Can Canada be an energy & resources superpower?

Key Concepts

• Energy & Resource Superpower: Canada’s potential to become a leading global supplier of energy and resources.
• De-risking Investment: Reducing policy uncertainty to attract investment in Canadian energy and resource projects.
• Egress: The capacity to export oil and natural gas.
• FID (Final Investment Decision): The point at which a company commits capital to a project and construction can begin.
• Impact Assessment Act (IAA) Reform: Changes to the legislation governing environmental assessments of major projects.
• Building Canada Act (C-5): Legislation aimed at speeding up major project approvals.
• National Interest Designation: The power granted to the cabinet to override laws for projects deemed in the national interest.
• Labour Disruptions: Strikes and work stoppages impacting critical infrastructure like ports and railways.

Canada’s Path to Becoming an Energy & Resource Superpower

This discussion with Heather Piro, Director of Energy, Natural Resources & Environment at the Macdonald-Laurier Institute, focuses on Canada’s potential to become a global energy and resource “superpower” and the progress made on a six-step plan outlined at the start of the year. The conversation highlights recent developments in pipeline projects, legislative changes aimed at accelerating project approvals, and the ongoing challenges posed by labour disruptions.

Six Steps to Superpower Status

Piro initially presented a six-step plan for Canada to maximize its energy and resource potential:

1. Pipeline Reform: Increase pipeline capacity to facilitate resource export.
2. Impact Assessment Act Reform: Streamline the environmental assessment process.
3. Go Nuclear: Invest in nuclear energy development.
4. Earn Indigenous Consent: Secure meaningful partnerships and consent from Indigenous communities.
5. Encourage Critical Minerals Production through Defence Spending: Leverage defence spending to stimulate the production of critical minerals.
6. Address Labour Disruptions: Resolve labour issues at ports and railways to ensure efficient supply chains.

Pipeline Progress & Increased Egress

Significant progress has been made on increasing Canada’s “egress” – its ability to export oil and natural gas. The Northern Gateway pipeline, previously considered defunct, is experiencing a revival with federal government support. The Prince Rupert Gas Transmission project has received re-approval, awaiting a Final Investment Decision (FID). Enbridge has announced a 400,000 barrel per day increase in capacity for its mainline, and Trans Mountain is adding another 360,000 barrels per day. Piro notes that global demand for Canadian oil and gas remains strong.

Legislative Changes & De-Risking Investment

The federal government passed Bill C-5, the Building Canada Act, granting the cabinet the power to override most federal laws (excluding the Criminal Code and a few others) to expedite project approvals. This was a response to investor hesitancy caused by previous project cancellations and rejections under the Trudeau government. The goal is to “de-risk” investment by ensuring policy stability. Mark Carney’s involvement, through the first signature bill, signaled a shift towards attracting investment. While the powers haven’t been used yet to designate projects as being of “national interest”, the establishment of a Major Projects Office demonstrates a commitment to streamlining approvals.

Labour Disruptions as a Major Impediment

Labour disruptions at ports and railways pose a significant threat to Canada’s resource export capabilities. Piro highlights that labour action accounted for a “majority or at least a plurality” of strikes in the past year, a period that saw more strike activity than in recent years. These disruptions impact farmers, miners, and the oil industry, creating bottlenecks in the supply chain. Nutrien, a major fertilizer producer, cited port disruptions as a reason for not building a new export terminal in Canada, although this was dismissed by Unifor as a bargaining tactic. The Transportation Minister recently visited the Port of Vancouver, indicating a commitment to addressing these issues.

Indigenous Consent & Critical Minerals (Mentioned but not detailed)

While the conversation briefly acknowledges the importance of earning Indigenous consent and encouraging critical minerals production through defence spending, these areas were not explored in detail.

Policy & Investment Climate

A key argument presented is that previous policy instability discouraged investment in Canadian energy and resource projects. The recent legislative changes and signals from the government are intended to create a more predictable and attractive investment climate.

“The problem with some of these… cancellations and rejections we had in the Trudeau years was it really spooked investors and who wanted to come back to Canada when you could have the rug pulled under you?” – Heather Piro, highlighting the impact of policy uncertainty on investment.

Conclusion

The discussion suggests that Canada is making strides towards realizing its potential as an energy and resource superpower, particularly through pipeline expansion and legislative reforms aimed at accelerating project approvals. However, significant challenges remain, most notably the risk of labour disruptions and the need to secure meaningful partnerships with Indigenous communities. Addressing these challenges will be crucial to unlocking Canada’s full resource potential and capitalizing on global demand.