Government to exempt oil companies from impact assessments

I read an article in Le Devoir this week in which I learnt that the federal government is trying to accelerate exploratory offshore oil drilling east from Newfoundland and Labrador. I decided to learn more about the topic. I share and comment here what I learnt.

The Minister of Environment and Climate Change Canada (the Minister), Jonathan Wilkinson, has decided to create regulation to exempt companies from conducting an impact assessment for exploratory drilling in the area. There is currently a public consultation about what should be included in that regulation. The deadline for the consultation when the article from Le Devoir was written was April 3rd. Due to the situation we are living right now with covid19 they changed it to April 30th.

In order to understand the reasoning behind the Minister's decision it is necessary to explain a few things about the Impact Assessment Act (IAA).

The IAA defines two types of assessments impact assessments and regional assessments. Impact assessments must be conducted by a company that wants to do an activity that falls under the category of designated projects; offshore exploratory drilling being one of them. Regional assessments are conducted by the Impact Assessment Agency (the Agency).

For each proposed project from a company, the Agency evaluates the impact assessment to decide whether to authorize the project or not. Regional assessments are used to help the agency take informed decisions in this process (you can find more information about the role and uses of regional assessments here).

The IAA has provisions that allow the minister to create conditions that if satisfied by a company, it gets freed from the obligation of conducting an impact assessment. For this to happen, there must first be a regional assessment and based on it, the minister may decide to create such conditions. This is what is happening here. In April 2019, the government formed a committee with the mandate of performing a regional assessment of the area in question. They finished in February and produced a report that can be found in this link.

The result of the exemption will be a more efficient and faster process for companies to start doing exploratory drilling in the area. A company would only need to notice the government explaining some technical details for them to be able to start drilling.

Irregularities in the regional assessment process

The article from Le Devoir, mentions some problems the committee had during the regional assessment. For instance the lack of sufficient time to do an appropriate study and the lack of help from government experts.

I found something else in the report that called my attention. According to section 112.2 of the IAA, the minister can decide to create regulation only after considering the regional assessment. This is alluded in the Introduction of the report.

It is also understood that the federal Minister may make a regulation that would exempt future offshore exploratory drilling projects from federal impact assessment requirements if they are proposed in the area where the Regional Assessment was carried out and they meet the conditions for exemption established by the Minister in such a regulation. The development of that regulation would be informed by the findings of the Regional Assessment, and would set out the conditions which a future exploratory drilling project offshore Eastern Newfoundland would need to meet in order to be exempt from federal impact assessment requirements.

Regional Assessment report
Excerpt from Section 1.4

Nevertheless, in the conclusion it is clear that the Minister had already made his mind before the assessment was over.

The Committee understands that the federal Minister of the Environment and Climate Change intends to make a regulation, informed by the findings of this Regional Assessment (Section 1.4), which will set out the conditions that future exploratory drilling projects in the Study Area would need to meet in order to be exempt from federal impact assessment (IA) requirements under the Impact Assessment Act. In some cases, the Committee’s recommendations are directed specifically to the federal Minister of the Environment and Climate Change for consideration in developing and implementing that regulation...

Regional Assessment report
Excerpt from Conclusion

Canada's climate responsibility

The motivation of the IAA for allowing impact assessment exceptions is to make a lighter bureaucracy for companies to do specific projects when the environmental impact is low. This is reflected in the following paragraph from the report.

Any activity that adds to Canada’s atmospheric emissions potentially has some type and level of implications for the country’s ability to remain within its emissions targets, and thus for Canada’s ability to meet its climate change commitments. Emissions from the exploration drilling activity are not immaterial, but constitute a relatively small fraction of national GHG targets. Without a full analysis of all emitting sectors and their expected contributions for the target years, it is not possible to say precisely what the contribution of these emissions from exploratory drilling in the Study Area would be, nor their implications for Canada meeting its emission targets. Given the small portion of total emissions it would generate, it is considered unlikely that exploratory (and delineation) drilling would in itself hinder Canada’s ability to meet its emissions targets. The Committee has therefore not made a specific recommendation on this particular issue.

Regional Assessment report
Excerpt from Section 7.2.3

What is being argued here is that exploration drilling emissions are low enough and it would not prevent Canada from complying with its climate responsibility. Note that the report gives uncertainty about this by saying that further analysis is needed to conclude this. Now, let us ignore this uncertainty and assume the emissions from this activity are negligible enough. The purpose of exploratory drilling is to find large enough oil reserves for operationalized extraction, which has significant emissions. The question then is, can Canada afford new production wells and still meet it's climate obligations? The answer is out of the scope of the regional assessment.

... All emissions are important in determining whether and how our national GHG targets can be reached. However, given the small portion of total emissions generated by this sector, and our inability to analyze other national sources, it is considered unlikely that exploratory drilling itself would hinder Canada’s ability to meet its emissions targets. The Committee does recognize however, that exploratory drilling is the “thin edge of the wedge” and successful exploration may lead to oil and gas production with concomitant GHG emissions. The Committee’s mandate to examine only exploratory drilling then leaves the broader issue of GHG emissions, and associated climate change considerations from the overall oil and gas sector to other, more appropriate venues.

Regional Assessment report
Excerpt from Executive Summary

Canada signed the Climate Paris Agreement, which seeks to limit the temperature average increase to 1.5°C. Oil Change International wrote the report The Sky’s Limit in which they conclude that existing fossil fuel reserves are enough to bring us close to a 2°C increase. They arrive to this conclusion using carbon budgets from the 5th Assessment Synthesis Report of The Intergovernmental Panel on Climate Change. This not only implies that there is no room for additional sources of fossil fuels but also that we cannot burn the entirety of the existing reserves if we want to stay within 1.5°C. Therefore, Canada (and the world) cannot afford more production wells. So, why do we continue doing exploratory drilling in the first place?

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