Hey there, time traveller!
This article was published 17/8/2016 (364 days ago), so information in it may no longer be current.
The extended controversy over the proposed Energy East pipeline reveals fatal flaws in how we collectively decide on the benefits and costs of resource megaprojects.
With the collapse of oil prices, Canadians can see how natural resources support our standard of living. Recent estimates from Statistics Canada suggest this sector underpins 20 per cent of the country’s GDP and 1.8 million jobs, most of which link to export markets.
With the increasing activity of politicians, with advocacy groups inside and outside Canada, and with aboriginal interests now having won recognition by the Supreme Court, the stakes have become too high to trust conventional politics to determine the fate of megaprojects such as Energy East.
Most importantly, who speaks for the vast majority of us who watch from the sidelines? Canada desperately needs an independent process to search for the social licence to develop these projects.
Historically, social licence referred to the "permission" received by mining companies in developing nations to engage in resource extraction and major infrastructure activities. Now, the definition of social licence has morphed into the idea all "stakeholders" must reach a consensus on the advisability of any resource development. Little wonder, then, stasis has become the norm.
The federal government has taken steps to improve management of resource development. The Canadian Environmental Assessment Act (CEAA 2012) created an expedited project review process to ensure timely assessment of any "large" project’s adherence to federal environmental regulations. Canada created the Major Projects Management Office (MPMO) to support this review process.
However, with the growing number of parties seeking a voice in the consultation and its federal focus, it is hard to see how the MPMO can expedite or even bring to closure the approvals needed for large-scale projects such as Energy East or Ring of Fire, the massive mineral resource plan for Northern Ontario.
There are two core challenges in developing social licence for a resource project. First, who should be involved — that is, who has standing in that process? Second, how can one expedite the review of natural resource projects while managing environmental risk?
The resource developer (specifically, the shareholders in the company) as well as federal and provincial governments will always be at the table. The courts have also determined aboriginal communities must be included as "governments" when projects encroach on their lands.
Deciding who else should have standing now becomes more challenging. Residents who stand to gain or lose directly from the development must be involved.
In the Northern Gateway decision process, the Kitimat town council held a referendum of residents, who rejected the siting of the pipeline port facilities within the municipal limits. Since any accident resulting from the project has the potential to affect lives and livelihoods directly, those living close to such developments need to be included in the social licence process.
But should any group have a veto? Could a process of financial compensation mitigate the perceived risks to residents? A social licence process could address these questions.
Canadian citizens and taxpayers must also have standing. We share in the benefits of resource development, and taxpayers will also likely pick up some of the costs in the event of a major environmental accident.
Increasingly, the environmental lobby wades into the debate on specific projects, typically stressing the risks associated with development. Simultaneously, think tanks weigh in on the economic costs and benefits. The result is a din of diverse opinions that create confusion and disengagement.
Governments must do three things to restore the integrity of resource development review.
• First, we need a universally respected intuitional structure to support these deliberations. With the hiatus in energy development, governments have an opportunity to develop structure now, balancing speed with the comprehensiveness of review. This structure must reach the stature of other key institutions such as the Supreme Court and Statistics Canada, and it must be clean of political fingerprints.
• Second, in addition to economics, membership in the group of vested stakeholders rests on legal/constitutional principles, the degree of exposure to proximate risk, and the capacity to halt projects legally and/or politically. Governments must define a framework for identifying the vested stakeholders and work through the inevitable court and political challenges as it develops that group.
• Finally, the government must invest in good public science and support the knowledge translation to ensure all Canadians receive an independent and current understanding of the benefits and costs arising from any natural resource project. We have a long way to go to restore trust in public science and overcome the damage of the past decade.
These are daunting tasks. Decisions emerging from any resource development review must have the gravitas to command the respect of all Canadians. Without a new process for reaching social licence on resource development, we will continue to endure the lowest-common-denominator outcome.
www.gregorymason.caGregory Mason is an associate professor of economics at the University of Manitoba and a senior consultant at PRA Inc. His views are his own.