It is painfully obvious to most Canadians that the lack of access to global markets is causing real hardship in the energy sector and is impacting the entire country’s economy. Yet, the announcement of “support” for the industry by the federal government this week actually highlighted its lack of understanding of the issue and inability to connect with Alberta.
The challenges facing the sector will not be resolved with the $1.6 billion – mostly in the form of loans – the Government of Canada offered up.
The real issues facing the industry are infrastructure and indifference.
Years of dire warnings from industry about pipeline delays and regulatory uncertainty impacting the business environment in Alberta hit home with a vengeance in 2018. The lack of progress on pipeline projects led to price discounts on Canadian oil, at times, in excess of $50 a barrel.
It’s reportedly cost Canada’s economy as much as $80 million a day and resolving the issue must be a top priority for all orders of government in 2019. If the energy sector is going to continue to underpin Canadian prosperity, pipelines to tidewater and access to global markets are urgently needed.
Many elements of success in business are beyond our control but creating a regulatory environment to responsibly propel industry forward is something we can achieve. We can do this!
The impact of deep discounted oil and gas prices on the Canadian economy was evident when Finance Minister Bill Morneau released a budget update in November. At the time, he announced a sweeping review of all federal regulations to ensure “efficiency and economic growth” are considered in project assessments.
People can always be confident the “regulatory system protects first and foremost the health and safety of Canadians,” said Morneau, who was equally adamant that “competitiveness considerations” must be taken into account in the decisions.
Business has long complained Canada’s overly complex and slow-moving regulatory regimes discourage investment. Nowhere is it more evident than in energy. Done properly, regulatory reform could provide a much-needed economic stimulus for Alberta and all of Canada.
The Economic Strategy for Calgary implemented in 2018 identifies business environment as one of four key elements for economic growth and a well-functioning regulatory regime is critical to any thriving business ecosystem.
Morneau has said Ottawa would introduce a “regulatory modernization bill” in 2019. He’s also proposed a strategy to significantly boost exports to support economic growth. The lack of market access is driving away investment and access to tidewater for both oil and gas would go a long way to meeting Ottawa’s goals.
However, current federal proposals for regulating the energy industry are completely at odds with that goal. The economic impact of modern energy infrastructure appears to be a secondary consideration, at best, in the proposed legislation.
Bill-C-69, as currently structured, is adding to the uncertainty and will continue to curtail investment. It proposes replacing the National Energy Board with the Canadian Energy Regulator and shifts reviews for projects to the new Impact Assessment Agency of Canada. The energy industry and the Government of Alberta warn the new process will do little to support timely decision-making or a positive investment climate.
When investors are bypassing the Canadian energy sector due, in part, to what they view as an overly onerous and costly regulatory process, the Government of Canada needs to treat all industries equally and fairly. Albertans are naturally asking why energy, a leading contributor to Canada’s GDP, is taking a back seat to other industrial sectors.
Throwing money at the issue doesn’t resolve the underlying problem. Access to the global markets that want our responsibly produced energy will. It’s also beyond reason why the Government of Canada and our provincial partners in Confederation prefer importing oil from countries with lower environmental and social standards than Alberta.
The energy sector has made, and continues to make, a tremendous contribution to Canada’s economy and the prosperity of Canadians from coast to coast to coast. It deserves an opportunity to develop and to serve global markets as much as other Canadian industries.