Trudeau Government Doubles Down On Energy And Environment But Has It Got A Winning Hand?

The Trudeau government came to power in 2015 with three inter-related objectives on energy and environment: taking meaningful action on climate change, securing market access for Canada’s energy resources and modernizing energy project decision-making.

Three years on, these objectives remain crucial. Credible action on climate is essential to maintain the support of Canadians for oil and gas production — especially expanded production to new international markets. Restoring public and investor confidence in project decision-making is pivotal to energy development in Canada, whether oil, gas or electricity. 

Little wonder, then, that the Trudeau government is doubling down on this trio of objectives. But has it got a winning hand?

Its marquee approaches in each area — the federal carbon tax (climate), public ownership of the Trans Mountain pipeline (market access) and Bill C-69 (modernizing decision-making) — are all in trouble, much of it deep.

First, on climate and the carbon tax, things have gone very far south very fast.

Rewind to late 2015, when Ottawa sailed to the climate talks in Paris on waves of enthusiasm, recommitting to Canada’s 2030 targets and pledging to ambitious mid-century aspirational goals. This was quickly followed by successful talks with the provinces and territories on the Pan-Canadian Framework on Clean Growth and Climate Change, which laid the groundwork to establish a country-wide price on emissions. It was a lofty time — the feds, provinces and territories were almost all collaborating on climate policy. Saskatchewan was the main holdout. 

Fast forward to 2018 and Saskatchewan has a growing list of friends: Ontario’s Ford government has cancelled the province’s carbon pricing plan and joined Saskatchewan in its constitutional challenge of the federal tax, Manitoba has stated it will not go ahead with its planned carbon tax, Alberta has pulled out of the federal plan until controversy over the Trans Mountain pipeline expansion project (TMX) is resolved, and the fate of the provincial carbon tax in New Brunswick is uncertain.

In response, the Trudeau government has doubled down, holding firm to its commitment that provinces without an approach meeting federal requirements will see Ottawa’s plan imposed on them.

So much for collaboration.

Second, on securing market access, in fall 2016, Ottawa announced its decision to approve two of three major pipeline proposals: Kinder Morgan’s TMX project to carry oil to tidewater and Enbridge’s Line 3 proposal to bring oil to U.S. markets were approved, while Enbridge’s Northern Gateway project was rejected. Score one for access to markets beyond North America.

Or not.

Fast forward to 2018, and TMX doesn’t even have a government approval anymore. The 2017 B.C. election brought to power a coalition NDP-Green government committed to using ‘every tool in the toolbox’ to stop the project. B.C. and Alberta began duking it out with an escalating trade war and B.C. pledged to test in the courts whether it has jurisdiction to prevent increased oil shipments. Kinder Morgan responded by giving the country what amounted to a ‘time out’ — halting all non-essential construction on the project and giving governments a spring 2018 deadline to achieve the clarity needed for the project to go ahead.

But clarity was not forthcoming. Instead, the federal government purchased the project — Kinder Morgan no longer had the stomach for the flip-flopping Canadian investment climate. And it just got worse from there, with the Federal Court of Appeal quashing the project’s approval, saying Ottawa had inadequately discharged one phase of its duty to consult and accommodate Indigenous communities and had not adequately taken into consideration certain marine impacts of the project.

In response, the government has doubled down. It is following the court’s recommendations to address the two areas of its decision-making process found deficient. Time will tell whether this ‘do-over’ will be successful.

For now, only one thing is clear: TMX is further away from shovels in the ground than it was before the government purchased it.

So much for Ottawa to the rescue.

Third, on modernizing project decision-making, the more people learn about Bill C-69 — Ottawa’s proposed legislation to strengthen public confidence in resource development — the more concerns they have about it. Back in 2015, it was evident that energy project decision-making needed to be reformed to more adequately address new social and environmental realities: a growing list of environmental impacts, the need to meaningfully involve Indigenous communities in decision-making, and citizen expectations to be engaged.

Early in its mandate, the government established two expert panels — one on environmental assessment and another on the National Energy Board — to consult and make recommendations on these issues. Bill C-69, the result of the process, has unleashed a firestorm in the energy sector over its impact on the investment climate. The bill addresses many social and environmental issues, but it does so in a way that takes an already uncertain, unpredictable, politicized decision-making process and makes it even more uncertain, unpredictable and politicized.

Here again, the government has doubled down. It appears unwilling to make major modifications to the bill, now in the Senate.

So much for strengthening public confidence.

So, has the Trudeau government doubled down on a winning hand?

It’s a gamble that may cost them at the polls — all signs point to the carbon tax becoming a (the?) main issue in the 2019 federal election, and politics on energy and environment are becoming more polarized by the day.

More importantly, it’s a gamble that may cost the country. Polarization is never a recipe for cool-headed evidenced-based stable policy — the kind needed to attract investors and to garner the confidence of Canadians in governments’ ability to create a workable balance between economic, environmental and security objectives that stands the test of time. Instead, get ready for more policy flip-flopping as governments look to score points on the back of public anger, frustration and division.