Haisla Nation Chief Councillor Crystal Smith during a press conference announcing that the Cedar LNG project has been given environmental approval in Vancouver, on March 14.Rich Lam/The Canadian Press
Canada’s reputation as a good place to do business is suffering serious damage, as the fate of resource projects are determined by the whims of politicians.
It is not enough for promoters of multibillion-dollar projects in Canada to meet among the most stringent environmental and social criteria on the planet; their projects are doomed if they do not fit the particular narrative the politicians seek to spin.
Ottawa’s approval last month of the Cedar LNG project in British Columbia should not fool anyone. The $3-billion liquefied natural gas project co-owned by the Haisla Nation and Pembina Pipeline is an exception in an otherwise hostile political and regulatory environment for resource projects. Cedar is a relatively small undertaking that provides a model for Indigenous ownership that advances efforts toward reconciliation.
Unfortunately, the same goodwill politicians displayed toward Cedar has not been extended to other LNG projects in Canada. Instead of expediting such projects amid Europe’s scramble for alternatives to Russian natural gas and efforts to wean Asian economies off coal, federal and provincial politicians find excuses to change the subject.
In the face of this political obtuseness, Pieridae Energy Ltd. PEA-T and Repsol SA REPYF recently abandoned proposals to ship natural gas from Western Canada to LNG terminals in Atlantic Canada. That followed a decision by the promoters of GNL Québec to give up.
“Comparing the U.S. to the Canadian response to Europe’s energy crisis, it is hard not to conclude that Canada is failing to capitalize on its natural gas deposits,” a Canadian Chamber of Commerce report said this week. “This hurts Canada’s economy, global reputation and allies, as well as the global environment since countries in need of energy often choose dirtier fuel sources whose carbon is not subject to a price regime.”
When German Chancellor Olaf Scholz came calling on Canada last year to supply gas to his country, Prime Minister Justin Trudeau responded by questioning the business case for exporting LNG from Eastern Canada. His Liberal government is unwilling to expend an ounce of political capital to meet Europe’s demands. This is local politics at its worst.
Well, almost its worst. Quebec Premier François Legault’s about-face on GNL Québec, a proposed $14-billion LNG project in the province’s Saguenay region, was even more crassly political. After a 2020 meeting with the project’s promoters, the Premier tweeted the GNL Project would create 4,000 construction jobs and, by substituting coal-fired generation, cut greenhouse gas emissions by 28 million tonnes.
Mr. Legault soon changed his tune in the face of opposition to fossil fuels within Quebec and the Montreal-based media, which portrayed GNL Québec as a litmus test for his government’s environmental policy. His flip-flop was not that surprising. In opposition, Mr. Legault had supported the Energy East oil pipeline, only to declare after becoming Premier in 2018 that Quebeckers did not want Alberta’s “dirty energy.”
Ruby River Capital LLC, the Delaware-based promoter of GNL Québec, is now seeking compensation for the Quebec and federal governments’ subsequent rejection of the project and an accompanying $6-billion pipeline, claiming damages of “no less than US$20-billion.” The sum represents the profits Ruby River says it would have earned on GNL Québec and the Gazoduq pipeline over a 25-year period.
“After years of encouragement and direct support for both projects through specific commitments and through public statements, the highest political leadership of Quebec suddenly developed cold feet and ultimately scuttled the projects in the run-up to an election year,” Ruby River says in a Feb. 17 legal filing that seeks the creation of a NAFTA arbitration panel to settle its claims. “The Quebec cabinet unlawfully instrumentalized the applicable environmental review process to accomplish its political agenda, imposing criteria devised solely to negatively target the projects.”
While the North American free-trade agreement was replaced in 2020 by the U.S.-Mexico-Canada Agreement, NAFTA’s provisions on investor protection were extended until mid-2023. Ruby River’s claim, which falls within that deadline, is against the federal government, since it was the direct signatory of NAFTA.
In early 2022, federal Environment Minister Steven Guilbeault also rejected GNL Québec, citing an Impact Assessment Agency of Canada report that concluded the project “could have an impact on Quebec’s and Canada’s greenhouse gas emission and climate change objectives” and “would cause significant adverse environmental effects on the culture heritage of the Innu First Nations given the disturbance of marine mammals that would be caused by the tankers.”
In its filing, Ruby River counters that GNL Québec was committed to achieving net-zero emissions in the province and lowering global emissions. It also says “the IAAC Report failed to explain how a marginal increase in shipping traffic with no discernible impact on belugas could have any impact on First Nations’ cultural heritage.”
Ruby River says that after Russia’s early 2022 invasion of Ukraine, it approached the federal and provincial governments to revive GNL Québec, adding: “In the course of these discussions, senior Quebec and Canadian officials frankly admitted that the initial decisions at the provincial and federal levels had nothing to do with the environment and were simply taken for arbitrary reasons of political expediency.”
No matter that there is a strong case for exporting LNG that helps lower overall global emissions, a lack of political guts is hurting Canada’s reputation – and the planet.