Natural resources have helped Canada weather the last three years of economic uncertainty, but even with business booming, industry is telling the federal government that the sector can do more with reforms to the regulatory process.
Canada has reaped the benefits of high commodity prices in recent years, with energy, mining, and forestry accounting for roughly 11.5 per cent of GDP in 2010. The federal government is banking on continued growth in the resource sectors. Last week Natural Resources Minister Joe Oliver (Eglinton-Lawrence, Ont.) told the House Committee on Natural Resources that his department was expecting $500-billion in new resource projects over the next 10 years. Canadian Environmental Assessment Agency president Elaine Feldman provided a similar estimate in testimony to the House Committee on the Environment and Sustainable Development in October.
Mining alone accounted for nearly three per cent— $35-billion—of Canadian GDP last year. The Mining Association of Canada (MAC) projects $137-billion in investments in the industry over the next five years.
The prospects for growth in the industry are “tremendous,” said Paul Hébert, MAC’s vice-president of governmental affairs.
“There are multi-billion-dollar investments planned in every province and territory in the country with the exception of P.E.I.,” said Mr. Hébert, who credits high demand in China and rising demand in India and Brazil for keeping commodity prices high in recent years.
“It really spans the spectrum of mineral resources, from base metals like nickel, copper, lead and zinc, precious metals like gold and silver, and potash and uranium in Saskatchewan, where there are huge growth prospects,” said Mr. Hébert.
Energy is the largest resource sector, accounting for seven per cent of Canada’s GDP. Energy is one of largest contributors to GDP among all sectors, exceeding manufacturing and rivaling the construction industry in size.
Of its energy resources, Canada’s oil and gas industries receive the most attention due, in large part, to the environmental impacts of oil sands extraction in Alberta and shale gas fracking in northern B.C., the Prairies, and the Maritimes. Canada has the third largest oil reserves in the world, and is the world’s third largest supplier of natural gas.
The industry’s continued growth depends on pipeline expansion says Canadian Association of Petroleum Producers vice president Greg Stringham.
“What we’re seeing as we look out 15 years, is that we need some expansion of pipelines,” Mr. Stringham told The Hill Times. “That doesn’t necessarily mean we need to have [Northern] Gateway and/or Keystone XL, but there needs to be something to access markets. With the doubling of the oil sands and some potential decline in conventional oil, the capacity that we currently have will get to the point where it actually fills up.”
But while Canada’s energy sector is largely associated with fossil fuels, roughly 65 per cent of Canada’s electricity generation is clean, coming primarily from hydro, with small but growing contributions by wind and solar. The share makes Canada a leader in green electricity among industrialized nations. As U.S. economist Jeremy Rifkin notes in an interview in this week’s Resources Policy Briefing in The Hill Times, Germany only recently achieved 20 per cent renewable energy.
Canada’s forestry industry has not fared as well as mining and energy since the 2008 U.S. housing market collapse caused demand for Canadian wood products to drop off. Last year’s Senate Committee on Forestry and Agriculture released a report showing that softwood, hardwood, plywood and strand board production have all plummeted by between 40 and 60 per cent since 2006. The sector accounted for two per cent of GDP in 2010, down one-third from 2001.
In his appearance before the Natural Resources Committee last week, Mr. Oliver acknowledged forestry as the “life blood of hundreds of Canadian communities,” and took the opportunity to detail the government’s Wood Export Program, which has contributed to a 600 per cent increase in Canadian lumber exports to China in the last five years. The program has worked to promote Canadian forestry products in Asia and Europe for nearly a decade.
Largely a provincial jurisdiction when it comes to regulation, the federal government’s role in the forestry industry has been one of economic development, while mining and energy projects must often meet provincial and federal regulatory standards.
The mining and energy industries have been hard at work promoting regulatory reform in the fall session. The Mining Association of Canada, the Canadian Association of Petroleum Producers, and the Canadian Electricity Association have all appeared before the Environment Committee to advocate for changes to the Canadian Environmental Assessment Act, which along with the Fisheries Act is one of the most important pieces of federal legislation regulating energy and mining projects.
Industry has been pressing the government to “streamline processes” by eliminating “duplicative steps” in federal and provincial approvals, and the federal government has clearly been listening.
“One of the things that we hear frequently from industry is about regulation, regulation, and more regulation,” Conservative MP and Natural Resources Committee member Brad Trost (Saskatoon-Humboldt, Sask.) commented during Minister Oliver’s appearance. “[O]ne of the things that has come up over and over again is regulatory frustrations.”
Mr. Trost went on to ask the Natural Resources Minister what his industry was doing to create a more “streamlined” regulatory process.
“I’ve said on a number of occasions… there’s too much duplication of efforts and too many regulatory hurdles and this needs to be reformed,” Mr. Oliver responded. “That’s why in the speech from the Throne we made it a priority to overhaul our regulatory system. This will involve moving to a one project one review system that will provide predictable and timely regulatory review for the sector.”
Mr. Hébert said that the mining industry is looking for more predictability for the timelines in the approval process and the elimination of duplication between federal and provincial reviews. Mr. Hébert added that while Canada’s resource sectors have benefited from high commodity prices, the mining industry could do more with greater regulatory certainty.
“When prices are high companies want to strike when the iron is hot, and if it takes five or 10 years to get a project built it’s kind of hard to take advantage of prices that are high today,” Mr. Hébert explained.
Ramsey Hart, Canadian program coordinator for MiningWatch Canada, said that industry clearly has the ear of government when it comes to reforming the federal regulatory review processes for resource projects.
“Our concern with one project, one review assessment is that the entirety of the review would be downloaded to the provinces,” Mr. Hart told The Hill Times. “That’s a concern because the federal government does have responsibilities. It has unique jurisdictional roles and specific polices around sustainable development, the protection of fish habitat, and climate change, for now at least. Are we still part of the Kyoto Protocol? I don’t know, I haven’t checked my e-mail this morning. Maybe that’s changed.”
While the federal government appears committed to making the regulatory approval process for resource projects more business friendly, Borden Ladner Gervais environmental lawyer Adam Chamberlain said that it’s possible to have a more reliable approval process that still accounts for environmental sustainability and public safety.
“If you have some certainty of process, it will end up with a higher percentage of projects being approved for the simple reason that a lot of proponents will select themselves or screen themselves out, and they won’t proceed with projects that they know won’t be approved,” said Mr. Chamberlain, who practices resource law in Ontario and Nunavut, and is president-elect for the Ontario Association of Impact Assessment.
Mr. Chamberlain added that one of the most important steps that federal, provincial and territorial governments can take is to better coordinate their work and the work of their departments.
“Streamlining in my mind isn’t about making something shorter, it’s about making the approval process more comprehensible to the average person, frankly.”
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