Questions for a Productive Energy Dialogue in Canada

Facing a multitude of stresses, strains and opportunities, Canada needs a productive energy dialogue. Yet, if we want to make real progress in such a dialogue, there are some tough questions that we need to be willing to ask. How do we generate an honest public debate on climate and energy in place of the denial of energy realities every bit as much as climate realities? How do we respect the role of citizens and local communities in determining our energy future while restoring public confidence in provincial and federal institutions?

Start with climate change. Almost thirty years after the emergence of the climate debate, the public discussions on energy and climate continue as if they were being conducted on different planets. At the international level we have, on the one hand, a base case outlook from the International Energy Agency that sees emissions growth of 16 percent from 2013 to 2040. On the other, the same governments who are members of the IEA have cheerfully adopted a goal of holding warming to 1.5 degrees Celsius by 2050 which would mean a drastic reduction in emissions worldwide with correspondingly reduced demand for coal and oil and even natural gas. Very rarely can one find a conversation in which those two realities are connected. Canada is not an exception.

Somewhat refreshingly, earlier this month Canadian environment ministers noted that the underlying trend in Canadian emissions implies growth (albeit modest), not decline. What the environment ministers did not say was that to meet any of the 2030 national targets being bruited about implies a significant change in trajectory. At the very least Canada would have to very quickly adopt policy action of much greater weight than we have seen even from Ontario with its coal phase-out or BC and Alberta with their carbon taxes. 

If governments find the political will to act in ways commensurate with their aspirations and commitments, then we are looking at radical increases in carbon costs either directly through carbon prices or indirectly through regulation. Yet are we willing to tell consumers that their energy prices will need to go up by 100 percent or more to meet our 2030 GHG commitments? Are we willing to absorb or mitigate the effects on high energy intensity industries that are already subject to pressure from cost and global competition?

If the political will does not follow the stated ambitions, that may compound the already malign effects of low public confidence in both the energy industry and in policy makers.

Indeed, public confidence or “social licence” has become the issue du jour in Canadian energy circles. The old way of doing things necessarily had to change. Canadian communities had clearly reached the point where they would not be passive hosts for energy projects whether pipes, power lines, power plants (of any sort) or oil and gas operations. But a necessary corrective risks turning into a rout in which “communities” become the granters of “licence”; and traditional permission granting authorities – governments and regulatory bodies – are reduced to being observers or simply one of the steps along the way to a wildly risky future.

Meanwhile the centrifugal tendencies in Canada seem to be growing. Provincial and municipal government leaders – in many parts of Canada - make pronouncements about energy infrastructure that appear to belie any familiarity with Canada’s 1867 constitution. What if the bargain of Canadian confederation included a provision along the lines of the following?

“All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces” (implicitly, such a clause would guarantee transport across and through other provinces equally free of unreasonable hindrance)

It turns out that we have such a provision, just no agreement that it matters any more.

If every province and every “community”, including several hundred increasingly “sovereign” First Nations governments all find themselves with an effective veto on energy projects then we are hardly a country any more.

Our challenge with respect to public confidence is to restore confidence in the institutions that actually make this country work, starting with the constitution.

The federal government’s announcement on temporary measures respecting energy approvals was probably a necessary antidote to the growing chorus of vocal opposition to the National Energy Board. The five principles[1] outlined by the government , if used the right way, could help guide Canada to some common sense outcomes - although they could also lead us down some blind alleys.

In any event, the deeper problem is the need to rebuild confidence in the whole institutional structure both within provinces and at the national level and do so while keeping processes functional and efficient. All energy regulators in Canada know this and most are hard at work looking for solutions. 

For some time into the future most energy decision processes will be slower, more costly and more uncertain. Yet rebuilding public confidence in public institutions, sustaining investor confidence in Canadian energy resources, reducing greenhouse gas emissions and moving closer to the leading edge of technological change are actually mutually compatible objectives as long as we approach them with common sense and realism about what is achievable through deliberate policy and in various time frames.

Finding the path forward will require a certain amount of political courage and that in turn requires a public debate which generates more light and less heat.

This blog post is based on Mike Cleland’s speech at the Energy Council of Canada: Canadian Energy Industry Updates and Insights on 2 February 2016.

[1] The five principles consist of:

     No project proponent will be asked to return to the starting line — project reviews will continue within the current legislative framework and in accordance with treaty provisions, under the auspices of relevant responsible authorities and Northern regulatory boards;

     Decisions will be based on science, traditional knowledge of Indigenous peoples and other relevant evidence;

     The views of the public and affected communities will be sought and considered;

     Indigenous peoples will be meaningfully consulted, and where appropriate, impacts on their rights and interests will be accommodated;

     And, direct and upstream greenhouse gas emissions linked to the projects under review will be assessed.

Source: http://news.gc.ca/web/article-en.do?nid=1029999