Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Wednesday, May 23, 2012

Why did Harper change the resource review regime?

Five years ago, a senior executive with a Chinese oil company voiced his frustration with Canada's regulatory system, saying it took too long for projects like pipelines to get up and running.

"Here you need a very long time," Yiwu Song, vice president of CNPC International Limited, a subsidiary of the state-owned China National Petroleum Corporation, was reported as saying in an Oilweek article at the time.

"It takes three years just to start up a pipeline. The situation keeps changing. We're fed up already," he continued.

His comments came at the sidelines of an oil sands forum. At the same time, Mr. Song said the company would scrap plans to get involved in Enbridge Inc.'s Northern Gateway project.

"The first thing when he finished his talk, I got a phone call from the Enbridge vice-president at the time saying...'Can you explain what's going on here?'" said Wenran Jiang, a senior fellow with the Asia Pacific Foundation of Canada.

An article in the Globe and Mail cited Mr. Song saying there had not been much progress on the Gateway project due to a lack of support from the government and companies.

Five years later, there is a flurry of activity in Canada with the federal government actively promoting a new plan for resource development—one that is at the centre of an erupting debate over the future of the country's approach to the environment.

The new system, being brought in by the government's omnibus budget bill, will see a shift in responsibility as the government makes only three bodies—the Canadian Environmental Assessment Agency, the National Energy Board and the Canadian Nuclear Safety Commission—responsible for reviews, eliminating the responsibility of dozens of others.

The types of reviews for pipelines or mining projects, for example, will be limited to a standard environmental assessment or a review panel. A 365-day timeline would be set for standard environmental assessments. For other reviews, it would be 24 months for projects under the Canadian Environmental Assessment Act and 18 months for projects under the National Energy Board Act.

Opponents of the changes like Stephen Hazell, a University of Ottawa professor and an environmental lawyer, say the government is reverting back 30 years to when there was "no real law governing or requiring that the government look at the environmental effects of projects."

But the government says it wants a review system that provides "predictable, certain and timely reviews, reduced duplication, strengthened environmental protection and enhanced Aboriginal consultations."

How much Mr. Song's comments were a result of a chill between Canada and China at the time, and whether the Harper government was listening to foreign governments like China's, and to what degree, all remain intriguing mysteries—and fiercely debated amongst observers and former Harper government officials.

Some observers suggest Mr. Song's comments could have had some kind of an influence on the government's decision to change its regulatory review process.

But they also say other factors were likely at play, possibly outweighing Mr. Song's influence.

For example, David Collyer, president of the Canadian Association of Petroleum Producers, says the system has been a long-standing issue for a lot of the business community in Canada. Others point to a host of other stakeholders who have voiced concerns as well.

Mr. Song's comments also echoed a general sentiment within Asian countries, many suggested. And still others argue that Canada does not make its rules based on what outsiders say.

The Asian factor

Some say Mr. Song's comments could have had some influence—but portray his remarks as reinforcing an emerging view within business and Western Canada that China and the rest of Asia were part of Canada's energy future, and its economic prosperity.

Stockwell Day, the former Conservative Asia-Pacific Gateway minister, holds this view. He said that during his time in office, the government developed its regulatory process based on Canada's needs, and not whether they were being pressured by outside forces. He said it's likely the same for the Harper government today.

But he said when people voice such concerns, it helps those who see the process as inefficient.

"It helps us to make that argument to say we're basing the concerns on fact, not just on speculation that our processes are too clumsy," Mr. Day said.

"Our policy is not going to be formed based on what outside sources are telling us to do, but it does inform our thinking when we clearly recognize the demand is there."

Ron MacIntosh, a former head of trade policy at the Canadian Embassy in Japan, agreed.

"I wouldn't want to say that individual had a titanic influence on anything specific Conservatives may have done, but a lot of foreign investors and domestic investors have complained about [this]," said Mr. MacIntosh, who is now a research associate at the University of Alberta's China Institute.

Sometimes these investors complain about environmental assessments, but there seems to be some consensus that having overlapping processes at different levels of government and taking a long time to get things done was not in the interests of Canada or investors, he said.

John Gruetzner, vice-chairman of Intercedent, an Asian-focused investment advisory firm, said Mr. Song's comments shouldn't have had much of an impact because—specifically relating to the Enbridge project—Canada had the ability to raise capital itself if needed.

"China does not believe in interfering in other people's environmental policies, and...it's not consistent with the practices in their own country that is comparable for longer timelines," he said.

Meanwhile, Mr. Jiang outlined numerous other factors that likely led the government to make these changes.

One was the controversy surrounding TransCanada Corporation's proposed Keystone XL pipeline last year, which US President Barack Obama blocked at the beginning of 2012. Then there was the potential decrease in US demand for Canadian oil and gas.

With the expected expansion of Canada's oil lands, this could mean that Canada is left with a surplus and potentially no market, which brings to the forefront the idea of more ties with Asia, he said.

"To sustain continuous economic development, we need Asian investment and Asian investment can be further stimulated by having the access to the West Coast, and therefore export oil to Asia," Mr. Jiang said.

"I think these combined together with the desire by Asian and other markets to have infrastructure to the West Coast has pushed government to speed up the reform process."

Mr. Jiang also said Mr. Song made his comments during a chilly period between Canada and China.

"He basically expressed some frustration, he was not particularly blaming the Enbridge people, but rather he was more targeting the federal government, which pursued a policy that was unfriendly towards China," said Mr. Jiang, who helped organize the forum at which Mr. Song spoke.

Mr. Jiang said the Chinese did not invest much between 2006 and 2009, and while several issues like high labour costs or the regulatory regime might have played a factor, the primary reason was relations between the two countries.

Relations started to warm up in 2009, and he said even though there hasn't been a dramatic change in the regulatory regime, the Chinese have invested about $16 billion into Canada's energy sector in the past two-and-a-half-years.

During Mr. Jiang's visits to China, he found that there was a desire for Canada to speed up its infrastructure processes. But China isn't the only country wanting to see this.

"The Koreans, the Japanese, they all have expressed a desire for Canada to speed up infrastructure projects, the kind of perception that the Chinese are pressuring Canada is not correct," he said.

"The Asian market is more than just the Chinese market and there's huge potential for Japan, South Korea to benefit, they all have expressed a desire for Canada to speed up."

Mr. Day, now a senior strategic advisor at McMillan LLP, said it is not uncommon for him and his colleagues to hear concerns from Asian countries about Canada's review process.

Several Asian countries have been moving toward higher standards of living in the past decade, and projects offering energy sources to them are currently in demand, he said.

"Not just China and India, but Vietnam, Malaysia, as the needs of these areas become more acute, we hear these comments more," he said.

Embassy attempted to contact Mr. Song's at his company, as well as the Chinese Embassy in Ottawa, but neither could respond by press time.

Domestic concerns

Mr. MacIntosh said he thought a lot of the pressure came from within Canada, but that foreign investor comments reinforce domestic industry concerns.

"If it's a foreign investor, whether it's American, European, Chinese or Japanese, and there's no Canadian sources saying the same things, then it's just seen as foreign meddling; however, when it's in conjunction with very similar interests in Canada, as I believe this is, then it does reinforce that message."

In its March 29 budget, the Conservative government stated it has been working to "streamline" the review process for big economic projects.

There have been some smaller changes over the years, said Brenda Kenny, president of the Canadian Energy Pipeline Association.

For example, they worked with the government to develop a standard for watercourse crossings about five years ago, since they are frequently encountered when building pipelines. They are now looking to update that.

"So if we are going to do a construction, that way we don't need a permit again and again, because we already know what we're doing, [the government] already knows what we're doing," Ms. Kenny said.

In addition, there has been a very strong push for changes to the regulatory system from a wide range of industry sectors, including the oil and gas and mining industries, Mr. Collyer said. He pointed to other engaged groups such as the Canadian Chamber of Commerce and the Canadian Council of Chief Executives.

"The lack of competitiveness in the regulatory system in Canada has been widely recognized by a broad diversity of industry sectors across the country, not just in Western Canada and not just the oil and gas sector," he said.

Mr. Collyer himself has been involved in such discussions for about five years.

Natural Resources Minister Joe Oliver wrote in an email to Embassy that he has traveled across the country consulting with different groups and that stakeholders often said there was a need for "system-wide reform."

For example, provinces wanted a "one project, one review" approach and Aboriginal groups wanted a simplified consultation process for reviews, he wrote.

Ms. Kenny noted that duplication of reviews between different government bodies has been a concern "for a very, very long time."

Timelines for reviews have been "all over the map" and have increasingly been a concern, she argued.

The government has often cited a project proposed by Areva Resources Canada as one that faced delays. The 2012 budget stated that the start of an environmental assessment for the project, which proposed construction and operation of a uranium mine in Saskatchewan, faced a 19-month delay.

But Mr. Hazell cited some other projects and said often the regulatory process isn't the reason for the delay in getting projects approved. Sometimes the proponents aren't ready and don't have the proper documentation, other times it is due to "squabbling within federal departments."

Ms. Kenny said energy, environment and the economy are an interconnected system and that various stakeholders have voiced their concerns about the current regulatory system.

"Certainly pressure from inside Canada would have been voiced by many stakeholders in many regions and similarly pressure from outside Canada would have been voiced."

Original Article
Source: embassy mag
Author: Sneh Duggal

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