Canada’s environmental laws threaten buildout of clean energy projects

Canada’s environmental laws threaten buildout of clean energy projects

Environmental regulations aimed at promoting biodiversity and conservation are now slowing the pace of construction

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The federal Liberal government must find ways to streamline the environmental review process if it has any hope of meeting the ambitious timeline for its energy transition goals, according to a new report by a governmental advisory panel.

The Canadian Electricity Advisory Council on Monday offered up a series of policy changes to make it easier to expand the electricity sector, and highlighted a central tension of the Liberals’ plan to address climate change: that many environmental laws and regulations aimed at promoting biodiversity and conservation are now threatening the pace of construction.

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The council’s 110-page report said a “tangle of current approval processes” at all levels of government are threatening the buildout of clean electricity projects and that the federal government can undertake “systemic reform” to lead by example.

“The council recognizes the need for an updated approach that accounts for biodiversity and conservation objectives without jeopardizing or unduly delaying critical projects to reach Canada’s net-zero goals on time,” the report said.

The council, composed of 19 people from the electricity sector, was convened by Natural Resources Minister Jonathan Wilkinson in May 2023 to advise the government on how to enable more electrification.

Today, electricity supplies around 17 per cent of the country’s energy, but that needs to increase to between 40 per cent and 70 per cent in order to meet Canada’s goal of net-zero carbon emissions by 2050. Put another way, the report said electricity generation capacity “must grow three times as fast as it has in recent decades.”

That would require decarbonizing the current electrical grid as well constructing new power plants, transmission lines and other associated infrastructure. For the country to meet its carbon-emissions targets, including net zero by 2050, the report said environmental reviews, also called impact assessments, need to be made more efficient.

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It cited a 2019 World Bank study on the time needed to obtain a general construction permit that said Canada ranked second to last among the 38 countries that belong to the Organization for Economic Co-operation and Development.

There are numerous reasons why environmental reviews can drag on. For example, the report pointed to the pileated woodpecker — “a non-endangered, non-migratory bird species (that) adds a minimum of 36 months of delays to any project that would need to fell even a single tree in which that common bird species has a nest.”

Your whole project can be delayed six months just for a pole

Philippe Dunsky

Philippe Dunsky, president of the environmental consulting firm Dunsky Energy + Climate Advisors and chair of the council, said there are “no silver bullets” that can fix the process, and many improvements need to be made.

The Liberals already made an attempt at revising the environmental review process by passing the Impact Assessments Act of 2019, formerly known as Bill C-69.

Last year, the Supreme Court of Canada ruled that the act was unconstitutional because it sought to regulate areas that fall within provincial jurisdiction. But it did not strike down the law, and the federal government in its latest budget said it would address the ruling by advancing the principle of “one project, one review.”

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One policy recommendation in the council’s report suggests an overhaul of environmental assessments by replacing the approval-based process — in which project proponents must receive approval at each stage to move forward — with a compliance-based approach, in which project proponents are expected to follow the rules and face enforcement actions when they do not.

Dunsky said the sheer number of permits required to build things makes every project slower under the approval-based process.

“Say you want to replace an existing pole with another pole and it happens to cross a stream,” he said. “Then you need to get a permit, and you need to wait for that permit, and if it’s not delivered on time, you may miss the season, and your whole project can be delayed six months just for a pole.”

It would be a mistake to think that if the federal government fixes up its process, we’re going to be able to build lots of stuff

Bruce Lourie

Bruce Lourie, president of the Ivey Foundation — a non-profit organization that supports the clean-energy transition — and a member of the council, said provincial and municipal governments also have a responsibility to streamline their processes.

“It would be a mistake to think that if the federal government fixes up its process, we’re going to be able to build lots of stuff,” he said.

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Eliminating duplication is a major theme of the council’s report, which said overlapping requirements either between departments within the same level of government or across governments can force project proponents to seek approval for the same thing multiple times.

One policy recommendation calls for “a champion” who can work across federal ministries and departments to ensure there isn’t duplication between departments and to take a big-picture view on the reforms needed to accelerate the pace of electrification.

“At the end of the day, in order to fight climate change, we have to do it at a faster pace,” said Natural Resources Minister Jonathan Wilkinson, who has been briefed on the council’s findings. “We can’t give people the sense that we’re compromising environmental standards, or our consultation with indigenous partners, but we have to make it more efficient.”

He said some of the proposals are already in progress, including the idea that permits can be applied for at the same time rather than in a consecutive order, and that the federal government should work with provinces and territories to eliminate duplication by adopting “equivalency” mechanisms.

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The report cited a modelling study by the Ottawa-based think tank Transition Accelerator that concluded most Canadian household energy bills would decline by 2050 if the country successfully completes the energy transition.

The same modelling said the capital requirements to reach net zero by 2050 amount to $1.4 trillion, which is about $55 billion per year.

Dunsky said enabling the energy transition should be viewed as an investment opportunity.

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Canada’s grid is already largely decarbonized, he said, adding that if Canada accelerates the expansion of clean electricity, it can lower costs for consumers and attract investment while limiting climate change.

“Ultimately, this is a call to action to enable growth,” Dunsky said. “The opportunity here is a $1.4-trillion investment opportunity that we’re looking to unlock, and we’re looking to unlock it by getting serious at reforming a whole bunch of things, but ultimately what we’re trying to do here is unlock an enormous growth opportunity.”

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