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ONE RELATIONSHIP AT A TIME:  THE PATH TO PROJECT SUCCESS

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ONE RELATIONSHIP AT A TIME:  THE PATH TO PROJECT SUCCESS

Infrastructure development is full of risks, which are managed in a number of ways. Risk management might sound cold and impersonal, but it has the potential to incent real human connections and build genuine relationships. Key risks may have leading practice on how best to mitigate, transfer, ignore or hold those risks, but when it comes to energy development across Canada, meaningful consultation and accommodation is non- negotiable. As most are well aware at this point, the Crown must consult and accommodate where Aboriginal or Treaty rights are impacted. Far from being a mandatory ‘checkbox’ in the process of project development, the undertaking of engagement and relationship-building holds the potential for mutual benefits for both the project and the impacted First Nations, Inuit, or Métis community.

Genuine relationship-building is a solid foundation for partnership on energy projects, to the benefit of both parties. This partnership can take the form of Impact Benefit Agreements (IBA) Mutual Benefit Agreements (MBA) or equity participation arrangements, among others. Both IBAs and equity arrangements have the potential to grow economic and social prosperity, but determining which approach is the best fit will be influenced by the priorities and capacity of both the developer and the Indigenous community.

In both these common approaches there are similar objectives:

  • Compensation for and mitigation of potential impact
  • Influence or control over project design and development
  • Securing benefits for the community
  • Securing social license
  • Working towards consent and support of the project
  • Reduced risk of opposition or disruption
  • Improved financing as a result of managed risks

Both also reflect an underlying premise that it is no longer acceptable to develop resources or energy infrastructure in a manner where impacts fall to one party, and benefits to the other.

When comparing and contrasting IBAs and equity arrangements, some key considerations are the degree of potential impact, the capacity and interest of the community in the project’s development and management, the project’s term, risk tolerance of either party, and financing and funding opportunities.

Impact Benefit Agreements between a project developer and impacted Indigenous community formalize project benefits sharing. Often, these IBAs will provide some employment, training, and contracting opportunities, but the economic benefits will often be tied to the project’s degree of impact to traditional lands and lifestyle (e.g., land impacts, hunting and gathering impacts, etc.). Regardless of how well the project is performing, the IBAs will guarantee a steady revenue stream to the Indigenous community. This can be a safe bet for risk adverse councils but holds the potential for serious revenue inequity in the case where the project is successful and very profitable.

Pivoting from partnership to ownership, equity participation agreements clearly scale the revenue sharing between the project developer and community as the project success and profitability increases. If the energy project does well, the First Nation, Inuit, or Métis equity partner is also going to do well and see greater revenues. The inverse is also true. In these equity arrangements, which are becoming more prevalent in the eastern provinces, the Indigenous partner has a greater say in project operations, as they are a shareholder. It also arguably provides more security to the developers, as the Indigenous partner is a proponent of the project, and no longer a potential opponent. Both partners would look to maximize the economic benefits of the project, while minimizing the adverse economic, environmental and social consequences flowing from the project. Without focusing too much on the direct revenue arrangement, equity arrangements will often also include guaranteed or preferential opportunities for contracting, procurement, employment and training.

To be clear, in either an IBA or equity arrangement model, the duty to consult and accommodate is neither negated nor automatically fulfilled. But the relationship between developer and community becomes formalized and clearer, adding transparency and certainty to an otherwise risk-filled process.

Managing project risk is a mandatory part of project development. But the means of managing risk holds so much potential for empowerment, leadership, and benefit. Project success and economic development are not an end in themselves, but rather a means to an end – the end being healthier and more prosperous First Nations, Inuit, and Métis communities, and Canada as a whole. All the while moving the dial on reconciliation through real connections, business developments, and cultural education – one relationship at a time.

Robyn Budd was a 2019 member of the Energy Council of Canada’s Young Energy Professionals program and was a Manager in KPMG’s Global Infrastructure Advisory practice, based in the unceded territory of the Musqueam, Squamish, and Tsleil-Waututh nations (Vancouver). She was also the Leader of KPMG’s National Indigenous Network.

Zachary McCue is Founder of The Waabgaag Group, with expertise in renewable, infrastructure, and resource development, specializing in equity participation and impact benefit agreements. He is a proud member of Curve Lake First Nation and is based in Ontario.

Thanks to Todayville for helping us bring our members’ stories of collaboration and innovation to the public.

Click to read a foreward from JP Gladu, Chief Development and Relations Officer, Steel River Group; Former President and CEO, Canadian Council for Aboriginal Business.

JP Gladu, Chief Development and Relations Officer, Steel River Group; Former President & CEO, Canadian Council for Aboriginal Business

Click to read comments about this series from Jacob Irving, President of the Energy Council of Canada.

Jacob Irving, President of Energy Council of Canada

The Canadian Energy Compendium is an annual initiative by the Energy Council of Canada to provide an opportunity for cross-sectoral collaboration and discussion on current topics in Canada’s energy sector.  The 2020 Canadian Energy Compendium: Innovations in Energy Efficiency is due to be released November 2020.

 

Click to read more stories from this series.

Read more on Todayville.

INDIGENOUS CONSULTATION AND ENGAGEMENT AT CANADA’S ENERGY AND UTILITY REGULATORS

The Energy Council of Canada brings together a diverse body of members, including voices from all energy industries, associations, and levels of government within Canada. We foster dialogue, strategic thinking, collaboration, and action by bringing together senior energy executives from all industries in the public and private sectors to address national, continental, and international energy issues.

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Alberta

Indigenous-owned LNG projects in jeopardy with proposed emissions cap, leaders warn

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Indigenous leaders meet with Japan’s ambassador to Canada Kanji Yamanouchi. Photo courtesy Energy for a Secure Future

From the Canadian Energy Centre

By Cody Ciona

‘It’s like we’re finally at the table and we’re having to fight to keep our seat at the table’

A proposed cap on oil and gas emissions will threaten opportunities for Indigenous communities to bring cleaner alternatives to coal to international markets, Indigenous leaders warned during a recent webinar. 

Karen Ogen, CEO of the First Nations LNG Alliance, fears Indigenous-led projects like Cedar LNG and Ksi Lisims LNG are threatened by the cap, which is essentially a cap on production. 

“If we’re going to help China and India get off of coal and help reduce their greenhouse gas emissions, it makes common sense for us to be selling our LNG to Asia and to other countries. To put a cap on, it would just stop us from doing that,” Ogen said. 

“It’s like we’re finally at the table and we’re having to fight to keep our seat at the table.” 

Indigenous communities across Canada have increasingly become involved in oil and gas projects to secure economic prosperity and reduce on-reserve poverty. 

Since 2022, more than 75 First Nations and Metis communities have entered ownership agreements across western Canada. Among those are key projects like the Coastal GasLink pipeline and the joint investment of 23 communities to obtain a 12 per cent ownership stake in several oil sands pipelines. 

The planned federal emissions cap will stall progress toward economic reconciliation, Ogen said. 

“Our leaders did not accept this and fought hard to have rights and titles recognized,” she said. 

“These rights were won through persistence and determination. It’s been a long journey, but we are finally at the table with more control over our destiny.” 

Chris Sankey, CEO of Blackfish Enterprises and a former elected councillor for the Lax Kw’alaams Band in B.C., said the proposed emissions cap could stifle Indigenous communities pushing for poverty reduction. 

“We’re working hard to try to get our people out of poverty. All [the emissions cap is] doing is pushing them further into debt and further into poverty,” he said. 

“When oil and gas is doing well, our people do well.” 

Together, the Trans Mountain Pipeline Expansion, LNG Canada project and Coastal GasLink pipeline have spent more than $10 billion in contracts with Indigenous and local businesses

Indigenous employment in the oil and gas industry has also increased by more than 20 per cent since 2014. 

For Stephen Buffalo, CEO of the Indian Resource Council, an emissions cap feels like a step in the wrong direction after years of action to become true economic partners is finally making headway. 

“Being a participant in the natural resource sector and making true partnerships, has been beneficial for First Nations,” he said. 

“So, when you see a government trying to attack this industry in that regard, it is very disheartening.” 

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Alberta

Taxpayers Federation hoping for personal tax relief in Alberta budget

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From the Canadian Taxpayers Federation

Albertans need income tax relief now

Author: Kris Sims 

The Canadian Taxpayers Federation is calling on the Alberta government to stick to its promise of cutting its income tax in tomorrow’s provincial budget.

“Cutting the provincial income tax was a huge campaign promise from the UCP and it needs to happen right away,” said Kris Sims, CTF Alberta Director. “Finance Minister Nate Horner should announce this income tax cut in the budget tomorrow.”

The provincial budget will be presented Feb. 29.

During the 2023, election the UCP promised to create a lower income tax bracket for the first $59,000 of earnings, charging eight per cent instead of the current 10 per cent.

The UCP said that move would save Albertans earning $60,000 or more about $760 per year.

The Alberta government currently charges workers who make under $142,292 per year a 10 per cent income tax rate.

By comparison, British Columbia charges an income tax of five per cent on the first $45,654 of earnings and seven per cent up to $91,310.

In B.C., a worker earning $100,000 pays about $5,857 in provincial income tax.

In Alberta that same worker pays about $7,424 in provincial income tax.

“Taxpayers need to see a balanced budget, spending restraint and our promised lower income taxes in this budget,” said Sims.

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