Section I: Organizational Expenditure Overview 2016-17

Organizational Profile

Minister: The Honourable Gordon James Carr, P.C., M.P.

Deputy Head: Bob Hamilton

Ministerial Portfolio¹:

• Atomic Energy of Canada Limited^{Footnote [i]} (AECL);
• National Energy Board^{Footnote [ii]} (NEB);
• Canadian Nuclear Safety Commission^{Footnote [iii]} (CNSC);
• Canada-Newfoundland and Labrador Offshore Petroleum Board^{Footnote [iv]} (CNLOPB);
• Canada-Nova Scotia Offshore Petroleum Board^{Footnote [v]} (CNSOPB);
• Northern Pipeline Agency^{Footnote [vi]} (NPA);
• Energy Supplies Allocation Board (ESAB) (inactive).

Year established: 1994

Main legislative authorities:

• Department of Natural Resources Act^{Footnote [vii]}, S.C. 1994, c. 41
• Forestry Act^{Footnote [viii]}, R.S.C., 1985, c. F-30
• Resources and Technical Surveys Act^{Footnote [ix]}, R.S.C., 1985, c. R-7

¹ On November 4, 2015, an Order-in-Council designated the Minister of Industry (now the Minister of Innovation, Science and Economic Development) as the Minister for the purposes of the Canada Foundation for Sustainable Development Technology Act. As a result, resources allocated to this organization will be transferred to Innovation, Science and Economic Development Canada, thereby, reducing NRCan financial resources. Until the transfer is complete, NRCan will continue to disburse funds from its reference levels toward both the SDTC’s NextGen Biofuels Fund and the SDTC Tech Fund. These disbursements will remain equally shared between NRCan and Environment and Climate Change Canada (ECCC), with each department reporting its shares in its respective RPP and DPR.

Organizational Context

Raison d’être

NRCan works to improve the quality of life of Canadians by ensuring that our natural resources are developed sustainably, providing a source of jobs, prosperity and opportunity, while preserving our environment and respecting our communities and Indigenous People.

Responsibilities

The Minister of Natural Resources has responsibilities in relation to more than 30 acts of Parliament. The Minister’s core powers, duties and functions are set forth in the Department of Natural Resources Act, the Resources and Technical Surveys Act and the Forestry Act. The Department also works in areas of shared responsibilities with provinces, which include the environment, public safety, economic development, science and technology, and consultations with Indigenous Peoples.

To fulfil its responsibilities, the Department relies on a number of instruments (e.g. policy, regulation, statutory transfers, grants and contributions) and key activities (e.g., science and technology, partnerships and communications).

NRCan has offices and laboratories across the country. About one third of its employees are located in the National Capital Region, with the remainder being distributed from Atlantic Canada, through Quebec and Ontario, to the Western and Pacific Regions and Northern Canada.

Strategic Outcomes and Program Alignment Architecture

Strategic Outcome 1: Canada’s Natural Resource Sectors are Globally Competitive

• Program 1.1: Market Access and Diversification

  • Sub-Program 1.1.1: Mineral and Metal Markets Access and Diversification

  • Sub-Program 1.1.2: Forest Products Market Access and Diversification

  • Sub-Program 1.1.3: Energy Market Access and Diversification

• Program 1.2: Innovation for New Products and Processes

  • Sub-Program 1.2.1: Mining Innovation

  • Sub-Program 1.2.2: Forest Sector Innovation

  • Sub-Program 1.2.3: Geospatial Innovation

• Program 1.3: Investment in Natural Resource Sectors

  • Sub-Program 1.3.1: Mineral Investment

  • Sub-Program 1.3.2: Targeted Geoscience Initiative

  • Sub-program 1.3.3: Geo-Mapping for Energy and Minerals

  • Sub-program 1.3.4: Geoscience for New Energy Supply

  • Sub-program 1.3.5: Major Projects Management Office Initiative

• Program 1.4: Statutory Programs – Atlantic Offshore

Strategic Outcome 2: Natural Resource Sectors and Consumers are Environmentally Responsible

• Program 2.1: Energy-Efficient Practices and Lower-Carbon Energy Sources

  • Sub-Program 2.1.1: Renewable Energy Deployment

  • Sub-Program 2.1.2: Support for Clean Energy Decision-Making

  • Sub-Program 2.1.3: Alternative Transportation Fuels

  • Sub-Program 2.1.4: Energy Efficiency

• Program 2.2: Technology Innovation

  • Sub-Program 2.2.1:  Materials for Energy

  • Sub-Program 2.2.2: Green Mining

  • Sub-Program 2.2.3: Clean Energy Science and Technology

• Program 2.3: Responsible Natural Resource Management

  • Sub-Program 2.3.1: Forest Ecosystem Science and Application

  • Sub-Program 2.3.2: Groundwater Geoscience

  • Sub-program 2.3.3: Environmental Studies and Assessments

  • Sub-program 2.3.4: Radioactive Waste Management

  • Sub-program 2.3.5: Geospatial Information for Responsible Natural Resource Management

Strategic Outcome 3: Canadians have Information to Manage their Lands and Natural Resources, and are Protected from Related Risks

• Program 3.1: Protection for Canadians and Natural Resources

  • Sub-Program 3.1.1: Explosives Safety and Security

  • Sub-Program 3.1.2: Materials and Certification for Safety and Security

  • Sub-Program 3.1.3: Forest Disturbances Science and Application

  • Sub-Program 3.1.4: Climate Change Adaptation

  • Sub-Program 3.1.5: Geohazards and Public Safety

• Program 3.2: Landmass Information

  • Sub-Program 3.2.1: Essential Geographic Information

  • Sub-Program 3.2.2: Canada’s Legal Boundaries

  • Sub-Program 3.2.3: Polar Continental Shelf Logistics Support

  • Sub-Program 3.2.4: United Nations Convention on the Law of the Sea

• Program 4.1: Internal Services

Organizational Priorities

For 2016-17, the Department’s focus will be on the five key commitments laid out in the Prime Minister’s mandate letter (available here) to the Minister of Natural Resources:  

Planned Initiatives2

Canadian Energy Strategy NRCan will work with the provinces and territories on the Canadian Energy Strategy, with the objectives of helping to protect Canada’s energy security, while supporting economic growth, encouraging energy efficiency and bringing cleaner, renewable energy onto a smarter electricity grid. Alignment: 1.1.3 and 4.1

National Energy Board Modernization   NRCan is taking steps to modernize the National Energy Board (NEB), to ensure that its composition reflects regional views and that it has sufficient expertise in fields such as environmental science, community development, and Indigenous traditional knowledge. Alignment: 1.1.3

Environmental Assessment Processes Review Under the leadership of Environment and Climate Change Canada (ECCC), NRCan will work with federal partners to review Canada's environmental assessment processes to regain public trust by ensuring that decisions are based on science, facts, and evidence, and serve the public’s interest. Alignment:  1.1.3, 1.3.5 and 2.3.3

Investments in Clean Technology NRCan, in collaboration with partners, will build a strategy for investing in clean technology across Canada. This will include engaging nationally to develop measures to support clean technology producers and clean technology development and use in the natural resource sectors. It will also include implementing Mission Innovation, a new global initiative aimed at accelerating clean energy technology innovation over the next five years to address climate change, provide affordable and reliable clean energy, and promote economic growth. Alignment:  1.1.3, 1.2 and 2.2

North American Energy Collaboration NRCan will work in partnership with the United States and Mexico with the objective of strengthening and advancing continental clean energy cooperation, in support of an overarching ambitious North American clean energy and environment agreement. Alignment:  1.1.3

²The start date for these initiatives is 2015-16. Target end dates will be established based on engagement with partners and stakeholders, and Cabinet discussions.

NRCan also delivers results for Canadians on its legislative mandate (described here) and a range of important issues including:

• Working with partners to restore public confidence in developing and bringing natural resources to market;
• Innovating to optimize resource potential and to support Canada’s transition to a low-carbon economy;
• Leveraging NRCan’s expertise to maintain public safety and security; and
• Enabling NRCan to be a high-performing organization that is innovative and collaborative in delivering on its mandate.

Further details are available in Section II: Analysis of Programs by Strategic Outcome.

Risk and Opportunity Analysis

Natural resources are key contributors to Canada’s economic performance, directly and indirectly accounting for about 20% of Canada’s nominal gross domestic product (GDP). The sector is a key source of jobs across Canada, directly and indirectly accounting for 1.8 million jobs. Valued at $259 billion in 2014, natural resources account for approximately half of Canada’s merchandise exports.

Natural resources are highly-traded commodities and, in most cases, prices are set by global markets. Energy, mineral and metal prices have declined recently, generally as result of oversupply in global markets.

• Global prices for crude oil and liquefied natural gas prices have fallen by over 50% since June 2014.
• Mineral & metal prices have been on a downward trend since 2011.

These price changes have created challenges for Canada’s natural resource sector. For example, investment has declined considerably, resulting in significant layoffs. Given the importance of natural resources in Canada’s economy, a slowdown has spillover effects on national, provincial and territorial economies.

Looking ahead, commodity prices are expected to remain low in the near term and rise to 2020 and beyond. Of note, despite low oil prices, Canadian production is forecast to grow as projects currently under construction continue to move ahead.

Through its policies, regulations and programs, NRCan (on behalf the Government of Canada) works with various stakeholders to help mitigate these effects, inform Canadians, and ensure policy choices are based on a complete understanding.

RISK: Climate Change Canada’s actions on climate change will have a direct impact on the country’s ability to sustainably develop and export resources. Canada’s trading partners want reassurance that the country has a plan to meet its domestic and international obligations (2015 Paris Climate Change Conference) and to facilitate the transition to a low-carbon economy. Measures to mitigate and adapt to future climate change are thus required to protect or increase market access.
Link to Program Alignment Architecture Canada’s Natural Resource Sectors are Globally Competitive Natural Resource Sectors and Consumers are Environmentally Responsible Canadians have Information to Manage their Lands and Natural Resources, and are Protected from Related Risks
Risk	Risk Response Strategies
If Canada’s actions to meet international climate change commitments are insufficient and if Canada fails to keep pace in adapting to climate change, then the competitiveness of some of Canada’s natural resource sectors could be threatened, including their ability to access foreign markets.	In 2016-17, NRCan’s risk response will include: Advancing North American energy collaboration Bringing clean, renewable energy onto a smarter electricity grid Supporting provincial and territorial energy efficiency programs through NRCan’s certification and benchmarking systems Improving energy performance standards under the Energy Efficiency Act Pursuing domestic and international partnerships in RD&D in order to advance climate change objectives Providing geoscience knowledge products to inform adaptation solutions for transportation and community infrastructure in the North Ensuring the department implements the climate change adaptation requirements as defined in the Federal Adaptation Policy Framework
RISK: Energy Infrastructure A lack of public trust in the federal regulatory regime and environmental assessments limits Canada’s ability to bring energy resources to domestic and international markets (e.g., crude oil, petroleum products, natural gas and electricity). Canadians who live near the resources and the transportation infrastructure and Indigenous communities whose rights could be potentially impacted by new infrastructures deserve assurance that potential environmental impacts will be well identified and managed, and that the benefits of major resource projects will create shared prosperity. If not addressed, the lack of public trust could lead to revenue and job losses as well as lower economic growth.
Link to Program Alignment Architecture Canada’s Natural Resource Sectors are Globally Competitive
Risk	Risk Response Strategies
If the public does not trust in Canada’s ability to expand its infrastructure in a safe and environmentally sound manner, then Canada’s ability to increase production and diversify markets may be limited.	In 2016-17, NRCan’s risk response will include: Partnering with provinces and territories to develop a Canadian Energy Strategy Supporting the review of environmental assessment processes Implementing a Transition Strategy for Major Resource Projects Modernizing the National Energy Board Convening relevant stakeholders and making science available
RISK: Hazards and Emergency Management Public confidence in Canada’s ability to respond to natural and human-induced emergency events involving critical infrastructure is also important, should such an incident occur. Public tolerance is low, whether for risks related to safety and security of existing or new infrastructure or for risks related to resource development activities. Canadians, and in particular Indigenous Peoples who live near the resources, need to be reassured that the country has the knowledge and effective emergency management practices in place to protect public health and safety and the environment while pursuing economic development.
Link to Program Alignment Architecture Canada’s Natural Resource Sectors are Globally Competitive Canadians have Information to Manage their Lands and Natural Resources and are protected from Related Risks
Risk	Risk Response Strategies
If Canada’s measures to mitigate, respond to, and recover from, in a timely and effective manner, natural and anthropogenic (human-induced) emergency events involving critical infrastructure are insufficient, there could be significant impacts on Canadian public health and safety, the environment, the economy and public confidence.	NRCan has identified a series of measures to mitigate this risk. In 2016‑17, it will strengthen its risk responses by: Strengthening Canada’s pipeline safety regime by implementing new prevention, preparedness and response, and liability and compensation measures Modernizing the safety and security regime for Canada’s offshore and nuclear energy industries Strengthening offshore emergency preparedness Contributing to development of a comprehensive action plan that allows Canada to better predict, prepare for, and respond to natural disasters Enhancing earthquake monitoring Increasing infrastructure protection against cyber threats
RISK: Clean Innovation The global market for clean technology is expected to reach more than US$2.5 trillion by 2022. Countries such the US, Germany and China are making significant public investments in clean technology and putting in place targeted policies to support their industries. Canadian companies have clean technologies and expertise that could be promoted domestically and internationally. To create a supportive environment to help them to further grow and to position the country as a leader in the clean technology market, the Government of Canada will make strategic investments and provide more support for companies seeking to access and expand into key markets.
Link to Program Alignment Architecture Canada’s Natural Resource Sectors are Globally Competitive Natural Resource Sectors and Consumers are Environmentally Responsible Canadians have Information to Manage their Lands and Natural Resources and are protected from Related Risks
Risk	Risk Response Strategies
If Canada fails to anticipate or respond to increased demand for more innovative approaches to energy, mining and forestry sector challenges, it will struggle to remain competitive and to take advantage of global market opportunities.	NRCan has identified a series of measures to seize these opportunities. In 2016‑17, it will strengthen its risk responses by: Rolling out initiatives related to Mission Innovation Advancing North American energy collaboration Pursuing partnerships on RD&D in energy, green mining and forestry Investing in clean technology producers, providing more support for emerging clean technology manufactures and exports Supporting innovation and the use of clean technologies in the resource sector (energy, mining, forestry) Fostering innovation related to rare earth elements and chromite Pursuing new wood-based products

Planned Expenditures

Budgetary Financial Resources (dollars)

2016-17 Main Estimates	2016-17 Planned Spending	2017-18 Planned Spending	2018-19 Planned Spending
1,592,518,753	1,592,518,753	1,420,420,537	1,417,806,350

Information on changes from 2016-17 to 2018-19 can be found in the narrative following the Budgetary Planning Summary for Strategic Outcomes and Programs Table.

 

Human Resources (Full-time equivalents [FTEs])

2016-17	2017-18	2018-19
3547	3454	3435

FTEs are extracted from the financial system and meet the following definition as set out by Treasury Board Secretariat: A measure of the extent to which an employee represents a full person-year charged against a departmental budget. Full-time equivalents are calculated as a ratio of assigned hours of work to scheduled hours of work. Scheduled hours of work are set out in collective agreements.

 

Budgetary Planning Summary for Strategic Outcome(s) and Program(s) (dollars)

Strategic Outcome(s), Program(s) and Internal Services	2013–14 Expenditures	2014–15 Expenditures	2015–16 Forecast Spending	2016–17 Main Estimates	2016–17 Planned Spending	2017–18 Planned Spending	2018–19 Planned Spending
Strategic Outcome 1: Canada’s Natural Resource Sectors are Globally Competitive
1.1 Market Access and Diversification	59,733,334	61,566,240	64,060,351	43,993,476	43,993,476	28,361,877	28,353,543
1.2 Innovation for New Products and Processes	94,093,063	71,707,214	86,490,553	96,074,981	96,074,981	55,536,596	33,047,172
1.3 Investment in Natural Resources Sectors	65,333,593	60,589,504	59,959,471	62,900,219	62,900,219	65,272,906	62,740,438
1.4 Statutory Programs – Atlantic Offshore *	795,884,721	837,746,067	489,183,203	743,336,158	743,336,158	761,960,697	806,240,682
Subtotal	1,015,044,711	1,031,609,025	699,693,578	946,304,834	946,304,834	911,132,076	930,381,835
Strategic Outcome 2: Natural Resource Sectors and Consumers are Environmentally Responsible
2.1 Energy-efficient Practices and Lower-carbon Energy Sources	314,652,883	291,745,439	214,551,934	183,336,817	183,336,817	133,361,992	120,560,992
2.2 Technology Innovation	155,738,548	151,832,220	126,793,222	115,838,434	115,838,434	108,270,795	104,315,546
2.3 Responsible Natural Resources Management	282,047,031	267,570,932	114,957,220	29,619,508	29,619,508	28,958,607	28,959,115
Subtotal	752,438,462	711,148,591	456,302,376	328,794,759	328,794,759	270,591,394	253,835,653
Strategic Outcome 3: Canadians have Information to Manage their Lands and Natural Resources, and are Protected from Related Risks
3.1 Protection for Canadians and Natural Resources	65,535,095	65,692,439	63,176,272	57,808,743	57,808,743	49,858,500	48,894,225
3.2 Landmass Information	73,828,231	78,469,116	75,953,499	75,092,662	75,092,662	51,156,481	47,898,096
Subtotal	139,363,326	144,161,555	139,129,771	132,901,405	132,901,405	101,014,981	96,792,321
Internal Services Subtotal	184,198,094	162,499,616	191,428,122	184,517,755	184,517,755	137,682,086	136,796,541
Total	2,091,044,593	2,049,418,787	1,486,553,847	1,592,518,753	1,592,518,753	1,420,420,537	1,417,806,350

*Statutory Programs – Atlantic Offshore: As per the various Atlantic Offshore Accords, the  Government of Canada receives royalties for offshore oil and gas production and subsequently pays an equal amount to the provinces of Nova Scotia and Newfoundland and Labrador.

Planned spending declines by $174.7 million, or 11%, from 2016-17 to 2018-19. This is mainly attributable to:

• A decline in funding profile for several programs, the most significant of which are:
  • ecoENERGY for Renewable Power;
  • Sustainable Development Technology Canada for Sustainable Development Tech Fund³;
  • Enhancing National Earthquake Monitoring; and,
  • United Nations Convention on the Law of the Sea (UNCLOS) – Mapping the North Pole.

• The sunsetting of some programs or initiatives in 2016-17 or 2017-18, the most significant of which are:
  • Federal Infrastructure;
  • Forest Innovation and Expanding Market Opportunities;
  • Investments in Forest Industry Transformation; and,
  • ecoENERGY for Biofuels.

• These decreases are partially offset by an increase under the Offshore Atlantic Accords, specifically related to agreements between the Government of Canada and the province of Newfoundland and Labrador. As the majority of payments are related to revenue, the planned spending trend fluctuates depending on a number of factors such as expected production and pricing levels.

Government decisions on the renewal of sunsetting programs would be reflected in the Department’s future Budget exercises and Estimates documents.

For the explanation on variances in actual expenditures and forecasted spending between 2013-14 and 2015-16, please refer to the analysis included in the Departmental Spending Trend Graph section that follows.

³On November 4, 2015, an Order-in-Council designated the Minister of Industry (now the Minister of Innovation, Science and Economic Development) as the Minister for the purposes of the Canada Foundation for Sustainable Development Technology Act. As a result, resources allocated to this organization will be transferred to Innovation, Science and Economic Development Canada, thereby, reducing NRCan financial resources. The above financial table does not reflect this reduction. Until the transfer is complete, NRCan will continue to disburse funds from its reference levels toward both the SDTC’s NextGen Biofuels Fund and the SDTC Tech Fund. These disbursements will remain equally shared between NRCan and ECCC, with each department reporting its shares in its respective RPP and DPR.

Alignment of Spending With the Whole-of-Government Framework

Alignment of 2016-17 Planned Spending With the Whole-of-Government Framework^{Footnote [x]} (dollars)

Strategic Outcome	Program	Spending Area	Government of Canada Outcome	2016-17  Planned Spending
1. Canada’s Natural Resource Sectors are Globally Competitive	1.1 Market Access and Diversification	Economic Affairs	Strong Economic Growth	43,993,476
	1.2 Innovation for New Products and Processes	Economic Affairs	Strong Economic Growth	96,074,981
	1.3 Investment in Natural Resources Sectors	Economic Affairs	Strong Economic Growth	62,900,219
	1.4 Statutory Programs – Atlantic Offshore	Economic Affairs	Strong Economic Growth	743,336,158
2. Natural Resource Sectors and Consumers are Environmentally Responsible	2.1 Energy-efficient Practices and Lower-carbon Energy Sources	Economic Affairs	A Clean and Healthy Environment	183,336,817
	2.2 Technology Innovation	Economic Affairs	A Clean and Healthy Environment	115,838,434
	2.3 Responsible Natural Resources Management	Economic Affairs	A Clean and Healthy Environment	29,619,508
3. Canadians have Information to Manage their Lands and Natural Resources, and are Protected from Related Risks	3.1 Protection for Canadians and Natural Resources	Social Affairs	A Safe and Secure Canada	57,808,743
	3.2 Landmass Information	Social Affairs	A Safe and Secure Canada	75,092,662

Total Spending by Spending Area (dollars)

Spending Area	Total Planned Spending
Economic affairs	1,275,099,593
Social affairs	132,901,405
International affairs	-
Government affairs	-

Departmental Spending Trend

Text Version

Departmental Spending Trend Graph

The table below illustrates the departmental spending trend, in dollars, for the period 2013-14 to 2018-19.

	2013-14	2014-15	2015-16	2016-17	2017-18	2018-19
Sunset Programs - Anticipated	0	0	0	73,423	145, 665	120, 093
Statutory	875,351	893,906	557,741	796,717	814,225	858,139
Voted	1,233,694	1,155,512	928,813	795,802	606,196	559,667
Total	2,091,045	2,049,419	1,486,554	1,665,941	1,566,086	1,537,900

For fiscal year 2013-14 and 2014-15, spending represents the actual expenditures as reported in the Public Accounts. For fiscal year 2015-16, spending represents forecasted expenditures as of the end of November 2015. For the period 2016-17 to 2018-19, spending reflects approved funding by Treasury Board to support the departmental strategic outcomes as well as anticipated renewals of some programs sunsetting during this period. Anticipated renewals are included in order to give a more reasonable picture of the future of the department, however these are subject to government’s decisions to extend, reduce or enhance funding. Outcomes of such decisions will be reflected in the Department’s future budget exercises and Estimates documents. The figures for anticipated renewals are not included in any other tables within this document.

As indicated in the chart above, NRCan’s forecasted spending for 2015-16 is $1,487 million, a decrease of $604 million, or 29%, from 2013-14 spending of $2,091 million. This decrease is mainly due to:

• A decrease in statutory payments pursuant to the Atlantic Offshore Petroleum Accord Acts. Under these Acts, the revenues (e.g., royalties) from offshore resources are collected by the Receiver General for Canada. Once collected, NRCan transfers a like amount to Newfoundland and Labrador or Nova Scotia. Royalty revenues, in particular, are a function of variables such as international crude oil prices and offshore oil and natural gas production and costs that fluctuate depending on global commodity markets. Correspondingly, the transfers are subject to equivalent variations in any given period.
   
• New initiative which began in 2015-16:
  • Federal Infrastructure
• A decrease in program spending:
  • Nuclear Legacy Liabilities Program⁴
  • Port Hope Area Initiative⁵
  • Medical Isotopes
  • Windpower Production Incentive
  • ecoENERGY for Biofuels
  • Forest Innovation and Expanding Market Opportunities
• The sunsetting of the following programs in 2014-15:
  • Clean Energy Fund
  • Satellite Stations Revitalization

As indicated in the Budgetary Planning Summary for Strategic Outcome(s) and Program(s) financial table, NRCan’s planned spending for 2016-17 is $1,593 million, an increase of $106 million, or 7%, from 2015-16 forecasted spending of $1,487 million. This increase is mainly due to an increase in statutory offshore payments offset by the transfer of responsibility of the Nuclear Legacy Liabilities Program and Port Hope Area Initiative to AECL and slightly offset by the sunsetting and year-over-year variability in the funding profile of various programs.

For the explanation on variances in planned spending between 2016-17 and 2018-19, please refer to the analysis included in the previous Planned Expenditures section.

Estimates by Vote

For information on NRCan’s organizational appropriations, consult the 2016-17 Main Estimates on the Treasury Board of Canada Secretariat website.^{Footnote [xi]}

⁴While the funding profile of the Nuclear Legacy Liabilities Program and Port Hope Area Initiative have been decreasing, a government decision has rendered the transfer of responsibility over these programs to AECL; therefore, the reference levels for these initiatives will be completely transferred to AECL as of fiscal year 2016-17.

⁵ Idem.