Government to slim environmental tests for big projects

Tue Mar 27, 2012 12:24pm EDT
 
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By David Ljunggren

OTTAWA (Reuters) - In a move set to help the oil industry, Canada's Conservative government will unveil new rules this week designed to cut the time it takes for environmental assessments of major energy and industrial projects.

The government says the current complex system of regulations means it can take far too long to approve pipelines and mines, thereby putting at risk up to C$500 billion ($505 billion) in new investment over the next 10 years.

Beneficiaries could well be Enbridge Inc and Kinder Morgan Energy Partners, which are both seeking to build pipelines from the oil-rich tar sands of northern Alberta to the Pacific Coast, where tankers would take crude to booming Asian markets.

Critics charge the government's approach will relax standards and could help trigger an environmental calamity.

The federal government's budget this Thursday will outline moves to simplify what Natural Resources Minister Joe Oliver calls "a needlessly complex, duplicative regulatory system".

Ottawa shares responsibility for regulation with the country's 10 provinces, which means some major projects are examined twice. Often lengthy public hearings into proposed mines and pipelines can drag out the approval process for years.

"The system should not take years and years to review a project. It's possible to make regulatory decisions in a reasonable amount of time without compromising the rigor or the standards of the process," Oliver said on Tuesday.

"Our ultimate goal is simple but not necessarily easy to achieve: one project, one review, in a clearly defined time frame," he told the House of Commons natural resources committee.

Ottawa is particularly keen to speed up development of the Alberta tar sands, which contain 170 billion barrels of crude and are the world's third-largest oil resource.

Oliver says the sands could contribute C$3.3 trillion to Canada's gross domestic product over the next 25 years and describes the current regulatory regime as "a huge disincentive to investment in a highly competitive market for capital".

Green activists, who oppose all-out tar sands development on the grounds that extracting oil from the clay-like bitumen is very energy-intensive, say streamlining the rules is a bad idea.

Stephen Hazell, an environmental lawyer who specializes in the regulatory process, said he was concerned by indications Ottawa would cut the number of projects that must be automatically assessed and instead give ministers more of a say.

"Bad things happen if you just let the engineers and the politicians do their little thing together," he told Reuters.

The government has two targets: rules that require many projects to be assessed for their possible impact on fish habitat, and a public hearing process that allows thousands of people to make comments.

This month retired federal fisheries biologist Otto Langer said he had been leaked a confidential copy of the proposed changes and that they would remove all references to fish habitat from the federal act used to assess environmental risks.

Given the sheer number of lakes, rivers and streams in Canada, a major project such as a pipeline is bound to have some effect on fish habitat.

"This proposed move ... is a travesty for our fishery resources and the health of the entire ecosystem and it ignores the needs of our future generations," Langer said. The government said no decision had yet been taken on possible changes.

Oliver is also unhappy about the time it takes Canada's federal energy regulator to study projects. Thousands of people - some encouraged by environmental organizations - are scheduled to comment on Enbridge's proposed Northern Gateway pipeline from Alberta to the Pacific Coast.

"We have got to make sure the actual review ... is pragmatic and doesn't risk getting hijacked by people who are just interested in extending the delay with the ultimate objective of seeing the projects economically undermined," Oliver told Reuters late on Monday.

He points to the seven years it took to approve Imperial Oil Ltd's Mackenzie Valley Arctic gas pipeline project as an example of what he wants to avoid.

By the time the final permits arrived, costs had soared and other cheaper sources of gas had been discovered. Work on the pipeline never started.

"We agree with the minister that the regulatory framework and the approach needs to be revised for major energy projects," Imperial chief executive Bruce March told Reuters.

($1=$0.99 Canadian)

(Additional reporting by Scott Haggett and Jeffrey Jones in Calgary and Julie Gordon in Toronto; Editing by Peter Galloway)