Bill C-69 will plug oil pipeline plans with more politics: C.D. Howe Institute

As the pro-energy convoy that delivered truckloads of resentment from Canada’s oil patch to Parliament’s doorstep trundles west after two days of protests in Ottawa, a new report underscores the anxieties behind the United We Roll rallies.

According to the C.D. Howe Institute, capital spending in Canadian energy, including oil and gas extraction, pipelines and electrical power and mining, fell from $125 billion in 2014 to $75 billion in 2018. 

Canada’s slump has outpaced the broader global downturn in energy and mining projects, and the think tank warns reforms under Bill C-69 threaten to bog down project approvals with more strenuous consultation requirements. “With investment in Canada’s resources sector already depressed, the federal government’s proposed Bill C-69 could further discourage investments by congesting the assessment process with wider public policy concerns and increasing political uncertainty,” the report’s authors said. 

Oil pipelines such as Northern Gateway and the Trans Mountain Expansion have been halted by judicial decisions under the current rules. 

Bill C-69 would overhaul the federal approval process, scrapping the Canadian Environmental Assessment Act in favour of an Impact Assessment Act. The change would widen the scope of potential impacts to be considered, and require the Minister of Environment and Climate Change, or cabinet, to determine whether a project is in the “public interest.”

The C.D. Howe Institute called the public interest standard “highly speculative,” and encouraged policymakers to specify project approval guidelines that can be applied consistently and predictably. 

The think tank also found it is unclear how Bill C-69 would resolve issues with the Ottawa’s approach to consulting and accommodating Canada’s Indigenous peoples. 

Last summer, the Federal Court of Appeal cited inadequate consultation on that front in its decision to block licensing for the $7.4-billion expansion of the Trans Mountain pipeline. The court raised similar concerns in its June 2016 decision on Northern Gateway. 

“Bill C-69 would not resolve the gap of dependable up-to-date guidance for federal officials to fulfill the government’s constitutional duty to consult and accommodate Indigenous peoples,” the report said. “The lack of updated guidance  – and the Court’s findings of the federal
government’s consultative failures on Northern Gateway and Trans Mountain Expansion – presents substantial uncertainty for proponents of any project that could affect Indigenous peoples.”

The C.D. Howe Institute said Canada’s track record for cancelling and delaying energy projects has coincided with a drop in planned investment in the sector, from $146 billion in 2015 to $35 billion in 2018. 

The authors note a $100 billion decline in the annual pace of capital investment represents approximately 4.5 percent of Canada’s gross domestic product.

“The $100 billion plummet in the announced value of planned investment during 2018 highlights the high risk for a substantial slump in overall Canadian capital investment in the years ahead,” the report said.

American oil giant Devon Energy Corp. (DVN) joined the list of foreign energy firms turning their back on Canada’s oilsands on Tuesday. The company said it expects to complete the separation of its Canadian and Barnett Shale assets by the end of 2019, and will evaluate a potential sale or spin-off.

ConocoPhillips Co. (COP), Murphy Oil Corp. (MUR), Marathon Oil Corp. (MRO), Royal Dutch Shell Plc. (RDS-A), Equinor ASA (EQNR) and Total SA (TOT) have also pared back exposure to heavy Canadian crude. 

The trend, and the perception it is not being taken seriously by Ottawa, continues to stoke Western frustration and backlash against the Liberal government. 

Conservative Leader Andrew Scheer welcomed the controversial United We Roll convoy from Red Deer, Alta. to Ottawa on Tuesday, telling the crowd, “It is time Canada has a prime minister who is proud of our energy sector … that fights for it and fights to get you back to work.”

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