Unclog the Pipeline Process

Journal: The Globe and Mail
Friday, Mar. 02, 2012
By Joseph Doucet

Ottawa says it plans to reform this review process, but it must do more than work on process: The federal government must be clear about which issues should be dealt with by regulators and which by politicians and policy-makers. Hard decisions on energy or environmental policy should not be shunted to regulators. A review process should focus on project-specific issues.

Delay is one thing, and a prescribed timeline for each stage of the review process – as suggested by Natural Resources Minister Joe Oliver – may indeed expedite reviews. But more fundamental is the basis on which the National Energy Board makes its decisions and what issues should have standing at a regulatory hearing. Any pipeline proposal that crosses provincial, territorial or international borders must receive NEB approval before construction. The board’s mandate – set by Ottawa – is to make regulatory decisions in Canada’s public interest. The question remains how to apply it in practice.

Northern Gateway proponents, for example, say the NEB should approve it because it connects Canada’s oil producers to strategic markets in Asia. Opponents are concerned about the greenhouse-gas emissions that would result from the oil sands production that eventually would flow through the pipeline.

But these issues have little to do with the pipeline itself. Although they may be significant, such as employment benefits, energy security or first nations sovereignty, they go beyond the scope that a regulator should address.

Instead, the NEB should focus on the project-specific concerns of a pipeline proposal. Questions of public interest to the regulator would include the likelihood of a spill and the steps a company must take to reduce that potential harm. These are legitimate environmental questions the NEB may want pipeline proponents to answer when deciding whether the pipeline is in the public interest.

Hence, Ottawa should determine which issues should be within the purview of regulators and which should rest with federal or provincial parliaments. Broader societal issues should be left to the representatives of all Canadians: MPs.

For example, under a cap-and-trade emissions program – a policy Ottawa has the power to implement – a firm that built a greenhouse-gas-emitting oil sands project enabled by a pipeline would be required to buy emission credits from a holder of such credits. The net emissions balance would remain neutral, and the regulatory decision on building a pipeline would have no net effect on Canadian emissions.

Environmentalists have legitimate concerns over the oil sands. But the best forum for dealing with this broad issue is in Parliament, not in a pipeline regulatory review. In the absence of a credible government policy dealing with greenhouse-gas emissions, advocates for their reduction likely will oppose any project that could lead to incremental emissions.

Unless Ottawa clarifies the NEB’s role and takes on the task of dealing with society-wide matters, the public debates over pipeline reviews will continue to re-emerge at regulatory hearings. Such debates are essential. But they’ll hold more meaning if held in the right forum, where those debating the issues have the power to enact the resolution.

Joseph Doucet is interim dean of the Alberta School of Business at the University of Alberta. His C.D. Howe Institute paper Unclogging the Pipes: Pipeline Reviews and Energy Policy is available at www.cdhowe.org.