Thank you very much for the opportunity to present to this committee.
This point in time represents the culmination of a long process of consultation, of input and so on, and a process that CEPA, the Canadian Energy Pipeline Association.... It also represents 97% of the volume moved from production in Canada into the U.S. We look forward to your comments.
I'm going to be fairly direct, fairly straightforward in my comments and look forward to your questions.
We remain fully engaged. We've submitted a submission already, and we will continue to follow up with further consultations. First I'd like to give you a brief “state of the union” for the energy sector. It's not good news.
In the two years leading up to this bill, you can pick your poison: policies, including a tanker moratorium off British Columbia's northern coastline; proposed methane emission regulation reductions; clean fuel standards; provincial GHG emission regulation; B.C.'s restrictions on transporting bitumen; a lack of clarity regarding the government's position on the implementation of UNDRIP and FPIC; and the fierce competition from energy-supportive policies in the United States, etc. The cumulative effect of these policies has significantly weakened investor confidence in Canada. It is seriously challenging the energy sector's ability to be competitive.
We are already in a time of profound uncertainty. New projects are grinding to a halt and we have major problems as a sector and as a country accessing new markets for our energy products to the world. The reality is that CEPA member companies, with material assets in other countries, are actively pursuing opportunities in those jurisdictions, and investment capital in the oil and gas industry is moving out of Canada. This is due in large part to the current regulatory policy uncertainty and the potential implications of any further seismic regulatory changes directly impacting the pipeline sector in Canada. The consequences are real, and the sector is suffocating because of it.
We believe that a majority of Canadians still appreciate the significant contribution the oil and gas sector makes to Canada's economy, and we hold firm to the belief that continued growth in the oil and gas sector is completely consistent with Canada's 2030 GHG emission targets. In the consultation process leading up to the tabling of this bill, CEPA took some comfort in assurances from the government that any new legislation will reflect shared values focused on a strong regulatory regime, relationship safety, environmental stewardship, public confidence, competitiveness, and the kind of certainty and clarity for a reasonable prospect of actually building a new major pipeline in Canada. In its current form, the bill cannot achieve that greater certainty, clarity, and predictability for projects that can extend hundreds if not thousands of kilometres across provinces, communities, and indigenous communities. In fact, it is difficult to imagine that a new major pipeline could be built in Canada under the impact assessment act, much less attract energy investment to Canada.
We are concerned that all this bill has done is frustrate regulatory reform in order to advance this government's climate change agenda and has baked too much broad policy subject matter into an otherwise very technical decision-making process.
With respect to the specifics of this bill, this process started with the Prime Minister's mandate letter to the Minister of Environment and Climate Change. The minister was asked to review environmental assessment processes to achieve three objectives: to restore public trust; to introduce new, fair processes; and to get our resources to market. With all due respect, CEPA does not believe the proposed impact assessment act would accomplish any of these objectives. Over the course of a year and a half of consultation, CEPA's 200-plus pages of submissions were meant to provide thoughtful and practical recommendations to address the government's three objectives. Our recommendations were premised on the underlying need to stem the erosion of Canada's competitive position in the natural resource sector. They were guided by key principles that we believe would have set the framework to meet all of these goals.
The first one is a process that ensures that broad public policy issues are addressed in more appropriate venues outside project reviews, a science and fact-based process that is coordinated and efficient, and provides clarity and certainty. The National Energy Board is the best placed regulator, with technical expertise and full-cycle responsibility for project reviews, operations, and maintenance. Regrettably, the impact assessment does not address these concerns. CEPA is disappointed that the proposed process appears to double-down on the very factors that created the toxic regulatory environment for major projects that this regulatory review process was intended to fix. The impact assessment does not address the pipeline sector's most fundamental concern: a process that is expensive, lengthy, polarizing, and ends with a discretionary political decision.
Bill C-69 has not addressed the need to find an appropriate venue to debate and resolve broader public policy issues. The bill is flavoured throughout with the government's commitment to meeting climate change objectives, gender-based analysis, indigenous reconciliation, and subjective and inherently unpredictable sustainability tests.
Despite CEPA's very strong recommendation to remove broader public policy from project-specific reviews, these issues are now explicitly included in the review process as factors to consider.
The impact assessment act will not achieve greater certainty, clarity, and predictability. Instead, it introduces a new regulatory agency and unique new processes and information requirements that have never been tested.
The public participation standing test has been removed. Science and fact-based assessments will now be obscured by the layering of other policy-based assessments that are ill-defined, fluid, and open to potential strategies of delay and obfuscation of the processes by groups opposed to any project. In short, we cannot see that timelines will improve; we expect them to be longer.
The National Energy Board, now the Canadian energy regulator, has effectively been sidelined with respect to major pipeline project reviews. CEPA consistently emphasized that the NEB was the best-placed regulator to oversee the full cycle of a pipeline from beginning to end. Instead, Bill C-69 carves out the review of major pipeline projects and places it with the new impact assessment agency. This new agency does not have the rich history of administrative decision-making and technical expertise of the NEB, now CER.
Instead, the new agency is mandated to perform a broadened role and assess a wider scope of issues, and is expected to implement the government's political agenda related to climate change, reconciliation, and gender objectives. It is not an independent, expert regulator. CEPA is not convinced that it will have the capacity to conduct these broadened political reviews, even with the announcement of $1 billion of new spending to support the implementation of the impact assessment.
Given these concerns, it is hard to imagine that any pipeline project proponent would be prepared to test this new process or have a reasonable expectation of a positive outcome at the end of it. With built-in climate change tests covering upstream and downstream emissions, it is preposterous to expect that a pipeline proponent would spend upwards of a billion dollars only to be denied approval at the end, because the project must account for emissions from production of the product to consumption in another part of the world.
If the goal is to curtail oil and gas production and to have no more pipelines built, this legislation may have hit the mark.
In conclusion, today CEPA has offered the views of member companies based on their direct experience in investing, building, and safely operating the energy infrastructure that supports the Canadian economy and the everyday lives of Canadians. Project proponents and their investors will continue to evaluate the feasibility of developing resource projects in Canada against other investment options.
The government's June 2017 discussion paper suggested a more balanced approach between the views of the more radical environmental elements and industry. This bill tilts the balance wholly in favour of the environmental perspective, some of whose goals are to keep fossil fuels in the ground and never see another pipeline built.
This bill will introduce even more risk and uncertainty. The net effect of the impact assessment is an impractical and unworkable process that will create unmanageable uncertainty and a decision-making framework that will insert broader policy issues squarely into a process that is not equipped to resolve them.
Finally, this bill does not provide a vision as to how it fits into Canada's achieving longer-term energy objectives; it does not reflect the reality of the importance that oil and gas will continue to play in the global energy mix for the next several decades; and therefore, it does not help Canada achieve full value of its resources in the world markets.
Thank you for hearing our comments. I look forward to questions.