; we expect them to be longer.
The National Energy Board, now the Canadian Energy Regulator, has effectively been side-lined with respect to major pipeline project reviews. CEPA consistently emphasized that the NEB was the best placed regulator to oversee the full life-cycle of a pipeline from beginning to end.
Instead, Bill C-69 carves out the review of major pipeline projects and places it with the new Impact Assessment Agency. This new Agency does not have the rich history of administrative decision-making and technical expertise of the NEB.
Instead, the new Agency is mandated to perform a broadened role, assess a wider scope of issues, and is expected to implement the government’s political agenda related to climate change, reconciliation and gender objectives. It is not an independent, expert regulator. CEPA is not convinced that it will have the capacity to conduct these broadened, political reviews, even with the announcement of $1 billion of new spending to support the implementation of the Impact Assessment Act.
Given these concerns, it is hard to imagine that any pipeline project proponent would be prepared to test this new process or have a reasonable expectation of a positive outcome at the end. With built-in climate change tests covering upstream and downstream emissions, it is preposterous to expect that a pipeline proponent would spend upwards of a billion dollars only to be denied approval at the end, because the project must account for emissions from production of the product to consumption in another part of the world.
If the goal is to curtail oil and gas production and to have no more pipelines built, this legislation has hit the mark.
PART 3 – CONCLUSION
In conclusion, today, CEPA has offered the views of member companies based on their direct experience in investing, building and safely operating the energy infrastructure that supports the Canadian economy and the everyday lives of Canadians. Project proponents and their investors will continue to evaluate the feasibility of developing resource projects in Canada against other investment options.
The Government’s June 2017 Discussion Paper suggested a more balanced approach between the views of the more radical environmental elements and industry. This Bill tilts the balance wholly in favor of the environmental perspective, some whose goals are to keep fossil fuels in the ground and never see another pipeline built.
This Bill will introduce even more risk and uncertainty. The net effect of the Impact Assessment Act is an impractical and unworkable process that will create unmanageable uncertainty and a decision-making framework that will insert broader policy issues squarely into a process that is not equipped to resolve them.
Finally, this Bill does not provide a vision as to how it fits into Canada achieving longer term energy objectives; it doesn’t reflect the reality of the importance that oil and gas will continue to play in the global energy mix for the next several decades; and therefore, does nothing to help Canada achieve full value of its resources in the world markets.