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Proposed Canadian Policy Could Make Pipelines Responsible for Wellhead-to-Burnertip Greenhouse Gas

The regulatory barrier that halted TransCanada Corp.’s Energy East pipeline conversion last year -- blaming pipelines for cargo carbon emissions -- would confront all future projects under legislation proposed Thursday by the Liberal government in Ottawa.

“Cumulative effects” and compliance with national climate change policy, plus enlarged aboriginal and citizen roles, figure in a reform bill introduced by federal Environment Minister Catherine McKenna and Natural Resources Minister Jim Carr.

The package granted a demand by Canadian native and green factions for stiffened federal project regulation since the 1990s: holding proposed pipelines responsible for greenhouse gas emissions from production and use of the oil and natural gas they would carry.

The legislation was foreshadowed last year when the National Energy Board (NEB), on Carr’s instructions, added overall climate change effects to the approval issues for Energy East over industry and producer-province objections.

The NEB shrugged off protests that production is under provincial jurisdiction and pipelines do not control use of their loads.

After the climate change effects were added to the approval issues, TransCanada last September scrapped the C$17.7 billion ($14.2 billion) plan to partially convert and extend its natural gas Mainline to carry 1.1 million b/d of oil to an Atlantic export tanker port.

A government manual for the 341-page reform bill confirmed that the hurdle faced by Energy East may be difficult to jump for other projects.

“Climate change considerations would be systematically integrated throughout the assessment process,” said the manual. “As a first step, Environment and Climate Change Canada would conduct a strategic assessment of climate change, which would be completed to provide direction to ensure Canada’s action on climate change is reinforced through the impact assessment process.”

The reformed process would be conducted by reorganized and renamed versions of the NEB and the Canadian Environmental Assessment Agency (CEAA). Both would be guided by enlarged mandates and increased public and native participation.

The NEB would be converted into the Canadian Energy Regulator, under “strategic direction” by government appointed managers: a CEO and a board of directors, overseeing work by hearing commissioners and inspectors.

The new regime would scrap legal “standing” rules that require NEB hearing interveners to be directly affected by projects or be capable of professional-grade evidence presentations. At least one director and one commissioner must have First Nations, Metis or Inuit status.

The CEAA would be replaced by the Impact Assessment Agency of Canada. The name change expresses a declared federal government intention to require “holistic” project reviews reaching beyond effects on land, air, water and wildlife.

The Liberal regime would follow an enlarged agenda as “a move from environmental assessments to impact assessments based on the principles of sustainability,” said the reform package manual.

“Assessments would consider a whole range of potential impacts to understand how a proposed project could affect not just our environment but also health, social and economic issues over the long-term.”

 Cumulative effects regulation would include regional and national strategic effects assessments, according to the manual.

“In support of our commitments to clean growth and in support of our transition to a low-carbon economy, we would be launching a strategic assessment for climate change.”

As in NEB project reviews, in impact agency cases, there would be no requirement for individuals “to meet specific criteria to participate as part of the assessment process -- no more ‘standing test’ or ‘interested party’ requirements,” said the manual.

Opportunities for aboriginal participation are built into the proposed impact review apparatus, but the legislation stops short of granting native communities veto powers over projects.

“It would be mandatory to consider and protect Indigenous traditional knowledge, if provided, alongside other sources of evidence,” said the reform manual.

The environment and resources ministers predicted the reform formula would speed up the regulatory process and enhance investor confidence by clarifying project requirements. The rules seek to reduce conflict by enforcing early disclosure and public participation.

The reform package is also billed as a gain for efficiency and timely response to economic opportunities. Legislated time limits for official reviews would be shortened, but companies would be allowed all the time they need to try complying with the holistic standards.

As the reform package was announced, the NEB posted a reminder that pipelines are no longer the only transportation service available to support development -- especially by Alberta oilsands production, Canada’s biggest and fastest-growing natural gas consumer.

“The Western Canadian Sedimentary Basin (WCSB) has approximately 1.2 million b/d of crude rail loading capacity,” according to a market snapshot update on expanding industry capabilities. “Crude oil shipped from the WCSB can access refineries across North America through several large rail networks.”

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