While Canada’s resource sector was dealt a blow with the cancellation of the Keystone XL pipeline’s permit by the United States, Canadian officials are facing another challenge as Michigan’s governor tries to shut down Enbridge’s Line 5 pipeline.
The Line 5 pipeline, which crosses Wisconsin and Michigan, brings oil from Western Canada east, where it is refined in Sarnia, Ont., into products like gasoline, diesel, and home-heating fuel. Shutting down Line 5 would have a major impact on the crude oil supply of Eastern Canada and cost thousands of jobs.
Some activist groups in Minnesota are also hoping to stop Calgary-based Enbridge’s Line 3 project, launching legal challenges and even hoping U.S. President Joe Biden will cancel the project like he did Keystone XL. Line 3, along with the Trans Mountain expansion project and Keystone XL, before the latter’s permit was revoked, are the three major oil pipeline projects currently underway in Canada.
But impediments to Canada’s pipeline and resource projects aren’t limited to the ones crossing the border. In recent years the country has seen a number of cancellations and hold-offs on energy projects located within its own borders. Some were due to market conditions and prioritization decisions by owners. But a considerable number of projects have been cancelled due to cited uncertainty in the regulatory process and environmental policies, as well as indigenous consultation complexities.
Ottawa has introduced new environmental legislation, including Bill C-69, which faced challenges from some provinces for increasing the regulatory burden. Bill C-69, which became law in 2019, set out a new federal process for the environmental impact assessment of major projects. The opposition Conservatives and industry groups said the legislation will scare away investors, while the Liberals said the existing legislation didn’t provide adequate environmental protections and that was why projects were getting stalled in the courts.
“Many projects in Canada have faced environmental assessments that take much longer than in comparator jurisdictions: Canadian timelines for mining projects are substantially longer than in Australia, and Canadian pipeline approvals are protracted relative to those in the United States,” the study said.
The infographic below shows some of the energy projects that have been cancelled in Canada for various reasons between 2015 and 2020, adding up to an estimated investment loss of over $175 billion. Also shown are the three major pipeline projects: Keystone XL, the Trans Mountain expansion, and Enbridge’s Line 3.
In many cases, the cancellation of energy projects has had the impact of reducing market access for Canadian oil and gas exports. In the case of the Energy East pipeline, which was to deliver crude oil from Western Canada to Eastern Canada, the cancellation meant more reliance on foreign imported oil for Eastern Canada, more oil exported from Western Canada to the United States at a discount, and more use of other means of transportation to move the oil.
