From Energy Now

By Jim Warren

Living with uncertainty can be worse than getting the bad news.

It’s been six months since Justin Trudeau resigned. Yet here we are little to no wiser about what Prime Minister Carney has in store for the oil and gas sector in the West. If Ottawa truly intends to pave the way for new pipelines, great! If not, it’s better to know now so we can get on with Plan B.

Those optimistic people who breathed a sigh of relief when the Building Canada Act (Bill C-5) became law are still at risk of disappointment. Bill C-5 might indeed herald a brighter future for Canadian gas and petroleum. But it’s also possible it will do nothing at all for the conventional energy sector.

The new law purports to be all about getting big development projects, that are in the national interest, more promptly approved than was the case when approvals were adjudicated under the auspices of the Impact Assessment Act (Bill C-69) and the tanker moratorium (Bill C-48).

Section 4 of the Building Canada Act states that its purpose “is to enhance Canada’s prosperity, national security, economic security, national defence and national autonomy by ensuring that projects, that are in the national interest, are advanced through an accelerated process that enhances regulatory certainty and investor confidence, while protecting the environment and respecting the rights of Indigenous peoples.”

Cabinet will have the final say on which projects will be considered for fast-tracked evaluation. Those lucky enough to be chosen are placed in Schedule 1. A project isn’t even in the game if it is not named and briefly described in Schedule 1.

The Act describes Schedule 1 as a list of projects seeking final approval. Providing the necessary information to appear on Schedule 1 seems pretty straightforward. Cabinet-anointed projects need only provide their name and the location of their principal activities and a brief description of what they intend to do. It almost seems too simple for projects purporting to advance critical national interests.

One of the big sticklers is that the Act is frustratingly opaque when it comes to specifically identifying what constitutes a national interest project (NIP). Subsection 5(6) provides a list of five conditions or goals that Cabinet might find relevant for the elevation of a project to Schedule 1. It doesn’t say a project has to meet all or any of those conditions—just that acceptable projects could include one or more of them. The wording is vague enough to suggest a project could include none of them, or include something nobody has thought of yet.

When deciding whether a project will be one of the lucky winners, the Act says Cabinet may consider any factor it considers relevant, “including the extent to which the project can:

(a) strengthen Canada’s autonomy, resilience and security;

(b) provide economic or other benefits to Canada;

(c) have a high likelihood of successful execution;

(d) advance the interests of Indigenous peoples; and

(e) contribute to clean growth and to meeting Canada’s objectives with respect to climate change.”

Smith makes the case

You certainly can’t fault Alberta Premier Danielle Smith for thinking a bid to get a million barrels per day Northern Gateway 2.0 onto Schedule 1 might succeed. The project clearly checks four of the five boxes, assuming they actually count. The new pipeline combined with plans for massive projects like the Pathways Alliance carbon sequestration initiative in the oil sands meets the contribution to climate change mitigation objective.

Check item “e”.

Speaking at Calgary’s Global Energy Show in early June, Smith explained a new million BPD oil pipeline running from Alberta to Prince Rupert has the potential to generate up to $20 billion in annual revenues. According to Smith, those new revenues will help make decarbonization projects like the Pathways Alliance plan feasible.  Additionally, the new revenues will contribute to economic benefits for all Canadians, enhancing our ability to cope with the effects of  US tariffs.

Check item “b”.

Alberta has taken significant steps to support First Nations participation in economically significant projects. Smith proudly points to the Alberta Indigenous Opportunities Corporation (AIOC) as an existing mechanism that will ensure Indigenous groups have a beneficial stake in energy projects and new pipelines.

Check item “d”.

No less important are the benefits the new pipeline will offer when it comes to Canada’s resilience as a resource exporting nation. Northern Gateway 2.0 will provide an outlet for exports to new international customers—as opposed to our heavy reliance on a single customer for almost all of our oil. If this doesn’t satisfy the goals stated in item “a” from the list, “strengthen Canada’s autonomy, resilience and security,” nothing can.

Check item “a”.

The likelihood that the project will succeed (as per item “c”) is a bit of a Catch-22. If the project is approved for Schedule 1, its chances for success are potentially good. If it is excluded they could be bleak.

Check “maybe” for item “c”

Assuming the federal government was being sincere when listing the five goals identified in Subsection 5(6,),  getting industry players to sign on to the proposal is probably the most significant barrier to success.

This time might be different

Smith has said government and industry are, “working hard on being able to get industry players, private sector players, to realize this time might be different.”  She’s optimistic that a private proponent or a consortium of companies will emerge to make a bid for approval.

Again, assuming the government is sincere about goals laid down 5 (6), the second most significant barrier is probably BC Premier David Eby’s, opposition to Northern Gateway 2.0.

The Building Canada Act is mute with respect to overriding the objections of a province to a project.

Smith recalls that Alberta was able to overcome opposition from the Government of British Columbia and obtain its approval for the original Northern Gateway project. She is confident that negotiations and common sense will prove successful this time around.

Danielle Smith doesn’t have stars in her eyes with respect to the chances for success. She simply recognizes what appears to be the opening of a window of opportunity. Considering the dearth of alternative options at the moment it makes sense to see if it’s real. If the opportunity proves illusive there are supporters of the oil industry in the West who will simply move on to Plan B. That option could include focusing  Albertans’ disappointment and attention on the upcoming separation referendum.

It’s not the Cabinet who decides, it’s the PM and the PMO

Much of the foregoing assessment could be moot should Cabinet determine a new export pipeline is a bad idea. Unfortunately, there is cause to worry that if a proposal is made, it won’t be approved. Last week, for example, the Liberal government doubled down on one of its least successful, most impractical green transition initiatives – the EV mandate.

Mark Carney’s new environment and climate change minister, Julie Dabrusin, embarrassed herself in Question Period last week, by refusing to admit to any of the well-documented defects in the government’s handling of the Electric Vehicle and EV battery file. Bankrupt battery makers, Canadians’ reluctance to purchase EVs, and auto makers’ warnings about plant closures and huge job losses come to mind. Dabrusin appeared oblivious to any problems in these areas.

Julie Dabrusin isn’t the only climate-alarmed fanatic in cabinet, Steven Guilbeault is still there. Furthermore, most members of the current Liberal caucus are veterans of the Justin Trudeau caucus. These are the same people who backed the Liberals’ ten-year assault on conventional energy. The current Liberal cabinet and caucus are potentially just as environmentally pure as Justin’s. If so, they could prove reluctant to approve any new pipelines or override the tanker ban.

Some political commentators have expressed alarm over the powers Bill C-5 grants to Cabinet. The official decision making process grants the minister selected to oversee the Building Canada Act authority to make recommendations to Cabinet for which proposals should be advanced to Schedule 1. But, Cabinet is empowered to confirm or reject the proposals. Similarly, the minister responsible gets to provide Cabinet with recommendations for the final approval or rejection of projects listed in

Schedule 1. But, again Cabinet gets to accept or reject the recommendations.

The fact that these decisions can be made in the absence of parliamentary debate and media scrutiny has been cause for further alarm.

On the other hand, it appears opposition amendments approved by the House may have remedied some of the concerns about transparency. Omissions from the Bill such as the lack of transparency around conflicts of interest have been addressed. And, there will apparently be an effort to clarify exactly what the criteria for project approval actually are.

Nevertheless, efforts to lift the veil on the realities of government decision making may not count for much. Democracy at the federal level has long been eroded by the growing power of the Prime Minister’s Office (PMO). It is unlikely that the minister in charge of the Act or Cabinet members will do anything that runs contrary to the wishes of the PMO. Defy this rule and risk being booted from Cabinet. Protest too much and the prime minister could refuse to sign your nomination papers for the next federal election.

In the final analysis, the success or failure of a proposal for a new export pipeline touching on tidewater, will depend on what Mark Carney really wants. And who knows what that might be?

By Dan McTeague

Earlier this month, Donald Trump fulfilled a major campaign promise and struck a blow against environmentalist governance in Canada, all in one fell swoop.

He did this by signing a congressional resolution revoking a waiver granted to California by the Biden Administration that enabled the state to set automotive emissions standards significantly stricter than the national standard. So strict, in fact, that in practice only electric vehicles (EVs) could realistically meet them.

This waiver functioned as a backdoor EV mandate, not just in California, but for all of the United States. That’s because automakers don’t want to be locked out of the most populous state in the union but are also disinclined to build one set of cars for California and another for the rest of the country. Their only option would be to increase their production of EVs, to the exclusion of gas-and-diesel internal combustion engine (ICE) vehicles.

Trump has argued, both during his 2024 campaign and since, that the waiver enabled far-left California to saddle the rest of the country with environmental policies it had never voted for and couldn’t repeal. That view helped him win back the White House.

But what does this have to do with Canada? Donald Trump has no power over our own EV mandate. The law of the land in Canada, though it was barely discussed in this spring’s federal election, beyond a last-minute pledge from Pierre Poilievre to reverse it, is still that by 2035, 100 per cent of new light-duty vehicles sold in Canada (including passenger cars, pickup trucks, and SUVs) must be electric.

It doesn’t sound like Mark Carney’s Liberals have any intention of changing course from this Trudeau-era policy — even though new EVs sold in Canada have been falling as a share of overall purchases. To stay on track for 2035, the mandate stipulates, 20 per cent of new cars sold in Canada next year must be EVs. Last year just 13.7 per cent were. And, as Tristin Hopper noted recently, “these sales are disproportionately concentrated in a single province … Of the 81,205 zero-emission vehicles sold in Canada in the last quarter of 2024, 49,357 were sold in Quebec.”

That doesn’t bode well for a national mandate. And Trump’s move further complicates the Liberals’ EV mandate, which has always been presented as an investment opportunity as well as a chance to reduce global carbon emissions. Our federal and provincial governments (particularly Ontario and Quebec) have bet very big on EVs dominating the future. Last year, the Parliamentary Budget Officer estimated that public investment in EVs exceeded $52 billion. Much of that money has gone towards subsidizing the manufacture of EVs in Canada.

Except there just aren’t enough Canadian consumers to justify that expense. The scheme has always hinged on there being a robust EV market south of the border. The Canadian Vehicle Manufacturers Association reminds us that “vehicles are the second largest Canadian export by value, at $51 billion in 2023, of which 93 per cent was exported to the U.S.”

The assumption was that existing avenues of trade would remain essentially unchanged. Even leaving aside concerns about what our future trade relationship with the United States will be, the end of America’s backdoor mandate — and with it, any reason to believe there will be a serious market for EVs in the U.S. — exposes our current EV policies as a bum deal.

Of course, there was never a strong case for attempting to turn Canada into a global EV superpower. There’s a reason Canadian consumers remain skeptical of them. EV batteries don’t perform well in the frigid temperatures for which our country is famous. In cold weather, they charge slowly and then struggle to hold the charge.

Our already-stressed electrical grid isn’t ready for the extra demand that would come with widespread EV adoption, especially considering the Liberals’ desire to progressively decarbonize the grid. And we have nothing like the infrastructure we would need to support this transition.

These roadblocks have now become so obvious that even the automakers, the main beneficiaries of both taxpayer-funded largesse and the mandates themselves, have started saying so. “The fact is these EV sales mandates were never achievable,” read a recent statement by the Alliance for Automotive Innovation, which represents Toyota, GM, Volkswagen, and Stellantis. Ford Canada CEO Bev Goodman has described the mandate as unrealistic and called for its repeal. Kristian Aquilina, president of GM Canada, has said the same.

Whether they realize it or not, our political leaders will have to face up to this reality, and sooner rather than later. Their best option is also the most straightforward one. There’s no reason for us to keep throwing good money after bad money, nor to force an unwanted product on Canadian consumers.

You can do it, Mr. Carney. Repeal the EV mandate.