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Canada’s lengthy approval process for energy projects is discouraging investment and costing us billions

By Krystle Wittevrongel
and Gabriel Giguere

It takes a lot of time to get anything done in Ottawa. That’s true whether you’re trying to get your passport renewed or a multi-billion-dollar energy project approved.

The passport office is trying to do better. But there is little evidence project approval is improving. Over the four years since Ottawa’s Impact Assessment Act – the “no more pipelines” law – went into effect, only one project has received its seal of approval: the Cedar LNG project in British Columbia.

Krystle Wittevrongel

Krystle Wittevrongel

Gabriel Giguère

Gabriel Giguère

Touted as one of the greenest energy projects on the planet, Cedar LNG is the first Indigenous-owned facility of its type in the country. It involves some 600 new jobs, many for local Haisla Nation members. Despite these benefits, environmental approval took nearly 42 months. And that’s just one step in the lengthy approval process for energy and natural resource projects.

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The Supreme Court’s recent ruling that some of the Impact Assessment Act’s dispositions are unconstitutional has given many people hope things will now speed up. In fact, the previous legislation wasn’t much better, with assessments taking a bit over four years on average. Assessment is required not only of pipelines and oil sands projects but also of power lines, large generating facilities, rail lines and highways.

Because of how difficult it is to get anything done, Canada has been losing tens of billions of dollars in investment in recent years, along with myriad good-paying jobs. Over the past decade, investment in construction for oil and gas extraction and pipeline transportation has fallen by half, from a bit over $76 billion per year in 2014 to less than $38 billion today – and that’s without accounting for inflation. In 2014 dollars, that $38 billion is just $30.2 billion, and the decline is 60 percent.

Time is money. It’s no surprise investors prefer looking elsewhere when assessments take four or more years.

It doesn’t have to be this way, however. Environmental assessments could be streamlined using what’s known as an “energy corridor” – a single right-of-way that undergoes a thorough assessment once, and where multiple infrastructure projects can then be built.

The idea is to consult all stakeholders and identify the necessary mitigation measures – once. That way, additional new projects don’t have to undergo the whole process all over again. The approach also minimizes land disturbance.

It has already proved effective in Australia – which seems to be ahead of us in smart policies in so many areas. Like Canada, Australia had been struggling with lengthy, costly, and duplicative environmental assessments and approvals.

Much like Alberta, the Pilbara region of Western Australia has the benefit of being resource-rich but needed a way to get its resources to tidewater where they could be exported. By adopting the corridor approach, the state was able to speed up development while at the same time responding to the concerns of Indigenous and other local communities. It also established clear options for future infrastructure development, minimized costs and increased efficiency – all of which significantly reduced project uncertainty.

Australia’s experience has helpful lessons for this country. Including First Nations as key stakeholders is win-win, helping governments further economic reconciliation. The proposed NeeStaNan utility corridor, for instance, is a First Nations-led initiative that would cross Alberta, Saskatchewan and Manitoba. The aim is to transport oil and natural gas, as well as other resources like potash, wheat, and critical minerals, to global markets. The corridor, 100 percent Indigenous-owned, would expedite energy infrastructure projects.

Public opinion is positive. According to an Ipsos poll done for the Montreal Economic Institute, a large majority of Canadians (66 percent) support developing an energy corridor, with the highest support in Alberta and the Prairies. This bodes well for the NeeStaNan project, which already has the support of all three provincial governments.

It is obvious that Canada’s regulatory and review processes are discouraging investment in and construction of major energy projects. It’s also true that the world needs energy and that demand for oil and gas continues to increase. Canada’s energy is secure, reliable, and responsibly produced. It could greatly benefit those of our allies who don’t have their own energy and are instead forced to rely on dubious or unfriendly sources.

All we have to do is stop preventing ourselves from sending it where it needs to go.

Krystle Wittevrongel is a senior policy analyst and Alberta Project Lead and Gabriel Giguère is a policy analyst at the Montreal Economic Institute.

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