The No More Pipelines Act?

Abstract

On August 28, 2019, both the Impact Assessment Act (IAA) and the Canadian Energy Regulator Act (CERA) came into force and Canada’s environmental assessment process and its regulatory regime for major energy projects were fundamentally changed. With this new legislation in place, is it fair to say that no new pipelines will be approved in Canada? The answer is likely yes, but not solely or even largely as a result of this legislation.

Changes in global oil markets have led to significant reductions in forecast production from Alberta’s oil sands. This implies that, with no new pipelines permitted, and assuming those with permits in-hand are built, the network will be sufficient to cover forecast oil export demand well into the 2030s. As such, there is a tautological answer to whether new pipelines will be approved in Canada: they likely will not be, unless market conditions change substantially, because new pipelines beyond those currently approved will not be needed.

Tautologies notwithstanding, Canada’s new regulatory regime represents a significant departure from previous legislation. This article asks whether it is likely that a new pipeline project could achieve approval under the combined process implemented in the CERA and the IAA? The answer is complicated, but likely turns on two issues already prevalent in Canada’s pipeline debates. The first issue facing any new pipeline review would be the ability to reconcile such development with Canada’s responsibilities to Indigenous peoples. The second is the collision between Canada’s climate change commitments, cumulative local environmental effects, and new oil sands production enabled by new pipelines. While approval has been – and will continue to be – primarily a political matter, the analysis presented herein shows that the combined consideration of cumulative environmental effects, greenhouse gas emissions, and the link between pipelines and oil sands growth is likely to make it more difficult to approve a pipeline. This is because, when combined with recent changes to judicial review doctrine in Canada, the new regime will make it much more difficult for regulators and political decision-makers to justify such approvals.

Keywords: oil sands, pipelines,canada, environmental assessment

JEL Classification: K32