Preventing the next Trans Mountain debacle
The federal government’s promise to buy the Trans Mountain pipeline was not ideal, but it was preferable to a total breakdown of the project. Nationalization was the federal government’s last remaining market-access option for Canadian oilsands entirely within its own jurisdiction.
That the Trudeau government was compelled to resort to this option is a testament to the dysfunction of our approval processes for major hydrocarbon infrastructure. A project that had all of the requisite regulatory approvals and had not to date suffered any substantive reversal in the courts was nevertheless deemed by its private capital investors as too risky to try completing.
Regardless of whether Trans Mountain is actually completed, as the Trudeau government promises, and eventually sold to private-sector interests, as it also vows to do, the question for reasonable Canadians is what we’ve learned from this outcome.
The most important lesson would be the necessity to restore confidence that regulatory approvals in Canada actually mean something. Governments must demonstrate their preparedness to resolutely thwart any civil disobedience intended solely to obstruct approved infrastructure, to remove legislatively any ambiguities on the primacy of federal jurisdiction and to clarify legislatively what constitutes adequate consultation with impacted stakeholders. This would reduce the claims of inadequate consultation that too many courts feel compelled to give credence to long after regulatory decisions have been rendered.
Second, the regulatory process does not need more process for its own sake, as the proposed Bill C-69, which overhauls the National Energy Board’s traditional role, would impose. Instead, Canada needs to restore the regulatory process to be primarily a technocratic exercise focused on the construction and operation of infrastructure to ensure that legitimate stakeholder and environment impacts are mitigated or financially accommodated to reasonable global standards. The process must be governed by accepted legal standards for standing and the probative value of submitted evidence. It cannot be a consensus exercise; its function should not be to make policy. Policy clarifications should be provided by democratically elected governments before the fact, so that the ambiguity of whether a project is in the public interest is determined as much as possible early on. Bill C-69 is at odds with what would substantively restore investor confidence in the regulatory process. The government should stand down.
Third, the federal government needs to fundamentally clarify its national carbon policy. To its credit, it has tried to espouse some balance between what it would see as credible climate policy and tolerance for hydrocarbon. It has imposed a national pricing standard that is as stringent as any currently in place among any of its major trading partners. But it has failed to explain that its national carbon-reduction targets are only an aspiration, at best, not an inviolate obligation that requires constraining growth in hydrocarbon production. That failure has emboldened the Canadian environmental movement to resist all hydrocarbon infrastructure, contributing to rendering our regulatory approval process dysfunctional. The Trudeau government should immediately clarify that carbon taxes are the pre-eminent carbon-policy instrument for Canada. Paying for carbon is a licence to emit. There is no other “social licence” standard.
Canada cannot afford to lose its most economic opportunities to regulatory and political failure. We have come perilously close to doing that, leaving the fate of so many of our energy project developments uncertain. Prime Minister Justin Trudeau in the past castigated the previous government for acting as “cheerleaders, not referees” who are “putting their hands on the scale” to promote hydrocarbon development. By nationalizing Trans Mountain, Trudeau’s government has now gone well beyond anything he could accuse them of doing. It cannot happen again.
GOVERNMENTS MUST DEMONSTRATE PREPAREDNESS TO THWART CIVIL DISOBEDIENCE.