From Energy Now

By Tammy Nemeth

Canada’s ongoing saga around interminable delays for infrastructure and resource development has not necessarily improved under Mark Carney’s Liberal government. Hopes were raised in oil, gas, and mining boardrooms with the seemingly sensible words coming from Natural Resources Minister Tim Hodgson and Prime Minister Carney himself about expediting projects and developing Canada as a (clean) and conventional energy superpower. But that “clean” part is usually whispered like a corporate secret, possibly in the hope that Alberta and others won’t notice. This situation feels like a modern version of Cinderella, where promises come from the wicked stepmother with impossible conditions: The big “IF”.

In Disney’s 1950 animated film Cinderella, there is a scene where Cinderella presents an invitation to the royal ball to her stepmother, Lady Tremaine. Despite Cinderella’s eligibility, Lady Tremaine imposes a condition: She may attend only IF she completes an overwhelming list of chores. This disingenuous offer, cloaked in fairness, ensures Cinderella’s exclusion, much to the delight of her jealous stepsisters. Similarly, Canada’s resource development process appears to promise opportunity while imposing conditions that may prove unattainable.

The premiers from all the provinces were invited by the Prime Minister to come cap-in-hand with a list of projects they feel are in the “national interest”. Some suggested it was like giving a business pitch to the panel at Dragon’s Den. Hardly an appropriate situation to be in for the First Ministers of the Federation. It is a revealing indication of how far the consideration of the Premiers has fallen in the esteem of Ottawa and its media mouthpieces. Nevertheless, the Premiers duly arrived in Saskatoon to have a conversation about Ottawa’s ambitions for Canadian resource and industrial development and presented their list of projects. Most left the meeting hoping for the best.

Later that day, Prime Minister Carney released his criteria for acceptable projects, which are quite vague—the devil is always in the details. From the Prime Minister’s website:

“As a first step, First Ministers discussed projects of national interest which fit the following criteria, subject to consultation with Indigenous Peoples whose rights may be affected:

• Strengthen Canada’s autonomy, resilience, and security.
• Offer undeniable benefits to Canada and support economic growth.
• Have a high likelihood of successful execution.
• Are a high priority for Indigenous leaders.
• Have clean growth potential, such as the use of clean technologies and sustainable practices.”

These general statements leave a great deal open to interpretation and much of it is in the eye of the beholder. For example, Quebec will not join a consensus or support any project for which it doesn’t receive a direct benefit in terms of ongoing employment, royalty sharing, or other revenue.

As for conventional energy, Prime Minister Carney said he supports decarbonized oil. This would be a nod to the proposed Carbon Capture Storage (CCS) project of the Pathways Alliance, an incredibly expensive proposition for which the alliance is seeking various tax breaks and inducements to commit to the multi-billion dollar endeavour. It seems that support for an oil pipeline to the east or west would only tentatively come once that CCS project is complete or nearing completion.

Carney also says that there needs to be a “national consensus” on projects in order to be short listed.  Who decides what is in the national interest or if a “national consensus” exists? Well, that would be the Prime Minister’s squad in Ottawa. What criteria or metrics will be used for those determinations? No one outside Carney’s circle knows. Prime Minister Carney said recently there would be a “process put in place to arrive at a [national] consensus” on projects.

If the Premiers thought these important details might be clarified in the implementing legislation, then they thought wrong. Bill C-5, the One Canadian Economy Act, merely codifies the five generic principles, mentions “energy” generally (which can be interpreted many ways), and does nothing to solve the problems with existing legislation that has created the regulatory morass for projects in the first place. Creating a “fast track” for only certain politically select projects, to bypass issues with the “regular track”, proves the existing system is too slow and ought to be corrected: Politically selected exceptions do not solve systemic problems.

The legislation also grants Cabinet sole power and discretion without any scrutiny or transparency on the decisions: “in respect of a project, the Governor in Council [Cabinet] may consider any factor that the Governor in Council considers relevant…” [emphasis added]. That is a very broad power that can be wielded in any number of ways, including forcing uneconomic high voltage electricity interconnections from eastern Canada to western provinces like Saskatchewan and Alberta. Essentially, Cabinet can do whatever it wants with respect to so-called “national” projects and is protected by Cabinet confidence in making those decisions.

Canadian premiers and the oil, gas, and mining companies are being confronted with a whole lot of “IFs” for potential projects all of which will be left to the arbitrary and secretive discretion of Cabinet. Which company will put the investment of time and money into an application process that has so many potential arbitrary and capricious ways to be rejected? So far, Canada’s process under its net zero by 2050 framework has been like betting on Cinderella to make the ball without a fairy godmother.

Prime Minister Carney is saying he encourages resource development applications but is offering several conditions that may prove impossible to meet for Alberta, Saskatchewan, and resource companies. Resource companies, wary of investing in a process rife with uncertainty, may hesitate to commit resources to projects that face rejection on subjective and capricious grounds.  If Canada wants to dance at the global energy ball, it needs clear procedural and regulatory rules, not a wicked stepmother’s to-do list.

As Jess Kline of the National Post says, the criteria, “pretty much gives politicians licence to reject any project for any reason at all.”  While many may be cautiously optimistic that such arbitrariness will be overcome by pragmatism and the realities of an economy hungry for reliable affordable energy, could it be that Canada’s resource development is facing the veiled meanness of a wicked stepmother?

Ambiguity is the enemy of action. Canada needs a clear, fair, timely approval process that balances environmental goals with economic needs. Without it, provinces and industries may stay stuck in an ongoing story where opportunities are promised but never delivered.

Tammy Nemeth is a U.K.-based energy analyst