New plan to ‘approve' pipelines designed to intensify pipeline wars

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Appeared in the Financial Post, February 13, 2018

The Trudeau government has announced its plan to “improve” the National Energy Board. The language of the announcement is all “sunny ways,” promising to be all things to all stakeholders. The new approval process for major energy projects will be rigorous and science-based, but at the same time based on Indigenous traditional knowledge. It will be faster and easier for developers, even as it vastly widens the scope of reviews, including new requirements to include “gender-based analysis.” It will cut red tape for resource development, even as it asks the public to suggest ways to expand the list of projects requiring review.

In short, the announcement promises two incompatible things: a leaner, more efficient approvals process, and a denser more complex review system. It’s a safe prediction that only one of these promises will be fulfilled.

Our informal motto at the Fraser Institute is: “If it matters, measure it.” We’re all for the empirical, measurable, and meaningful analysis of proposed activities. To the extent the government is serious about transparent, science-based decisions, it is all to the good.

However, the federal government’s announcement injects a large number of subjective criteria into project analysis including such intangibles as the “social” impact of a proposed investment, its gender implications and climate impacts. The announcement repeatedly invokes “science,” as in science-based decision-making, but undermines that intention by calling for evaluation of unmeasurable things. The category of “effects on Indigenous people,” for example, is so ill-defined as to be meaningless in a scientific context, as are gender-based impacts of proposed activities.

A related problem is the implied invitation for busybodies to flood the system with new demands and obstructionist tactics. While we are not fans of having small numbers of remote bureaucrats making arbitrary decisions, neither is it wise to open the evaluative process to anyone and everyone who wants to participate, regardless of their actual stake in the project.

Does a person living 1,000 miles away from a stretch of pipeline really deserve an equal voice in deliberations to those who will be locally impacted by the decision?

Should distant provinces (that may be seeking competitive advantage over others) really have comparable input to a decision-making process as a province that will be directly affected by the outcome?

Giving distant (and self-interested) interest groups and provincial governments a greater voice before a national energy regulator (in Ottawa) can only lead to more delays, and more of the kind of blatant provincial rent-seeking and virtue-signalling we are seeing in the great Alberta/B.C. pipeline war.

The announcement reflects admirable intentions to provide a one-stop approach for reviews. While we like the idea of defined-timeline, single-process regulation, those organizational characteristics are only beneficial if one presumes the regulator’s intention is to seek out tangible economic and other benefits for the people being regulated. Implementing a one-stop, centralized regulator with a fixed timeline has little to do with whether or not that regulator is likely to approve projects or use federal authority to see them to completion. To the extent that the announced reforms actually reduce local decision-making, increase the subjectivity of evaluation criteria, dilute the voice of the most directly impacted, and increase the number of hoops an investor needs to jump through, concentrating control in fewer hands may actually make the system less responsive and beneficial.

Ultimately it’s hard to tell if the government really wants new resource investment. The announcement refers to $500 billion in proposed projects over the next decade almost like a threat needing to be headed off with “better” rules and more formidable standards. The announcement sounds a few encouraging notes about improving the efficiency of the approvals process, but those hopes are more than drowned out by signals that the new system will be even harder and costlier to navigate than before. No one doubts the government’s commitment to setting high social and environmental standards. What is doubtful is their commitment to ensuring resource development actually occurs.

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