ARCHIVED - Extractive Resource Industries – Creating Maximum Benefits for Canadians: Remarks to the University of Calgary

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Transcript of
Remarks by
The Honourable Joe Oliver
Minister of Natural Resources

University of Calgary
Extractive Resource Governance Policy Program

Calgary, Alberta
April 18, 2013

Good morning everyone.

I am delighted to be here at an event sponsored by the School of Public Policy or, as some refer to it, the house that Jack [Dr. Jack Mintz, Head, University of Calgary’s School of Public Policy] built.

This school and this university have a well-earned reputation for excellence, and the School of Public Policy, under Jack’s leadership, has established itself as one of the country’s most respected voices in natural resource policy. So, my thanks again for your invitation to join you here today.

This morning, I’d like to speak for a few minutes about Canada’s extractive resource industries and how government can be an ally in their efforts.

I do not need to tell any of you how important natural resources are to our economy. You all know the numbers. Natural resources support close to 1.6 million jobs and drive almost 20 percent of our GDP. All told, oil, gas and mining industries pay close to $25 billion in taxes and royalties every year. Revenues that help pay for things that are fundamental to Canadians, including education, health care and public pensions. Quite simply, this is a sector that contributes both to the strength of our economy and the quality of our lives. And it is critical to our future.

My message to you today is that we stand at a pivotal moment, a time when the actions we take as a country will either set the course for future growth or consign us to watching the opportunities pass to others. And here are the challenges. While we are blessed with an enormous endowment of natural resources on the energy side, we are largely tied to one customer. One hundred percent of our natural gas exports and 99 percent of our oil exports go to the United States. The immediate problem is that we are forced to sell our oil at a significant discount. And that is costing our economy as much as $20 billion every year.

As a point of reference, the federal deficit for 2013 is expected to be about $26 billion. So narrowing the price gap would make a substantial contribution to balancing our books.

At the same time, America’s massive discoveries of tight oil and shale gas mean that it will need less and less from Canada in the future. So it is critical that we expand our markets. The good news is that those markets are already there, just waiting for us to develop. The International Energy Agency estimates that the global demand for energy will increase by more than one-third by 2035. And according to the Organization of the Economic Cooperation Development, 92 percent of global growth by that year will come from non-OECD countries.

For example, in China, the number of civilian-owned cars and trucks grew from 5.5 million in 1990 to 214 million in 2011. And in the next 20 years, this is forecast to more than double again, which means there will be more cars in China in 2030 than there were in the entire world in the year 2000.

And it is a similar story in countries like India where a growing middle class will need vehicles, buildings and roads, creating tremendous demand not only for energy but also for the minerals and metals such as steel, copper, aluminum, platinum, zinc, rare earths and potash.

Global urbanization is continuing at an astonishing rate. Some 180,000 people a day are moving to the cities, driving up energy demand in the world’s largest countries. Canada can play a critical role in fuelling that growth, if we act now. And that means we need to get things right — the right fundamentals, the right policies and the right regulations. And that is just what our Government is doing. It begins with a sound economy.

Our Government is lowering taxes, cutting red tape and promoting free trade. We are the only G7 country to have recouped all of the jobs lost during the last recession. In fact, we added 950,000 net new jobs since July 2009.

Canada’s conservative economic management and solid economic performance has not gone unnoticed. Both the organization for Economic Cooperation Development and the International Monetary Fund expect Canada to be among the leaders in economic growth in the industrialized world over the next two years.

So, we have strong economic fundamentals. Necessary for success, but not sufficient. If we are going to capture the incredible opportunities for natural resources, we also have to act in three key areas: governance, environmental protection and consultation with First Nations. Let me touch on each of these.

To fully seize this moment, we need to have clear, predictable rules for development. In other words, good governance. That is why we introduced a sweeping new approach to how we regulate resource development. We call it responsible resource development and it does a number of things. It makes project reviews more predictable and timely with fixed end dates for key assessments, and it ends duplication in reviewing projects with the goal of one project, one review.

That means for example, that provincial reviews can be substituted for federal ones, saving time and expense and providing the certainty that investors demand. Making reviews more timely means that we can strike while the iron is hot. In the case of liquefied natural gas, for example, we know that Canadian industry is facing significant global competition with a narrow window of opportunity. So it is critical that our regulatory process be as expeditious and predictable as possible.

And we have done this, for instance, by streamlining the process for issuing export licences for LNG projects to focus on export-related issues. Furthermore, collaborative work is underway between Canada and British Columbia on regulatory cooperation for LNG projects with a goal of reducing overlap and duplication. So that is the first thing: putting the economic fundamentals in place and modernizing regulatory regimes.

Second, if we are going to capture this moment, we must be good stewards of the environment. Social licence requires it; prudence demands it; and our children deserve it.

For our Government, environmental protection is not a nice-to-have, it is a must-have. We do not accept — and we will never accept — the false choice between economic development and environmental responsibility.

We know that we must do both, and that means extracting and developing our resources in accordance with the highest environmental standards. And that is why a key part of Responsible Resource Development involves creating tough new environmental protections, including increasing annual inspections of oil and gas pipelines and doubling audits to identify problems before the occur.

Recently, we also announced comprehensive new measures to create a world-class tanker safety system. While our current tanker safety system has served us well for many years, in fact there has not been a major tanker accident on the West Coast, ever. It is nevertheless critical that we strengthen this system as exports continue to grow in the coming years.

New measures that we recently announced include strengthening pollution prevention and response, increasing tanker inspections, creating a new Coast Guard Incident Command Centre and expanding surveillance and monitoring of ships in Canadian waters.

These and other actions will bring us closer to a world-class tanker safety system. But there is still more work to do to reach that goal. And so we are seeking expert advice through a tanker safety expert panel to review our current preparedness and response capacity and to propose new ways to bring Canada’s safety system to world-class status.

And just as Canadians expect us to develop our resources in concert with the environment, they expect us to develop them through consultation and engagement with Aboriginal peoples. For me, this is not just a legal requirement. It is a moral imperative. We must ensure Aboriginal peoples have every opportunity to share the benefits of resource development.

In addition, I have announced a Special Federal Representative who will report directly to the Prime Minister on key issues of Aboriginal participation, particularly here in Western Canada. This appointment complements our other ongoing engagements with Aboriginal peoples, engagement on major resource projects that will be consistent, meaningful and timely, involving Aboriginal groups in the review process from beginning to end.

So, strong fundamentals, clear rules, a commitment to the environment, an effective engagement with Aboriginals — all of these are essential to ensuring that Canadians reap the benefits of our natural resources. All areas where our Government is leading.

Of course, no issue is more top of mind than pipelines.

Recently, I visited Chicago and Houston to promote Canada’s strong environmental record and to show support for Keystone XL. Next week, I’ll be returning to New York and to Washington.

I met with business people and government officials, including Chicago Mayor Rahm Emanuel and U.S. Deputy Energy Secretary Daniel Poneman. And I made a very simple argument. I told them that Canada is not just their closest neighbour and biggest trading partner: we are a stable, free market democracy, a friendly and reliable country where the rule of law applies and our word has meaning. A country with a strong record of environmental protection.

Venezuela may be a major supplier of heavy crude to the U.S., but it has also threatened to cut supplies five times in as many years. That is not a reliable partner, and that is not a stable source of oil. And that is not how Canada will ever treat the U.S.

Let me say at this point how deeply Canadians empathize with the terrible American loss from the terrorist act at the Boston Marathon, a city where I lived for a couple of years.

I pointed out also that the oil sands are among the most rigorously regulated and monitored industrial projects in the world, one that produces only 1/1000th of green, of global greenhouse gas emissions. And we estimate that the total emissions of oil sands crude transported by Keystone XL would be less than 1/80th of the amount produced by American coal generation overall.

And let me be clear. We know that every bit of GHG matters and we are making progress.

Between 1990 and 2010, emissions associated with every barrel of oil sands crude have been reduced by over 26 percent. More broadly, between 2005 and 2011, while Canada’s economy grew by 8.4 percent, our greenhouse gas emissions declined by 4.8 percent — an impressive achievement.

The fact is that Canada and the U.S. share the same environmental objectives when it comes to greenhouse gas emissions: a 17 percent reduction from 2005 levels by 2020. And it is estimated that Canada is halfway to meeting that goal.

In fact, in some areas, we are ahead of the world. Coal for example, is the largest source of GHG emissions by far, and Canada is the first country to ban new coal projects that use traditional technologies.

Canada is also in lockstep with the Americans when it comes to regulating emissions from passenger vehicles, light trucks and heavy vehicles. And we are moving on new regulations for oil and gas emissions, something few other countries have done.

So, if America wants a reliable supplier of energy, one that cares about the environment, that shares its goals with respect to the environment, the choice is clear — it is Canada.

At the same time, we know that our opportunities lie not only to the south but also east and west. And to meet the demand of global markets, we need to move our resources to tidewater on our coasts.

I was very encouraged that TransCanada announced potential plans for a new west–east pipeline. This would mean greater stability of supply; more affordable oil for refineries in Quebec City, Montreal and St. John; and more jobs right across the country. And of course, we await the scientific and fact-based regulatory assessment of the Northern Gateway Pipeline proposal this December.

And we continue to diversify our markets. As we do so abroad, there is an increasing need for better intelligence about those markets. I am therefore delighted to announce today a $15-million contribution for a new international policy program here at the University of Calgary. This program will help develop policies to increase Canada’s competitiveness in global markets, promote sustained growth and create a sound base for economic development.

Funded through Western Economic Diversification, Canada’s Western Diversification Program, the new international public policy program will use a multidisciplinary approach to assist Canada in diversifying the economy, markets and trade relations and developing and marketing international governance expertise in the extractive resource industries as well as in providing essential analysis on global economic and security issues.

Let me close as I began, by saying that this is a pivotal moment in the life of our country — and the stakes are enormous.

Over the coming decade, as many as 600 major resource projects are planned or underway worth over $650 billion and representing over a million new jobs for Canadians. From coast to coast, and this is nation-building. And it is nation-building on a grand scale, comparable to the building of the great railroads in the 19th century or the highway system of the 20th century.

At stake are trillions of dollars in economic activity, hundreds of thousands of jobs and billions in revenue to fund critical social programs.

And just as those periods prepared the way for generations of Canadians to grow and prosper, what we are doing now is creating the conditions for prosperity and opportunity for generations to come. But, only if we act now. History must not record this as an opportunity missed, our resources stranded, our legacy lost. And that is why our Government is determined not to let this moment go by. We do not intend to squander the chance fortune has supplied.

I’ve been very privileged to be on the front lines of our effort. And each of you has a similar vantage point with extractive industries at the centre of it all. Let us embrace both the challenges we face and the opportunities we enjoy, and let us build a foundation on which future generations will stand. Thank you very much.