Environment Committee on March 28th, 2018

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Thank you, Minister.

Madame Chair, I'm done. I'll pass the time to Elizabeth.

[The Chair, Liberal, Deb Schulte]

Okay, you have one minute, Elizabeth.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

I appreciate that very much.

First of all, Minister, I want to thank you for the expanded definition of navigable waters. There is some lack of clarity in pursuing the legislative path in terms of navigable waters within the schedule and navigable waters outside the schedule, but this is a substantial improvement over what the discussion paper left us with in late June. I want to thank you very much for giving us this chance to protect our navigable waters.

How do you see the link working, in the time we have left, between the impact assessment legislation and this legislation?

Like my colleague, Linda Duncan, I would much prefer to see the trigger in place again, but I'm sure I'm running out of time.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Well, as you know, the impact assessment act will have a project list, and that is a list that will be having projects put into it. If something is in there, whether it's involved with navigation or installing a major work or a pipeline or whatever, it will trigger the impact assessment.

In addition, we have what we call our major work definition. So far, I've given the example of dams that have a major impact on a navigational waterway. We will also be looking to expand that.

Now there, it's with respect to navigation only, but the project list that will be within the environmental impact assessment act—which, as Minister McKenna has clearly indicated, I believe, will be populated with projects—will also include projects in which there could be an environmental impact on a navigable waterway.

[The Chair, Liberal, Deb Schulte]

Minister, thank you very much. I know we're out of time and that you need to go. I appreciate your team being here with us and answering the questions.

I won't suspend, because there is a point of order here, but I'll let you go.

[Marc Garneau, Liberal, Notre-Dame-de-Grâce—Westmount, QC]

Thank you. It was my pleasure.

[The Chair, Liberal, Deb Schulte]

We have a point of order.

Go ahead.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Madam Chair, for the opportunity to make this point of order. It has to do with the votes that are happening tonight.

As you know, we had scheduled three hours for this meeting and we have another set of witnesses coming. The vote is going to cut a big chunk out of our ability to ask questions of those witnesses who are coming.

I would seek the support of the rest of the members of this committee to tack on to our committee time, at the end, the amount of time it takes to undertake the votes, because I'd hate to cheat our witnesses of the time they had expected to have with us.

[The Chair, Liberal, Deb Schulte]

That is a point of order. I don't think we can do a motion on a point of order, but it's a suggestion—

[Ed Fast, Conservative, Abbotsford, BC]

Yes.

[The Chair, Liberal, Deb Schulte]

—that we'll take under advisement.

I am going to suspend while everybody else comes up to the table.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I have a motion to bring—

[The Chair, Liberal, Deb Schulte]

Okay.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

My motion is, if there is an opportunity, even at the end, can we bring the minister back, because we did not have him for the full hour?

[The Chair, Liberal, Deb Schulte]

He has another obligation—

[Linda Duncan, NDP, Edmonton Strathcona, AB]

I'm not talking about right now. We were delayed because of the votes.

[The Chair, Liberal, Deb Schulte]

We'll take that under consideration and see what we can do.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Could we have a vote on extending an invitation for him to return at some date?

[The Chair, Liberal, Deb Schulte]

Can we leave it that I investigate it with him, or do you want to take a vote?

I think you might better leave it with me to investigate it, rather than take a vote. What do you think? I'm willing to go—

[Linda Duncan, NDP, Edmonton Strathcona, AB]

If people are amenable to that.... We said we'd like people back at the end, but at the very least I'd like to have him back—and his officials.

[The Chair, Liberal, Deb Schulte]

Okay, I'm going to take that under advisement as a request. I'm going to pursue it.

I'm going to suspend temporarily, and then we'll investigate the discussion on extending.

[The Chair, Liberal, Deb Schulte]

I'm going to bring the session to order.

Welcome, all of our guests.

While they're getting themselves settled, let me say that we have four companies with us. We appreciate their coming today. Unfortunately we have had a bit of a challenge with the schedule because of votes, and we have another set of votes.

We are discussing whether we might extend. I don't know whether that is something you're willing to do. I know you're supposed to end at 6:30, but if we need a little bit more time, is everybody okay?

I see nodding heads, so I hope.... We're just trying to work out on our side whether the members can get everything worked out to do this.

Let me introduce everyone. We have, from the Canadian Association of Petroleum Producers Terry Abel, executive vice-president. We have Paul Barnes, director, Atlantic Canada and Arctic. We have Patrick McDonald, director, climate and innovation.

We have, from the Canadian Energy Pipeline Association, Chris Bloomer, president and chief executive officer.

From Canadian Hydropower Association we have Eduard Wojczynski, president; Geneviève Martin, regulatory chair; and Pierre Lundahl, chief consultant.

From the Prospectors and Developers Association of Canada we have Lisa McDonald, executive director interim, and we have Lesley Williams, director, policy and programs.

Thank you all.

You have seven to 10 minutes for your statements, and then we'll get into the questioning round.

Terry, would you like to start?

[Terry Abel, Executive Vice-President, Canadian Association of Petroleum Producers]

I would be happy to. Thank you.

Good afternoon, honourable chair and members of the committee. My name is Terry Abel. I'm executive vice-president with the Canadian Association of Petroleum Producers. Joining me today are Mr. Paul Barnes, who is the director of our Atlantic Canada and Arctic offshore, and Patrick McDonald, who is director of climate and innovation.

We are very appreciative of the opportunity to address the committee today and provide some of our experience and thoughts that might help inform your review of Bill C-69.

Hopefully, many of you know that CAPP and its members are responsible for producing around 80% of all the natural gas, natural gas liquids, crude oil, and oil sands across Canada, including offshore resources. Our industry is the largest single private sector investor in Canada. In 2014, it invested at a peak of $81 billion and at more like $45 billion in 2017. Collectively, we employ well above 500,000 Canadians from coast to coast.

Our offshore oil and gas and natural gas projects, located generally quite a way offshore—200 to 500 kilometres offshore in Newfoundland and Nova Scotia—have brought tremendous benefits to Newfoundland and Nova Scotia over the years and will continue to do so for some time.

As you know, the International Energy Agency continues to project that energy demand will grow worldwide by more than 30% by the year 2040, and growth in that demand will happen in both oil and natural gas, with hydrocarbon resources continuing to make up the lion's share of energy demand across the country, although renewables are growing substantially.

CAPP believes that Canada is well positioned to become the supplier of choice for oil and natural gas resources, given our world-leading responsible development practices and the fact that we have some of the largest and highest-quality reserves of oil and gas in the world. It's therefore imperative that Canada remain competitive with other oil and gas-producing jurisdictions; otherwise, Canada loses not only the opportunity to generate economic value from this industry, but also the consequential global reductions in GHG emissions that flow from Canada's being a more responsible producer of those resources.

I am going to introduce my comments today focusing on the competitiveness of our industry and on some aspects of the bill that can create uncertainty and further erode the global competitiveness of the industry. I'll touch on such things as transitional provisions, timelines, early planning, review panels, and regional strategic assessments.

We understand that the government's stated objective is to restore public trust in its environmental and regulatory review processes, something we absolutely share as an objective. We also want to ensure, however, that any changes restore confidence in the investment community.

Our industry is very challenged these days. There is a highly competitive global competition for capital resources, and Canada needs to remain competitive, if we're going to bring capital into Canada. Unfortunately, today Canada is attracting more uncertainty, not more capital, and we will continue to lose investment and jobs if we do not have a system of clear rules and decisions that are final and can be relied upon.

I'd like to point out that a 2016 WorleyParsons study of environmental assessment practices worldwide observed that while Canada has an EA process that is one of the most thorough and comprehensive, it also currently has “one of the most expensive time, and resource consuming EA processes in the world”.

Unfortunately, CAPP and the investment community today see very little in Bill C-69 that will improve that status. A simple example of this growing uncertainty is found in the transitional provisions within the draft impact assessment act. Current provisions require that assessments initiated under CEAA 2012 but not yet complete would generally have to continue and be completed using new legislation and rules. Specifically, the language in the bill that might allow an assessment to be completed under the current legislation, CEAA 2012, is actually very subjective and does not provide clear certainty as to which process will apply. If the intent of those provisions was to have those started in 2012 continue, we would argue that you could make this far clearer and more certain within the current language.

Requiring a new proponent, if that is the intent, to follow the new regulatory process midstream would run the risk of essentially taking processes back to the starting line. For example, we would point to offshore exploration drilling programs. There are four currently in Newfoundland. We see substantial risk that all the work undertaken today could be deemed incomplete. Therefore, they may have to restart and follow an entirely different process, which would add more time and more uncertainty for our investment community.

We simply propose that the government confirm that all projects in flight within federal, provincial, or territorial processes not be revisited under the new legislation.

Madam Chair, CAPP supports maintaining legislated timelines that we see both in CEAA 2012 and within proposed Bill C-69. However, it's not evident that overall, the regulatory review timelines will be any shorter than the current process. With the addition of early planning and no clarity regarding the time frames for review and information requests, and a number of opportunities sprinkled throughout the legislation to extend those timelines, we and the investment community generally conclude that we only see an increase in timelines overall.

We fully support the concept of early planning. I would note that it is normal practice by CAPP's members and our industry in general to engage early with stakeholders that may be impacted by proposed developments. We support the government's involvement in a more formalized process of early engagement as it provides an opportunity to get an early understanding of issues and clarity for all. It also gives stakeholders an opportunity to address issues that we often find come up in our project reviews that actually have very little to do with the project. They're much broader in nature.

For early engagement to be effective, however, all parties must be committed to the process and held accountable to meaningfully engage and honour timelines and their respective roles. We believe that without setting clear expectations for the stakeholders, industry, and government, the commitment to, and the introduction of, an early engagement or early planning process is likely to continue indefinitely and do nothing to support timelines improvement.

CAPP believes that, should the proponent and the agency at the end of the process not be able to agree on the scope of an EA, there needs to be some mechanism to actually bring discipline and closure to that process and actually let an EIA continue.

I'd like to flag something very specific to our offshore in my final comments. The way it's currently written, all offshore-designated projects would require a panel review. With that panel review come timelines that are at least twice that of the review by the agency. We do not believe there's any justification for a process that would effectively double the timelines, which we would expect would be at least four years, particularly as the potential effects of offshore oil and gas projects are well understood.

We have had numerous environmental assessments completed and reviewed in Canada both by CEAA and the offshore boards and decades of environmental effects monitoring in Canada as well as internationally that can contribute to practices that are pretty much standard at this point and are adopted in all jurisdictions across the world.

It's our view that a review panel that combines the experience and expertise of both the impact assessment agency and a specialized regulator, such as the offshore petroleum boards, should actually be able to decrease the regulatory review time required, not double it, as would currently be interpreted with the way the legislation is written. CAPP recommends that the requirement for offshore operations to require a review by panels be removed.

Our industry is also very supportive and sees the benefits of regional impact assessments as are enabled under the draft legislation. We note that they can include such benefits as improved environmental effects assessment and cumulative effects assessment. They would probably help a lot with stakeholder fatigue by not having to do the same things over and over again, and should afford some regulatory consistency and efficiency.

This approach is something that's used internationally. We would point to jurisdictions, such as Norway, that have already used that.

We continue to support the idea of regional impact assessments, and we recommend that, if we're going to go that route, a list of the completed and accepted assessments should be maintained and should ultimately form part of exclusion criteria for the project list that's going to be developed as well.

We believe it can be a powerful tool provided Canada, the provinces, and the territories, work together to complete assessments. However, as currently written, in Bill C-69 we really see no mandated timelines, no confirmation of the inclusion of provinces or life-cycle regulators, and really no guarantee that the process will be successful or will actually be utilized within the assessment process that Bill C-69 talks about.

I will wrap up quickly here, Madam Chairman.

CAPP again thanks you for the opportunity today. We urge you to carefully consider some of our feedback today, and we recommend changes that will resolve investor confidence, help Canada fully realize the significant economic value of our industry, and ensure the resulting global environmental benefits that flow when Canada is the supplier of choice.

Thank you again.

[The Chair, Liberal, Deb Schulte]

Thank you very much.

We definitely do want to hear from everyone, and we want to get to questions. I know everybody is very keen to question, so I am going to be a bit strict on the timelines.

Mr. Bloomer, you have the floor.

Thank you.

[Chris Bloomer, President and Chief Executive Officer, Canadian Energy Pipeline Association]

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.