Canada has no hope of reaching its 2050 climate goals unless it can find a way to speed up the approvals process for major projects in this country, a new report states.
The report, from the Business Council of Alberta, says Canada’s current regulatory system for large-scale infrastructure projects is “complex, fractured and frustrating.”
It warns that massive investments in everything from mines for critical minerals to renewable power generation to hydrogen technology will be required in the coming years if Canada is to achieve its greenhouse gas emissions reduction targets.
But the report’s authors say that Canada already has a reputation as a place where major projects can’t get built — and unless that changes, the country’s environmental ambitions will be out of reach.
Mike Holden, chief economist for the Business Council of Alberta, said Canada’s regulatory systems were set up to ensure corporations don’t run roughshod over local communities, Indigenous people and the environment.
While that’s a good thing, he said, the processes involved have become so cumbersome — with the odds of a final green light far from certain — that many investors would rather not take the chance.
“A lot of projects end up not coming forward at all because companies aren’t willing to go through the uncertainty of the process,” Holden said.
“So there are a lot of cases where investment passes Canada by, or it gets downscaled.”
According to the federal government’s own estimates, $125 billion to $140 billion in capital investment will be needed annually until 2050 to build the infrastructure needed for the energy transition.
But right now, Holden said, companies are investing only about one-fifth that amount.
“Historically, we set up our systems to stop bad things from happening. Now we need to make good things happen and make them happen fast.”
For much of the past decade, Canada’s energy sector has complained of lengthy permitting timelines and regulatory uncertainty slowing down everything from major oil pipeline projects to the development of a liquefied natural gas (LNG) industry in this country.
Of the 25 projects submitted under the federal Impact Assessment Act since it came into force three-and-a-half years ago, almost all remain in the first two phases of a four-part approvals process, according to a report from the Canada West Foundation earlier this spring.
And under the Canadian Environment Assessment Act of 2012, which preceded the current Impact Assessment Act, it took almost 3.5 years on average for projects to either receive approval or be terminated.
Some projects took more than 10 years to get a go-ahead or rejection, the Canada West report found.
The federal government has recognized the problem, pledging to unveil a plan aimed at speeding up the permitting process for major infrastructure projects before the end of the year.
The government also earmarked $1.3 billion in its 2023 budget to be used by the Impact Assessment Agency of Canada, the Canada Energy Regulator and 10 other departments to improve regulatory efficiency.
But Holden said there is much more that can be done, including some relatively simple changes that could have a broad positive impact. These include creating one government oversight body to manage and coordinate federal permitting, expanding financial supports for Indigenous participation in project development, and clarifying the criteria under which the federal Environment Minister would use his or her power to designate a project for review under the Impact Assessment Act.
South of the border, companies have raised similar complaints about regulatory slowness and permitting delays. U.S. President Joe Biden has pledged to improve communication and co-operation among federal agencies to accelerate permitting and environmental reviews in that country.
Holden said that’s another reason Canada must move quickly. He said the U.S. Inflation Reduction Act already offers huge financial incentives for investors to direct green energy spending south of the border. If it’s also much easier to get projects approved there, Canada will be unable to compete.
“If they manage to do what’s been proposed and shorten some of these timelines, that suddenly puts the U.S. at a huge advantage,” he said.
Earlier this week, a group of 18 different business, Indigenous, labour, environmental, and policy groups published an open letter to the federal government advocating for an improved approach to major project regulatory and permitting processes.