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Trudeau’s plan for oil and gas

Liberals promise activist role on environment, revamped project assessment process
By Paul Cassidy
January 15 2016 issue

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The election in the fall of 2015 of the new Trudeau Liberal government was, in large measure, a reflection of Canadian’s typical desire for a change of government after approximately ten years of one party being in power.

While our history has examples of a party remaining in power longer than a decade, usually the pattern is that after more than two full terms we become anxious that a government has “run its course” so that its defeat at the polls is less about specific policy unhappiness with them, and more about overall political discontent with the status quo.

As a result, it is often difficult to determine the new government’s specific mandate, other than a promise of change, or, in the case of the Trudeau election, “real change.”

But what does this mean for Canada’s all-important oil and gas sector? It is still early days for the Trudeau government, but the Liberal’s election campaign platform offers a glimpse of the sector’s likely experience with the new federal government.

First, the Liberals promised a much more activist federal role in shaping and delivering a Canadian policy and regulatory regime to deal with climate change, with direct impact on the oil and gas sector.

While it is fair to say that as in all Canadian federal elections to date, environmental issues were not a major factor in the defeat of the Harper government, the climate change file lurked in the background of the political discussion last fall, and the

Trudeau government quickly had to react to it with the developments at the Paris climate change summit occurring only a month after it was elected.

The Paris accord will require the Liberals to develop, in consultation with the provinces, a national carbon reduction plan to go along with the campaign promise to establish a $2-billion “Low Carbon Economy Trust” fund to provide support for projects that materially reduce carbon emissions under the new national carbon regime. In addition, the Notley government announcements of a new climate change regime in Alberta have a direct impact on the oil and gas sector, and in combination with the federal initiatives, cause a redirection of priorities for the sector, all in a time of depressed oil and gas prices.

Second, the Trudeau team campaigned on a promise to revamp the process used by the National Energy Board (NEB) in assessing oil and gas projects and in regulating the sector for the protection of Canadians. This promise was made in very general terms, but it is an important issue for the sector because the NEB, as its principal federal regulator, will likely become much more expansive in creating opportunities for public participation and in assessing broader aspects of projects, such as cumulative effects and climate change impacts.

Third, and related to the promise of an expanded NEB role, the Liberals campaigned that they will review the Canadian Environmental Assessment Act, focusing on introducing new processes to ensure science based decisions and greater public participation.

The history of federal environmental assessment legislation is rocky, with frequent change being made to such processes ever since they were first introduced by Pierre Trudeau’s government. The oil and gas sector will continue to be affected by such process volatility but may well benefit if projects are approved on a scientific basis rather than public emotion, or a particular ideology.

Fourth, the Liberals promised to review the Fisheries Act and the Navigation Protection Act to, in their words, “restore lost protections, and incorporate more modern safeguards.”

It is debatable if the revisions made by the Harper government to these statutes did, in practice, materially change their effect on the sector. Nevertheless, any changes to this legislation have the potential to impact the upstream oil and gas operations.

Further, the Liberals can be expected to move on their campaign promise to expand the protections provided in the federal Species at Risk Act. It will be important to assess the cumulative effect on the sector of the changes to these environmental statutes.

Fifth, the Liberals have indicated they will continue the moratorium on tanker traffic on British Columbia’s North Coast. This moratorium, long in place under both previous Liberal and Conservative governments, will, therefore, remain a cornerstone oil and gas policy of the federal government and will help drive the desire for the sector to have alternative means of access to markets.

Given the importance of the oil and gas sector to Canada, it will be important for the government, the industry, and all Canadians, to carefully consider the impact of these federal initiatives to bring “real change.”

Paul Cassidy practices environmental and energy law in Vancouver. The views expressed are solely his own.

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