Environmental Scan - Briefing Binder for CER Appearance at the House of Commons Standing Committee on Natural Resources

Summary of Recent Related Parliamentary Debate

Key Takeaways Regarding TMEP/CER from the Minister of Energy and Natural Resources' Testimony on the 2024-25 Main Estimates (May 6, 2024)

Bloc Québécois Line of Questioning:

  • Inquired about the cost overruns of the Trans Mountain Expansion (TMX).
  • Minister emphasized TMX's importance in ensuring Canada receives a fair price for its resources.

NDP Line of Questioning:

  • NDP expressed concerns that TMX's pipeline expansion would increase production from 300,000 to 900,000 barrels per day, resulting in heightened emissions from the oil and gas sector.
  • Minister clarified that the expansion increases capacity, not production, and all emissions are factored into forecasts.
  • NDP argued that increased capacity would inevitably lead to increased production.
  • Referenced the International Energy Agency's warning against government investments in oil infrastructure due to stranded assets.
  • MP Charlie Angus (NDP) made explicit references to the CER's analysis regarding toll fees.
    • “What we've been told from the energy regulator and from analysis is that it would be too expensive. The toll fees would be too high to pay off the cost. Those toll fees have been capped at 22%, which means that the public is going to pick up 78% of every barrel going through the pipeline”
    • “Are we going to be on the hook for the toll fees for every single barrel that goes through there? The CER, the Canada Energy Regulator, says we're going to be paying 78% per barrel of the cost.”
    • Minister: “That's actually not what the CER said. The Government of Canada doesn't intend to be the long-term owner of the pipeline. We do intend to sell it and we believe that we will recoup the money that the Government of Canada has invested in the pipeline.”

The other parties did not raise TMX with the Minister at this time.

Summary of First-Time Debate on the Motion at Committee (May 23, 2024)

NDP Comments:

  • The Motion was originally moved by MP Charlie Angus (NDP Natural Resources Critic)
  • Criticizes the Government's decision to proceed with the TMX due to the absence of a viable business case and its potential environmental harm.
  • Highlights the significant cost overruns for a project benefiting the profitable oil and gas industry, an industry that is already negligent to reducing emissions.
  • Argues that TMX contradicts emissions reduction goals.
  • Believes there is no way any company can use TMX unless it is heavily subsidized because of the costs of bitumen transport it will not be worth it.
  • Cites CER’s estimation that 78% of every barrel's cost will fall on taxpayers.
  • Expresses concern over the possibility of the pipeline being handed to corporations, burdening taxpayers.
  • Wishes to ask questions along the lines of; Why were these decisions made? What is the plan for GHG emissions?

CPC Comments:

  • Questions the government’s expenditure on TMX, suggesting that the private sector, which could have completed the project at a far lower cost, was forced to abandon the project due to uncertainty and delays caused by overregulation.
  • Advocates for Investment Tax Credits (ITCs) to enhance competitiveness vis-a-vis the United States.
  • Calls for realistic and affordable objectives to compete with the US, rejecting a subsidy race.
  • Criticizes federal regulations and taxes as anti-competitive and unaffordable, burdening taxpayers.
  • Asserts the presence of a viable business case for the TMX project on its own but it was undermined by government-imposed delays and conditions, forcing the Government to have to buy and complete the pipeline expansion.
  • Discusses the SCC ruling re: Impact Assessment Act, resulting in further uncertainty or clarity for private sector proponents.
  • Taxpayer burden undermines public interest.

BQ Comments:

  • Supports the motion.
  • Notes inconsistency in the government's approach to TMX.
  • Expresses concern over perceived contradictions in funding oil and gas while promoting fossil fuel development.
  • Shares NDP's concern over subsidies to oil and gas corporations amidst financial challenges for Canadians.

LPC Comments:

  • Expresses interest in discussing TMX's impacts on Canadian communities, advocating for the inclusion of diverse community perspectives.
  • Highlights the importance of regulatory frameworks for energy transition discussions.
  • Emphasizes the importance of studying electricity as part of a cleaner grid transition, citing Ontario's shift from coal to electricity.
  • Recognizes the challenges of the final 16% of the energy transition and proposes discussion on electricity grid implications.

Transcripts or recordings of subsequent debates on the motion are not yet available.

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Environmental Scan – Excerpts of Public Statements by First Panel Witnesses on TMX

Canadian Association of Petroleum Producers (CAPP)

  • “The completion of the Trans Mountain Expansion Project promises to deliver economic, social, and geopolitical benefits to Canada. With improved access to global markets, Canadians can look forward to receiving higher value for our energy resources, meaning more money coming back into the economy. This contributes to our GDP, which enhances every Canadian’s buying power and quality of living standards – not to mention supporting more government revenues, jobs and opportunities for Canadians to prosper. The project also excelled in its commitment to meaningful public engagement and Indigenous participation. The project employed over 3,000 Indigenous workers, nearly $5 billion was spent with Indigenous suppliers and contractors, and has delivered more than $580 million in benefits-sharing arrangements with 69 Indigenous communities. As the world undergoes rapid and sometimes violent geopolitical realignments, safe and reliable oil and gas supplies will be a priority for governments for years to come. The completion of the Trans Mountain Expansion will help Canada play an enduring strategic role in ensuring our allies and trading partners have access to a reliable and trusted source of critical energy.” – May 1, 2024 (https://www.capp.ca/en/media/capp-statement-on-the-trans-mountain-expansion-project/) - Lisa Baiton, CAPP President and CEO
  • “A lack of new pipeline takeaway capacity in recent years has ultimately limited the export potential for Canadian crude oil. The Trans Mountain Expansion Project (TMEP) increased Canadian oil exports to the US West Coast. TMEP also presents an opportunity to ship oil to Japan, India, and SE Asia.”
  • “The Trans Mountain Expansion Project (TMEP) is in service as of Q2/2024 and added ~590 MB/d of egress capacity, marking a major milestone for Canadian oil producers and providing tidewater access to new markets.” (https://www.capp.ca/en/capp-data-centre/)
  • CAPP believes the approval process in Canada, partly due to the Impact Assessment Act, is one of the slowest among its peers and thus detracts investment.
  • Desire to amend the IAA, further than the Government’s proposed amendments in C-69, in order to provide constitutional clarity, streamline the approval process, and increase predictability (https://www.capp.ca/wp-content/uploads/2024/06/IAA_submission.pdf)

Environmental Defence

  • “Ministers Chrystia Freeland and Mary Ng have just approved a giant new fossil fuel subsidy: a $10 billion loan guarantee for the Trans Mountain pipeline. This will put even more taxpayer dollars on the line for a federally owned project that has clearly become a financial boondoggle, as the costs keep ballooning. It’s another broken promise from a government that committed to end fossil fuel subsidies. Instead of spending billions on a fossil fuel pipeline that will further fuel the climate crisis, the Government of Canada should be ensuring a safe future by investing in climate solutions.” (May, 2022)
  • “The Canadian Energy Regulator’s analysis shows that Canada’s oil export needs can be met with existing capacity, making additional pipelines unnecessary- including the Trans Mountain Expansion pipeline.” (https://environmentaldefence.ca/2022/05/11/statement-from-julia-levinnational-climate-program-manager-on-the-new-subsidy-for-trans-mountain-pipeline/)

Pathways Alliance

  • Pathways Alliance president Kendall Dilling says the Trans Mountain pipeline is a case study in how hard it can be to get major infrastructure projects across the finish line in this country.
  • The Pathways Alliance recently began filing regulatory applications for its formative carbon capture project. Pathways has said the project could help its member companies achieve a 32 per cent reduction from 2019 emissions levels by 2030.
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Environmental Scan – Media Scan

Media Environmental Scan

Purpose:

To provide background information on the current media environment to the CEO, EVP Transparency and Strategic Engagement, and EVP Regulatory before their appearance at the House Natural Resources Committee on June 17, 2024, regarding the study of the Trans Mountain Expansion Project.

Summary

The Trans Mountain Expansion continues to receive substantial media coverage in Canada, with a particular focus on the costs associated with the project, its potential sale and its impact on global markets. The quality of the crude oil shipped on the pipeline has also emerged in media coverage this week, with US West Coast refiners voicing concerns about the vapour pressure limits and asking that the CER narrow the pipeline's technical specifications. While much of the focus has been on Trans Mountain, the CER itself has not been a focus of the vast majority of the articles over the past three weeks.

Throughout May and June 2024, the House of Commons’ Question Period has focused on topics concerning Canada's environmental and energy policies. These discussions have highlighted the financial and environmental controversies surrounding the Trans Mountain Expansion, including its costs to taxpayers and the need for a balanced approach towards economic benefits and transitioning to green energy. Legislative debates touched on budgetary considerations for energy sectors, criticisms of the government's investment priorities, and the need for greater accountability in sustainable technology initiatives. Concerns were raised about the legal and regulatory challenges posed by Bill C-69, the safety risks associated with the pipeline expansion, and environmental issues. Additionally, the significant cost overruns of the Trans Mountain Expansion Project underscored concerns about fiscal responsibility and efficiency under the Liberal government.

Trans Mountain articles for awareness

Political Responses/ Legislative Debates
Potential Technical Specification Challenge
Sale of Trans Mountain
Exports/Economic Impact/Global Markets
Regulatory Delays
Oil Price/Differentials
Budget/Cost Overruns
Opposition /Indigenous Rights
Environmental
Climate Change/Carbon Pricing
Project Completion
Future Project Development

Recent GoC news releases

Department of Finance

CPAC summary of Question Period

  • Quoting CPAC | 06/13/24: “The government's $34 billion investment in TMX is criticized for severe cost overruns, making it economically unviable for oil companies due to high toll charges. The CER has capped these tolls, but plans to increase them to nearly 50 cents per dollar raise further concerns. Critics argue that the Conservatives' approach, which includes voting against economic measures like capital gains increases, ignores the need for sound financial strategies to fund future technologies. This situation highlights the challenges in managing and financing large-scale energy projects in Canada effectively.”
  • Quoting CPAC | 06/13/24: “The oil industry, including Imperial Oil, is set to achieve record production levels with an increase of 500,000 barrels a day of high-emission raw bitumen, raising concerns about its environmental impact and financial burden on taxpayers. MPs discuss concerns over the Trans Mountain Pipeline's impact amid record oil production. Critics highlight the pipeline's role in facilitating increased extraction of heavy bitumen, a major emitter of greenhouse gases. They argue that despite carbon pricing policies aimed at reducing emissions, the industry shows little commitment to emission cuts. The pipeline expansion is seen as enabling further growth in high-emission fuel production, raising doubts about the effectiveness of current environmental regulations and the allocation of costs to taxpayers.”
  • Quoting CPAC | 06/09/24: “The discussion revolves around the renewal of the Trans Mountain project, which originally cost $7.3 million and is deemed critical for ensuring Canada receives fair compensation for its resources while acknowledging the need for an energy transition plan as part of the broader strategy to combat climate change. This transition emphasizes the importance of current resources for the next 20 to 30 years.”
  • Quoting CPAC | 06/09/24: “hybrid meeting addressed budgetary matters for several entities, including Vote 1 under the Canadian Energy Regulator (CER), Votes 1, 5, and 10 under the Canadian Nuclear Safety Commission, Vote 1 under the Department of Natural Resources, and the Northern Pipeline Agency.”
  • Quoting CPAC | 06/06/24: “During a parliamentary debate, the Honourable Member for SaintJean criticized the government for favouring oil and gas investments, notably the Trans Mountain pipeline, over green transitions. Additionally, the Honourable Member for Windsor West, backed by the member from Edmonton, advocated for a motion to enhance accountability and transparency in sustainable technology initiatives.”
  • Quoting CPAC | 05/29/24: “motion aims to send a legislative bill back to the Standing Committee on Natural Resources for revisiting specific clauses, due to concerns that they echo the contentious provisions of Bill C-69, which led to the creation of the Impact Assessment Act and the Canadian Energy Regulator Act. This action seeks to ensure clarity and prevent the introduction of unforeseen regulatory burdens reminiscent of the changes brought about by Bill C-69.”
  • Quoting CPAC | 05/28/24: “Discussion around the need to pause the progress of legislative amendments concerning the Atlantic Canada Treaty Accord offshore, specifically Clauses 61, 62, 169, and 170, until the Standing Committee on Natural Resources reviews them. This is to ensure there are no conflicts or uncertainties with Bill C-69, which includes the Impact Assessment Act and the Canadian Energy Regulator Act, and to prevent issues arising from new regulatory conditions.”
  • Quoting CPAC | 05/27/24: “The motion suggests that Bill C-49, amending energy-related laws, be reviewed to resolve ambiguities overlapping with Bill C-69, which introduces new standards via the Impact Assessment Act and the Canadian Energy Regulator Act. This is to ensure that unforeseen requirements beyond current legislation are addressed.”
  • Quoting CPAC | 05/24/24: “NDP MP questions the expansion of the Trans Mountain pipeline by the Liberals, noting increased tanker traffic sevenfold in Burrard Inlet, raising concerns about potential evacuation and health risks due to spills. The government is criticized for lacking a safety plan, prompting questions on how they intend to protect Canadians from a catastrophic event.”
  • Quoting CPAC | 05/23/24: “Discussion highlights the responsibility of the CER in ensuring pipeline safety and efficiency, and addresses the ongoing mercury poisoning crisis in Grassy Narrows due to corporate negligence. Governmental action is urged to rectify the situation and hold the responsible parties accountable.”
  • Quoting CPAC | 05/21/24: “Discussion around TMEP’s decade-long completion and cost overrun from $7 billion to $34 billion under the liberal government has raised significant concerns about efficiency and fiscal management.”
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