Expert panel recommendations are top to bottom reworking of energy infrastructure assessment process
After years of complaints from First Nations and eco-activists that the National Energy Board was biased toward the energy industry, the Canadian government released an expert panel report Monday designed to “modernize” the national energy regulator.
The oil and gas industry has also been critical of lengthy and expensive reviews that have uncertain outcomes. For instance, Enbridge’s Northern Gateway pipeline project from Bruderheim, Alta. to Kitimat, BC was rejected last fall after the company spent approximately $300 million on a process that spanned more than 10 years.
One of the criticisms of the NEB is that the regulator was tasked with all aspects of a review, from stakeholder engagement to technical scrutiny of proposals to providing economic data and studies. The regulator’s structure, as well as its supposed cozy relationship with industry insiders, led pipeline opponents to accuse the NEB of bias.
The Justin Trudeau Liberal promised during the 2015 election it would “modernize” the regulator.
“The goal is to ask all of the right questions, put everything on the table, and emerge with a set of processes that reflect the realities of 2016, that respect the importance of partnerships and meaningful consultations with indigenous communities that understand we have international and domestic obligations to limit greenhouse gas emissions,” said Natural Resources Minister Jim Carr in an interview last year.
“Our strategy is to create a process, and room for all Canadians who have an interest in major projects, to express themselves.”
The expert panel recommended a completely different approach to assess energy projects.
“We envision a completely new way of reviewing proposed transmission infrastructure projects, in which both the if (is a proposed project aligned with the national interest and policy?) and the how (does a project proposal minimize risk and maximize benefits?) of a proposed project are addressed openly, fairly and separately,” the report says.
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The first task for Ottawa, says panel member Brenda Kenny, an engineer and former head of the Canadian Energy Pipelines Assoc., is to square away Canada’s national energy strategy with other policy initiatives, such as greenhouse gas emission reductions under the Paris Climate Accord.
“If you haven’t made your energy policy intentions clear, and you haven’t explained to Canadians how they all fit together and co-exist, naturally you get polarization. In an NEB hearing today, you get a policy debate rather than a project debate,” Kenny said in an interview.
“So, step one, advance the Canadian energy strategy, bolt in Paris and policy other aspirations, make sure that they all work together.”
According to the report, the next step would be for all major projects – including inter-provincial pipelines – to submit to a one-year process to determines if a project aligns with Ottawa’s policy framework and is in the “national interest.”
The expert panel recommends the Major Projects Management Office – a federal agency whose role is to “provide overarching project management and accountability for major resource projects in the federal regulatory review process,” according to its website – be tasked with leading this stage of the process.
“It would not be a loose bunch of cabinet ministers or politicians out doing town halls. The process would be evidence-based but strategic, focused on assessing a project at a strategic level against well-understood policy objectives,” she said.
“Natural Resources Minister Jim Carr, through the cabinet, would call on the government to make that national interest determination at the end of year one.”
If the Canadian government agrees the project is in the national interest, then a two-year technical environmental assessment would be undertaken by a new entity, the Canadian Energy Transmission Commission, in conjunction with the Canadian Environmental Assessment Agency. If the joint assessment is successful, the proponent would be granted the appropriate licences, potentially with conditions.
The new process would incorporate input from all and any interested Canadians while still reducing the timeline to a maximum of three years, giving industry the certainty and streamlining it has long asked for.
The new Commission would replace the NEB and be governed by a Board of Directors, with decisions rendered by a separate group of hearing commissioners. The board of directors would be located in Ottawa rather than Calgary, which has ruffled some feathers in Canada’s energy capital.
The NEB act was changed in 1991 to move the regulator to Calgary and it was decided at that time all board members must reside there, too. Kenny says that narrowed the pool of technical and management professionals from which to choose.
“We recommend [that provision] be expunged because it’s no longer relevant. In fact, it hampers the ability to have a truly nationally board of governors and a truly nationally pool of commissioners,” she said.
“The key is here is that the board will govern out of Ottawa, individual members may live anywhere in the country.”
The chief executive officer of the Commission and most technical staff will likely remain in Calgary, says Kenny.
The report also recommends the creation of a new independent body modelled after the US Energy Information Administration: “[The] new Canadian Energy Information Agency responsible for the production of regular public reports about projected energy demand, energy sources (including renewables), progress in implementing innovative clean energy technologies, climate change, international benchmarking, and performance against Canada’s policy objectives.”
Kenny also stresses that the panel envisions a much larger role for Canada’s indigenous peoples in energy regulation.
“Real and substantive participation of Indigenous peoples, on their own terms and in full accord with Indigenous rights, aboriginal and treaty rights, and title, in every aspect of energy regulation,” is how the report describes the panel members’ intent.
“We spent one day in every city just on indigenous issues because we knew at the outset that to actually implement the United Nation’s declaration of rights of indigenous peoples into a modern regulatory framework, nobody had ever done that before,” she said.
“So, we took our time and listened well.”
The report includes 26 recommendations and advice. The government is now accepting comments online about the report until June 14.
Carr thanked panel members for engaging people across the country and the many Canadians who made their opinions known in person and online during this process.
“The information gathered will be key in deciding the best way to modernize the NEB,” he said in a press release.
The expert panel was comprised of David Besner, Wendy Grant-John, Brenda Kenny and co-chairs Hélène Lauzon and Gary Merasty. The panel travelled to 10 cities, from Vancouver to Yellowknife to Saint John. It heard presentations from close to 200 individuals, and over 1,000 people attended the sessions in person. More than 200 detailed written submissions were provided to the panel online, according to the release.