World Forum on Energy Regulation

2012/62

Notes for Remarks

by

The Honourable Joe Oliver, P.C., M.P.
Minister of Natural Resources

to the


World Forum on Energy Regulation


May 14, 2012
Québec City, Quebec

Introduction

Thank you very much, Mr. Théorêt for the kind introduction.

I want to thank and congratulate you and your colleagues at La Régie de l’énergie du Québec for your outstanding commitment to building collaboration among international energy regulators.

Regulations have come a long way since the first-ever World Forum on Energy Regulation also held in the Province of Quebec and hosted by REQ. Natural Resources Canada is very proud to have supported your efforts since the beginning and again this year by joining Ressources Naturelle et Faune Québec as a lead sponsor of the Forum.

On behalf of Prime Minister Stephen Harper and the Government of Canada, it is my pleasure to welcome all of our guests to Canada, to Québec City, and to the fifth World Forum on Energy Regulation.

I note that the theme for this edition of the Forum is, "Striking a Balance in the Midst of Change."

For energy regulators, of course, it is always about finding the proper balance among the economy, energy and the environment. This is never easy but it is even more challenging today given globally shifting patterns of growth and energy demand and ongoing economic uncertainty.

Here in Canada, we’ve tackled this challenge head-on, through sound fiscal management and proposed legislation to modernize of our federal regulatory system.
Our plan is called Responsible Resource Development. With its implementation, we will enhance Canada's already rigorous environmental protection and provide Canadians with a project review process that is more effective, efficient and predictable.

Attracting investment

We’ve set the foundation for growth and economic resilience by lowering personal and corporate tax rates, paying down our debt, containing expenditures, reducing red tape and promoting free trade and investment. Our efforts are being recognized. Forbes magazine rates Canada as the best place in the world to do business.

However, to maintain that position and even enhance it, we need to recognize the key role regulatory processes play in our economic well-being, especially as they apply to the development of energy and energy infrastructure.

Providing a regulatory regime that is efficient as well as effective is fundamental to a stable, predictable and welcoming climate for investment.

Other countries are taking action, including the United States, where President Obama recently issued an Executive Order that would significantly reduce the time required to make permitting decisions on infrastructure projects.

It is well known that inefficient regulation leads to unnecessary and unpredictable delays — delays that create additional costs for project proponents and impede industry's ability to attract capital.  

Unfortunately in Canada, we’ve been struggling for years to match our world-class environmental protection standards with regulatory processes that are timely, predictable and effective. Our regulatory processes were developed and added to over the course of many years, in different jurisdictions, with little thought to how they interact. As a result, we have a system that is unnecessarily complex and highly prone to duplication and overlap.

Different levels of government have their own regulatory requirements. In practice, this can mean the same project must go through two virtually identical assessments at different times, with potentially different conclusions.

Within the federal government alone, half-a-dozen or more departments and agencies can have a hand in a single project assessment. There is a lack of clarity about who is responsible for what and when they are responsible for it.

Taken together, these factors make for a system that is slow and inefficient, that can discourage investors and put major projects at risk — without any improvement to environmental protection.

The result? Nobody wins.

Responsible Resource Development

That is why improving the performance of the regulatory system has been an ongoing priority for our Government.

We have implemented a number of administrative improvements since 2007 to this end.

Just a few weeks ago, as part of our 2012 Economic Action Plan, we announced a major initiative designed to provide Canada with a regulatory system that is efficient and effective.

Our Plan for Responsible Resource Development is founded on four main pillars:

  • first, to make project reviews more predictable and timely;
  • second, to reduce duplication of project reviews;
  • third, to strengthen environmental protection; and
  • fourth, to enhance Aboriginal consultation.

The plan will eliminate duplication by allowing environmental assessments by our provincial governments to replace rather than overlay assessments by the federal government.

It will also place enforceable, beginning-to-end time limits on assessments of up to two years, without compromising the thoroughness of the independent review. As Prime Minister Stephen Harper has said, “Let us not confuse the length of the process with the rigour of the science.”

Our regulatory reforms will add additional rigour to environmental protection in Canada because we are raising our high standards. The focus will be put on major projects that may have a significant environmental or economic impact. For the first time, substantial financial penalties will be imposed for non-compliance with conditions set by regulators.

We are introducing new, important maritime safety measures. Tankers will be double hulled. There will be mandatory pilotage and improved navigation products. We will also be increasing annual pipeline inspections from 100 to 150 and doubling annual comprehensive audits to identify problems before they occur.

Aboriginal people in Canada have unique rights and our Government has a legal duty to consult on decisions that could affect them. We take this obligation very seriously. Our plan includes new mechanisms that will make consultation with Aboriginal people and communities an integral part of the review process, with additional funding to support Aboriginal participation in the process.

More than $500 billion could be invested in resource development in Canada over the next 10 years. Our plan will help to ensure Aboriginal peoples have every opportunity to share in the economic and social benefits that investment can provide.

I am pleased to say that the overall response to our initiative has been positive and supportive.

People recognize the logic and common sense of reducing overlap and duplication, making the system more effective, efficient and predictable.

They recognize that an efficient and predictable regulatory regime bolsters investor confidence. Canadians understand that we do not have to sacrifice the environment on the alter of resource development or squander our resource legacy to preserve our environment for future generations.

We will only move ahead with resource development that is safe for Canadians and safe for the environment. Discharging that fundamental responsibility can be achieved as we take advantage of the enormous natural advantage we Canadians are so fortunate to have been blessed with.

Regulatory challenges

The interconnectedness of regulatory changes challenges the international community and confronts it in a way which really draws our attention and no more so than with the tragic earthquake and tsunami of March 2011 in Japan. That tragic accident at the Fukusima Daiichi nuclear power plant reminds us how quickly an accident in one country can have repercussions for regulators on the other side of the globe.

In the wake of that accident our nuclear regulator, the Canadian Nuclear Safety Commission, swiftly created a task force that re-examined the safety cases of our nuclear power plants and confirmed that our plants are safe and have a robust design. It also made numerous recommendations to further strengthen each layer of defence built into the Canadian design and licensing philosophy, results now being shared with nuclear regulators around the world.

Fukushima reconfirmed the need for international collaboration in ensuring our systems protect us in the event of a serious natural disaster.

Regulators must also concern themselves with the steady increase in continental and global interconnectedness and interdependencies of energy systems and markets.

Here again, regulators must strike the necessary balance. In many ways, the situation in Canada mirrors what is happening internationally.

Regulators are a key link in facilitating cross-border movement of vital commodities, and they also bear a heavy responsibility for ensuring energy is traded without compromising the reliability or safety of the energy grid.

That is a concern not only in their own jurisdictions, but in every other jurisdiction the energy may pass through on its way from producer to consumer.

These physical connections — electricity grids and oil and gas pipelines — are indispensable assets. Interjurisdictional collaboration must assure their reliability and safety. That is essential.

In Canada, the production of energy and other natural resources is largely under provincial jurisdiction, which our government respects. However, when energy or energy infrastructure moves across provincial or international borders, which it usually does in major projects, federal regulation comes into play. As well, there are areas where the federal government and provinces share jurisdiction, such as the offshore, and areas of exclusive federal jurisdiction, such as nuclear.

Our National Energy Board is responsible for the regulation of pipelines and international and designated interprovincial electric power lines. The Board enables appropriate collaboration among the various regulatory agencies involved to ensure standards are adequate, complementary and respected.

The federal and provincial governments in Canada do not operate in isolation. For instance, our offshore petroleum boards are joint federal-provincial bodies that regulate Canada’s offshore oil and gas activities.

We also have a strong relationship with the U.S. The North American Electric Reliability Corporation, for example, monitors and enhances the reliability of the electricity grid between the U.S. and Canada.

The interoperability of our electricity grids is also a key part of our collaboration through the Canada–U.S. Clean Energy Dialogue. Interoperability is a growing concern, as utilities in both countries put in place smart grid technologies and integrate new forms of generation to their grids.

Maintaining reliability as new technologies are brought online is crucial. We’ve seen more than once how a problem in one country can cascade through the system with alarming speed.

Plan Nord

Here in Quebec, one of the key drivers for economic growth will be Plan Nord, announced by Premier Charest last May. This strategy includes a series of mining and infrastructure projects that will lead to over $80 billion in investment over the next 25 years.

The goal is to unlock the vast energy, metal and mineral wealth of Quebec’s north and to protect the ecology in vast tracts of territory.

The plan will integrate the development of northern Quebec’s vast resource potential in an environmentally sustainable manner, while improving the socio-economic conditions of the province’s northern residents.

The Quebec government expects that these investments will create an estimated 20,000 jobs per year, generate $14 billion in revenue and contribute $162 billion to the province’s gross domestic product.

Natural Resources Canada is collaborating with the provincial government to upgrade the mapping coverage for the area of northern Quebec covered by this impressive strategy, one of the biggest economic, social and environmental development projects ever undertaken in Quebec’s history.

Energy in Canada

For a country as rich in energy as Canada, the importance of regulatory excellence cannot be overstated.

We find ourselves in a position that is both enviable and challenging. As a growing energy superpower, we take great pride in our natural resources. At the same time, we recognize that developing these resources in a way that meets both our economic and environmental demands is a challenge.

Our plan for responsible resource development will assure we meet this challenge. Our future prosperity depends on it.

Together, energy, mining and minerals processing and forest products account for more than 10 percent of Canada’s gross domestic product. Our natural resources industries employ more than 750,000 Canadians.

You may know that today marks the beginning of Mining Week in Canada — an opportunity for Canadians to celebrate our great mining heritage and international leadership and expertise in mining.

Canadians are no less global leaders in energy. A few facts are worth noting.

Canada is the world's third-largest producer of hydroelectricity — more than 75,000 megawatts of installed capacity. An additional 29,000 megawatts are currently proposed for development over the next 20 years.

It’s not nearly as well-known, but Canada is also a leader in clean energy. Three-quarters of our electricity supply comes from non-emitting sources, including close to 60 percent  from hydro.

We are the third-largest producer of natural gas globally. Our natural gas resources are estimated at more than 700 trillion cubic feet — well over 100 years of domestic production.

Wind is now the fastest-growing source of electricity in Canada. We have more than 5,500 megawatts of installed wind energy capacity. That is up from less than 200 megawatts a decade ago.

We’re the world's second-largest producer of uranium.

We are currently the world's sixth-largest oil producer and our proven reserves total 174 billion barrels — the third-largest in the world, with the technology potential for a massive increase.

Of all our natural resources, energy has the greatest impact on jobs and prosperity in Canada. The energy sector accounts for close to seven percent of our GDP.

The oil sands alone – which hold this vast bulk of our reserves – are responsible, directly or indirectly, for the jobs of some 400,000 people across Canada.

Opportunities

As new economic powers emerge around the world, natural resources offer tremendous opportunity to Canadians. We see opportunities to expand and diversify our energy, mining and forest markets to the United States and beyond.

To achieve this diversification, we need huge new investments in infrastructure — pipelines and ports to access new markets, especially the Asia–Pacific region.

No benefits flow when major projects languish in an unwieldy regulatory process. We need the energy and the jobs and other economic and social benefits that these projects will provide. We need them now — not 10 years from now, or never.

Take for example the Keystone XL pipeline, which would deliver another half-million barrels a day of Canadian oil to refineries on the U.S. Gulf Coast. This would mean both new revenues for Canada and greater energy security for the U.S., by reducing its reliance on other, less stable suppliers.

With sufficient pipeline infrastructure coming to fruition, it's estimated that the number of oil sands-related jobs in Canada could almost double — to an average of 700,000 jobs a year for the next 25 years with economic activity increasing by $3.3 trillion.

There is also an opportunity to build pipelines to eastern Canada, thereby enhancing our energy security, creating refinery jobs and potentially lowering the cost of energy for Canadians.

We are seeing potential for exports of electricity — especially clean hydroelectricity — to U.S. markets seeking to reduce their reliance on high-emission coal generation.

Again, developing the resources and the infrastructure to feed these new and expanded markets is a significant challenge. These are very large projects, involving the investment of hundreds-of-billions of dollars in Canada alone.

To maintain existing assets and meet growth in demand, the Canadian Electricity Association estimates the sector will need to invest almost $300 billion over the next 20 years — an average of $15 billion per year.

Around the world, the International Energy Agency projects that, over the next 25 years, an investment of nearly $38 trillion dollars will be needed to meet global energy supply infrastructure requirements.

There is no question of the role regulators play in monitoring and supporting these nation-building projects.

Conclusion

The pursuit of regulatory excellence is what this Forum is about, and the attendance it has attracted demonstrates that its priority for an international audience.

Safe, reliable, affordable energy is fundamental to attracting capital, creating jobs, improving national competitiveness and building long-term prosperity. Energy strengthens developed nations and is a prerequisite to the economic success of emerging economies — and efficient, effective regulation is the foundation.

Please enjoy your time in this great city, and accept my best wishes for an informative and successful conference.

Thank you very much.