'Crisis of our own making': Regulatory logjam has cost $100B in cancelled resource projects
As Senate hearings into the controversial bill continued Thursday, the C.D. Howe Institute released a report detailing how recent declines in planned energy, mining and forestry investment in Canada totalling $100 billion is equivalent to erasing 4.5 per cent from Canada’s gross domestic product.
TransCanada Corp.’s $15-billion Energy East pipeline, CNOOC Ltd.’s Aurora LNG and Petronas Bhd’s $36-billion Pacific NorthWest LNG project are among the major resource projects that have been cancelled in recent years after long and uncertain regulatory processes, contributing to the $100-billion figure.
The declines in planned investment in Canada’s resource sector have continued even as investments in competing jurisdictions have rebounded following a years-long decline in commodity prices, said C.D. Howe Institute associate director of research Grant Bishop, who co-authored the report.
“U.S. and global investment in oil and gas has rebounded while in Canada it has continued to plunge,” Bishop said, adding, “Global planned investment in mining has dropped but it has dropped further in Canada.”
Industry groups across the resources sector including the Canadian Energy Pipelines Association and the Mining Association of Canada are asking the Senate to amend the bill. Other think tanks, including the Canada West Foundation, have also called for substantial changes to the bill.
Part of the issue is long regulatory timelines. The study shows it can take up to 15 years to get a mine approved in Canada, compared with six years in Australia. Or it can take up to 11 years for pipeline approvals in Canada, compared with two years in Australia or five years in the U.S.
More important, he said the bill and regulatory overhaul does not fix the biggest obstacle facing major resource projects: the federal government’s own approach to consultations with Aboriginal people affected by development.
“The critique is that Bill C-69 is being pitched as being necessary to fix major resource projects,” Bishop said. “The legislation is not addressing the problem that has tripped up major resource projects.”
… Bill C-69 is being pitched as being necessary to fix major resource projects. The legislation is not addressing the problem that has tripped up major resource projects.
report author Grant Bishop, associate director of research, C.D. Howe Institute
Approvals for the Trans Mountain pipeline expansion project, for example, were overturned in August 2018 when the Federal Court of Appeal found Ottawa did not properly consult with affected First Nations.
The Appeals Court judge found that the third phase of Ottawa’s consultation consisted primarily of note-taking rather than a meaningful dialogue, which is similar to the issue that caused the same court to overturn appeals for Enbridge Inc.’s Northern Gateway approvals in June 2016.
Bishop said Bill C-69 will not change anything about the regulatory process that would have resulted in different outcomes for either Northern Gateway or Trans Mountain, as it doesn’t update the federal government’s consultation guidelines.
The last time those guidelines were updated was 2011, before either of those pipeline decisions were rendered.
Those guidelines were based in part on interim guidelines developed in 2008 following Supreme Court of Canada decisions from 2004 and 2005.
Bill C-69 (will) provide 'early, inclusive and meaningful public engagement'
Natural Resources ministry spokeswoman Vanessa Adams
“We inherited a broken system, and we are fixing it by listening to Canadians, stakeholders and Indigenous Peoples,” said Vanessa Adams, spokeswoman for Natural Resources Minister Amarjeet Sohi.
She did not say if the legislation should included updated guidelines for Indigenous consultation.
She said Bill C-69 would provide “early, inclusive and meaningful public engagement” that would help provide investors with certainty to proceed with projects.
In response to the Appeals Court decision on Trans Mountain, Sohi asked the National Energy Board to provide a new review of the project and launch fresh consultations with affected First Nations. The board is expected to release its findings on Friday.