Operating context and key risks

Operating context

Canada’s wealth of natural resources, which include renewable and non-renewable energy, minerals and metals, and forests, are key to our economic prosperity and provide Canadians with good jobs and business opportunities. In 2016, our natural resource sectors directly or indirectly provided 1.7 million jobs and accounted for 16% of GDP in Canada. NRCan’s present and future challenge is to promote its economic and environmental goals at the same time, building the natural resource sectors’ contribution to our economy, while also achieving environmental results such as reduced greenhouse gas (GHG) emissions, through sustainable practices.

As NRCan pursues its economic and environmental goals, domestic and global factors affect its operating context.

Domestically, wildfires around Fort McMurray, Alberta in the spring and summer of 2016 not only threatened lives and livelihoods, they also adversely impacted the forest industry, oil production, and employment. Meanwhile in the global economy, the prevalence of financial and debt woes and the increasing trend toward protectionism translated into slower overall economic growth, slower growth in global trade and investment, and low commodity prices. For example, the prices of minerals and metals remained far below the levels of several years ago and although the price of crude oil increased modestly in 2016, it remained less than half the price seen in mid-2014. Notwithstanding this broader global context, the International Monetary Fund estimated that Canada’s annual rate of economic growth over 2016-2021 will average 1.8%, which is the second-highest expected rate among G7 countries.

Budget 2016 and Budget 2017 presented expanded opportunities for the Department with renewed emphasis and significant investments for addressing climate change and adaptation, as well as a strong focus on innovation such as in the field of clean technologies.

The Paris Agreement of 2015 continued to anchor Canada’s commitment to a 30% reduction in its GHG emissions by 2030 compared to 2005 levels. Our natural resource sectors, as Canada’s predominant sources of GHG emissions, remained key players in advancing efforts for emission reductions and delivering on our international commitments. NRCan deepened its engagement in actions against climate change through the Pan-Canadian Framework on Clean Growth and Climate Change (PCF), and supported PCF priorities related to energy efficiency, electricity infrastructure, energy technology and innovation, and international collaboration.

As economic growth through innovation is a priority of the Government of Canada, the global movement to address climate change provides an economic opportunity that we have begun to seize through innovation. With increasing worldwide demand for clean technologies and a global market estimated to more than $1.15 trillion in 2017,Footnote 1 Canada emphasized its efforts on targeting opportunities to become a global leader in clean technology innovation in 2016-17. These efforts aim to create good jobs for Canadians while helping to meet our climate change goals. NRCan has continued to take action  to ensure that Canada’s clean technology companies in the natural resource sectors are well positioned to compete in this large and growing global market. Commitments in Budget 2016 and Budget 2017 reinforced NRCan’s focus on advancing research, development, demonstration and adoption of clean technologies in the natural resource sectors and contributing to the multi-country initiative Mission Innovation, which aims to accelerate global clean energy innovation.

Key risks

The key strategies deployed by the Department to manage its risks and opportunities are outlined below.

NRCan’s risk environment consists of ongoing risks that require ongoing mitigation, but do not lend themselves to being fully addressed over a period of one or several years.

Throughout 2016-17, NRCan closely monitored its global and domestic context and implemented strategies to manage its risks and seize its opportunities. These strategies aimed to ensure that Canada’s resource sectors remain globally competitive;, enjoy expanded access to foreign markets; build safe and secure energy infrastructure; pursue innovative approaches and clean technologies; use sustainable, environmentally sound practices; and advance our international commitments on climate change.

Taking action to address climate change is important for protecting human health and the environment. At the same time, meeting our international commitments on climate change is important for maintaining and expanding the access our natural resource sectors have to foreign markets and for supporting the competitiveness of their products. NRCan collaborated with a wide range of domestic and international partners in 2016-17 to make progress on our climate change commitments and to continue adapting to a changing climate. Among other actions, the Department worked with the United States and Mexico to advance North American energy collaboration; with provinces and territories to promote energy efficiency and develop cleaner, renewable energy and get it onto a smarter electricity grid; promote energy efficiency; and with industry and communities to build capacity and support climate change adaptation. NRCan widely shares knowledge, information and tools with the full range of stakeholders.

Using environmentally sound approaches to continue building and improving the secure infrastructure needed for transporting Canada’s energy resources to domestic and international markets is essential for earning public trust and diversifying our market access. Among other actions, NRCan partnered with provinces and territories to continue implementing the CES, which involves working together with Indigenous communities, industry, researchers, and other organizations, with the shared purpose of further developing energy resources in an environmentally and socially responsible manner. While infrastructure projects continue to encounter environmental, social and regulatory challenges, progress is being made to help Canada improve its energy infrastructure.

Canada’s ability to prevent, respond to, and recover from natural and man-made emergencies involving our critical infrastructure is of paramount importance to public health and safety, the environment and our economy. The public, and notably Indigenous communities, need to have confidence that Canada has established effective emergency management practices. In 2016-17, risks to critical infrastructure continued to increase in complexity. To mitigate this risk, NRCan put in place emergency management plans, contributed to the Federal Response Emergency Plan led by Public Safety Canada, and shared its specialized knowledge on hazards with other governments and industry. The Department implemented new legislative provisions under the Nuclear Liability and Compensation Act to enhance Canada’s ability to respond and recover from damages from a potential nuclear incident. NRCan also worked on new standards to improve pipeline integrity and contribute to the effective and safe transport of fossil fuels in Canada. NRCan played a key role in responding to the Fort McMurray wildfires by providing advice and expertise in the area of geomatics. By processing data from satellites to create geospatial analysis, NRCan was able to equip officials and first-responders with comprehensive intelligence, thus facilitating better and faster decision-making.

Fostering the development of innovative solutions to challenges in the energy, mining and forest sectors is vital if Canada is to be competitive and take advantage of growing global demand and market opportunities. The strong focus of Budget 2016 on innovation presented an opportunity for the Department to support innovation with respect to clean technologies in the natural resource sectors. As a result, NRCan has invested in initiatives to promote research, development and demonstration of innovative clean technologies that focus on the most pressing environmental issues and create a supportive environment that helps Canadian companies grow and position themselves as world leaders in the clean technology market. These initiatives have helped Canadian companies that are operating in emerging industries to take the essential first steps toward commercializing their novel technologies.