By Jack Middleton
January 21, 2025
Can Canada still build big projects or are we doomed to infrastructure decay and with it a stagnant and weak economy? This is no small matter as we head deeper into 2025. Will Canada choose to be a top-tier rich country, or fall down the economic rankings due to poor economic development and find itself among the likes of Portugal and Greece? Our stagnation is reversable, but the challenge is substantial – and our traditionally strong reputation on the world stage for clarity and stability of laws and policy has been weakened. Thankfully, there are clear policy initiatives that can help to build back Canada’s reputation and spark the investment Canada needs for the coming decade.¹
Due to the focus on climate change by governments and the media in general, the most high-profile examples of large-scale investments being blocked or stalled recently have been in the fossil fuel industry. Projects have been mothballed because of the political and polarized nature of this debate. However, these challenges also exist for mines like Ajax Mine in British Columbia (Baker 2018), and renewables like Chaleur Ventus Wind Projectin New Brunswick (Leger 2022). As such, we will talk about projects broadly rather than debate which energy sources are most valid. If critical minerals mines and wind farms have as much trouble navigating public and political sentiment as oil pipelines and LNG facilities, the issue must have deeper roots than that of the energy source.
This issue is critically important to Canadians. There are many reasons why we need to build major projects but ultimately, the answer is simple: so that governments, businesses, and families can generate income and pay for the things Canada need. Data continuously shows that resource projects are the highest source of productivity and are fundamental to the economy (Williams 2021). In short, if we want to pay for the kind of social programs and services that Canadians deserve, we need to continue growing investment in resource projects.
The Canadian context
Canadians often forget that for foreign investors, navigating the complexities of investing in Canada can be quite challenging. Canada’s strong commitment to democracy sets it apart from autocratic, authoritarian, or illiberal countries, but this does not always lead to stability of policy.
For too long, Canada has argued that its political stability alone makes major projects more secure and more investable. This is only true for projects that can make it through our increasingly complex and byzantine regulatory processes and proceed to construction: an ever-rarer accomplishment. The stark reality is that international investors can often find more stability and quicker approvals to build under authoritarian regimes.
If we compare Canada with a stable authoritarian jurisdiction like Qatar, this threat to investment in Canada is plain to see. Qatar has historically been among the largest exporters of LNG globally, while Canada currently exports miniscule volumes, despite countries like Germany practically begging us for it (Tizhoosh and Zimonjic 2022). When Qatar wishes to build projects, they are based purely on the technical and economic reasons and when buyers seek to obtain volumes, they look at the price. The feasibility of building a facility that would have met the German timelines is slim, but the lost opportunity to Canadians is huge. For example, a typical LNG cargo alone is worth between US$100 million and US$120 million (Jaganathan 2021), not to mention the upstream and economic benefits throughout the system in the process.
Traditionally, investors have accepted Canada’s high environmental standards as a fair trade-off for its stable democracy. Certainly, we are not arguing that Canadian political parties should abandon environmental responsibility: Canadians value it in both industry and government. Indeed, political parties with clearly stated, strong environmental goals have enjoyed much electoral success over the past decades. Environmental responsibility is not solely a left-wing priority: the former BC Liberals, a centre-right party, was the first government in British Columbia to impose a carbon tax – a policy that continues to this day (Government of British Columbia 2008).
Unfortunately, activist groups have hijacked Canadians’ general support for high environmental standards and weaponized them in an effort to stop all Canadian resource development projects.
Meanwhile, certain governments in Canada have tried to spin these unreasonable demands into a positive – claiming that high environmental standards will make our products more valuable on the global market. While this may be true for consumer products like yoga pants or backpacks, it is not the case for commodities like copper, gold, lumber, or oil, which compete globally on price. While eco-activists preach about the green economy, the fact remains that Canada’s economy is driven by natural resource commodities.
On the West Coast, the BC government claims that CleanBC – its comprehensive climate change plan – provides an economic advantage to commodities producers; the province argues that a higher carbon price will make commodities more attractive to international buyers. So far, there is no evidence to support this. Rather, these policies will simply add extra costs that make us less competitive, while driving investment to other jurisdictions with lower standards.
The news in BC isn’t all bad, and to the government’s credit, it implemented an Output Based Pricing System (OBPS) that factors in the competitivenessof industries like smelting, copper mining, and cement to reduce the burden of carbon tax by industry (Curpen, Singh, and Gibson 2024). We need more pragmatic policies like this. Reducing emissions domestically is a valid objective, but we must be clear that it is not going to make products more competitive internationally.
Another nuance of the Canadian context is the relationship with Indigenous nations. For centuries, these nations have been purposefully excluded from access to land, capital, and resources by governments at all levels. Nations have utilized the courts to establish rights and titles over territories (Supreme Court of Canada 2014). They have gained the legal right to be consulted and accommodated by the Crown (Government of Canada 2024a). Recently, Parliament and the BC Legislature passed the United Nations Declaration of Indigenous Peoples (UNDRIP) and Declaration of the Rights of Indigenous Peoples (DRIPA) respectively and began implementing them. These are developments that, if properly implemented, make Canada better and should be celebrated. Economically strong First Nations are a benefit to Canada, not a burden.
Debates about the extent to which nations have gained rights will continue in the world of partisan politics, but for industry, nations have essentially become another level of government. This is especially true of treaty and modern treaty nations who have established territory as opposed to the situation in British Columbia, where much of province’s Crown lands are contested by First Nations and not currently under treaties. While this may be a potentially challenging concept, nations should be viewed in this context. A level of government, with citizens who must be engaged politically and at a community level to understand the goals and issues they may have to build projects. This is neither a good nor a bad thing, it is simply a reality. If properly understood it can benefit large resource projects as well as society in general. If it’s poorly understood and implemented, it adds an intractable layer of bureaucracy and regulatory uncertainty.
Within this context the key question is: How can Canada compete against countries that do not have democratic, environmental, and Indigenous rights, while protecting these fundamental tenets of Canadian society? We argue that it is possible – but it will require political courage and the willingness to innovate.
Regulatory aspirations vs. political realities
The federal and provincial governments have regulatory regimes that have been debated, reviewed, and revamped. They are strict and generally administered by technical experts. These systems have clear timelines and in theory, they should form the basis for a clear and consistent system that sees major projects enter and be approved or declined. Upfront timelines should allow investors to easily compare our systems with other jurisdictions’ and provide a sense of clarity about the process. In theory, this should work seamlessly. It does not.
Too often, Canadian regulatory systems – which seek input from civil society through consultation and open houses – are hijacked by organized opposition groups with political axes to grind.
Regulatory processes are part of a country’s comparative advantage and are, in some sense, arbitrary and subjective. Canada can claim having higher environmental standards are desirable, but if it cannot balance this with efficient permitting, it cannot expect to attract capital globally. Many countries with high environmental standards have managed this when the political will was there. For example, the Nord Stream assessment process took four years. The regulatory review included EU members Denmark, Germany, Poland, Lithuania, Latvia, Estonia, Finland, and Sweden. Coastal GasLink on the other hand, though located exclusively within BC, took six years to assess. How can this be?
One problem with the Canadian process is the assumption that proponents have unlimited funds, limited options, and will face no political interference when entering the regulatory process. In a globalized world this simply isn’t true. If project proponents run into a maze of incoherent regulatory systems with uncertain timelines, they will simply look elsewhere to invest.
In 2023 the Canada West Foundation (CWF) released a report that showed that three-and-a-half years after the Impact Assessment Act (IAA) came into effect, all projects progressing were still in phase one or two of the fourphase process (Orenstein 2023a). Prior to this a review of the Canadian Environmental Assessment Act, 2012, showed that on average it took almost 3.5 years for a project to either receive approval or be terminated, with some projects taking more than 10 years (Orenstein 2023b). This is unsustainable for any economy, let alone one driven by large-scale resource investment.
The trouble is, while technical experts evaluate and permit projects, the final decisions are made by elected politicians. The conflict in priorities hereshould be apparent. Too often, politicians base their decisions on political whims rather than facts. This isn’t to say that politicians aren’t rational – but they have a different set of goals than most: to maximize vote efficiency and be re-elected. This conflict of interests sets the system, and everyone in it, up to fail.
Take, for example, the case of Cedar LNG, which is majority-owned by Haisla First Nation with a portion owned by Pembina Pipeline. Cedar LNG went through an ultra-stringent British Columbia Environmental Assessment Office regulatory process, is fully supported and owned by local First Nations, and offers access to a growing global industry. Yet, when it came time for a final decision, BC’s environment minister sat on it for months before finally approving it in the face of overwhelming public support from Indigenous communities (First Nations LNG Alliance 2023). If Cedar LNG, the high watermark for projects, was stalled for months, what can others expect? It’s a bad message to send to the international investment community.
Another example is the case of renewables in Alberta, a jurisdiction that had, until 2023, sought to attract as much investment as possible. In developing these projects, wind and solar farms began to eat up actual farmland and mountain views. This led locals to demand that the government stop or stymie the amount of development taking place. The United Conservative party slapped a seven-month moratorium on approval for new renewables projects and then instituted new rules that included 35-kilometre buffer zones around protected areas and other “pristine viewscapes” along with protections for farmland (Anderson 2024). This kind of rule-making is not conducive to attracting long-term investment.
While examples abound of politics derailing otherwise sound and beneficial resource development projects, there are also examples of political courage in support of them. For instance, former BC Premier Christy Clark should be commended for leading an all-hands-on deck effort to develop LNG in thatprovince. Her staunch support of that industry resulted in nearly 20 proposed projects by some of the world’s largest energy companies (Giraud and Meeres 2024). Political courage attracts dollars.
This kind of leadership is challenging, and politicians aren’t always rewarded for their work. While Clark ushered in BC’s LNG era, she was not premier long enough to see the projects through. The NDP government that succeeded Clark, led by John Horgan, also supported resource development. However, current Premier David Eby is far more resource skeptical and so far, has not emulated the resource development success of his predecessors.
Policy alternatives for a better system
If we want to build the renewables, mines, and industries of the future, we must chart a new course. Here, we present some examples of policy alternatives that can be adopted to bolster confidence in Canada. These are challenging ideas that require political bravery and real effort, but the reward will be a stronger economic future for all Canadians.
Real timelines
Establishing clear timelines for the regulatory process, with defined endpoints and consequences for delays, would significantly enhance Canada’s reputation. No business expects or requires 100 per cent certainty to proceed with a project, but they need to know that the process in which they are engaged will be consistent, fair, and timely.
The process could also include “automatic gates” in the timelines: for instance, if a project’s proponent doesn’t meet all requirements by a certain date, the project would be automatically declined; however, if a government fail to follow timelines for making a decision, then the reverse would be true – the project would receive automatic approval.
Quicker timelines for designated industries
Federal and provincial governments should be able to designate industries as critical, or “of national importance,” and provide a quicker process. A recent announcement by the Eby government in BC designated 5,000 gigawatt hours per year in clean energy projects exempt from the Environmental Assessment (EA) process (Little 2024). This is perhaps an acknowledgement that the impacts of wind are well understood and unnecessary, or that the EA in BCis too onerous to facilitate investment in clean energy projects. Either way it’s a clear example of a government stating its intentions and taking meaningful action on an issue.
An example of where this would be beneficial is in the mining and exploration industry. From “notice of work” applications to environmental assessments, to mine permits, projects are bogged down in permitting delays. Even operating mines are seeing permitting timelines move past them. If battery and critical minerals are as important to governments as they have stated, they must drastically expedite permits. This will be crucial if Canada hopes to play a key role in the global economy for the next 100 years. While many factors go into these delays, governments across the country must get serious about issues they designate as critical, or risk damaging the trust of the public.
Clarity on who regulates
At a systemic level, Canada has endured several reformations of the environmental assessment process for major projects. The opaque and muddled process for reviewing and reforming relevant legislation has created even more investment uncertainty. While a full-scale overhaul of the Impact Assessment Act, with reduced and legislated timelines, would be welcome, the government can also use other tools to ensure projects are appropriately approved and permitted.
For example, the Government of Canada used “federal substitution” to permit the LNG Canada project in two years (Government of British Columbia 2015). This process, by which the federal and provincial government work together to prevent duplication and focus on speed, provided Canada’s first large-scale LNG facility in a timely manner. While it wasn’t constructed immediately upon approval, that governmental green light caused it to be selected for the “Final Investment Decision” by its consortium of owners.
Another tested option is the Indigenous-lead process used by Woodfibre LNG. With free prior and informed consent and the nation leading the process, the project achieved approval in two years under the Squamish Nation Environmental Assessment Agreement and the provincial and federal governments in 2015 (Woodfibre LNG 2015). By allowing the host nation to function as a regulator, the efficiency of permitting is increased.
The United States is currently piloting the Fixing America’s Surface Transportation Act (Fast 41). This program applies to projects that aredesignated as “a covered project,” which are ones that: (1) are subject to the National Environmental Policy Act (NEPA); (2) are likely to require a total investment of more than $200,000,000; and (3) do not qualify for abbreviated authorization or environmental review processes under any applicable law (U.S. Department of Energy 2024). While it is too early to judge the success of the pilot program, it nonetheless represents the kind of forward thinking required to move projects along.
At a staffing level, regulators should have experience in the industries they regulate. This may seem obvious but ensuring that people’s experience matches the industry they are regulating is critical to ensuring timely decision making. Consider mismatching a person trained in ecology to permit a mineral exploration project that requires mostly engineering. This mismatch in experience would undoubtedly hinder the project. Likewise, there is immense value in employing people with industry experience in roles throughout the ministries and agencies responsible for permitting projects. For instance, unlike typical government bureaucrats, former field geologists will have unique knowledge of what it means to miss a “summer window” during mineral exploration, etc.
Crackdown on rogue municipalities
Constitutionally, municipalities do not exist. They are the creation of provincial governments and in theory, do not have regulatory power. In practice, however, they administer permits and can do much to impede projects. Using data from the United States on renewables projects, the number one and two largest barriers to renewables projects are local ordinances and community opposition respectively (Bauer et al. 2024). Indeed, municipal interference poses a major threat to the renewables projects we will require to achieve decarbonization.
Take for example the District of Squamish, which has thrown down as many barriers as possible to the approved and under-construction Woodfibre LNG project. This includes blocking its floating hotel (floatel) meant to house 650 workers away from the community. This is a decision not made for practical reasons but instead meant purely to hold up the project. Additionally, the municipality has proposed an industrial tax rate of 12.5 per cent despite the average rate being 2.9 per cent (Hughes 2024). It clearly did this to challenge the economics of the project. Thankfully, in the case of the floatel, the BC Environmental Assessment Office issued an order for Woodfibre LNG torelocate workers to the floatel and move the facility to their site, thereby addressing the municipal standoff (Thuncher 2024). Governments should act quickly to quash these efforts by municipalities to impede regulatory processes that are outside of their authority.
This is important because, even under optimal circumstances, municipalities are ill-equipped to regulate major projects. They rarely, if ever, have the capacity and expertise to fairly determine the environmental impacts of major projects and only add another layer of complexity and risk for investors. Provincial permits should always take precedence over municipal by-laws. Governments can address local concerns by sharing revenue from major projects with the most impacted communities as a risk-mitigation method. However, if activist municipalities continue to insert themselves into the regulatory process, they could cause great harm to the sector.
Incentives for projects, communities and Indigenous nations
As discussed above, First Nations have a right to be consulted and accommodated on major projects. Given this, government needs to be prepared to support nations in their pursuit of partnering on projects. There are success stories here. For example, the First Nations Major Projects Coalition (FNMPC) has helped develop over 19 major projects with a value of $45-billion across the wind, transmission, natural gas, and nuclear sectors (FNMPC 2024). These projects are being done in partnership with Indigenous communities, and participating nations should receive financial backing from government programs. In its Budget 2024 plan, the federal government announced its long-awaited Indigenous Loan Guarantee program, which provides access to affordable capital to Indigenous governments and communities (Government of Canada 2024b). A step in the right direction, these loans would be provided by financial institutions or other lenders and guaranteed by the Government of Canada. This means that the borrower would benefit from the government’s AAA credit ratings, delivering a lower interest rate than is available to most borrowers.
While the loan guarantee is a piece of the puzzle, it’s not the full story. Projects funded via the Indigenous Loan Guarantee program – if they are for new builds – should also be expedited through regulatory processes. This would act as an incentive to develop projects in partnerships with nations and would help with financing given the quicker path to derisking.
Conclusion
The technical bar for project approval is set extremely high in Canada. Canadian environmental and financial law leaves little room for delinquent projects. This should continue. However, there is currently also too much political and regulatory risk for investors who formerly only needed to worry about the technical and engineering feasibility of their projects.
If companies have demonstrated, understood, and mitigated their projects’ risks, then they should be approved and expedited. Examples of this include Indigenous ownership and interest, building community support, and siting that considers environmental and culturally sensitive areas (best done in partnership with the nations).
While not all projects should or can be built, more incentives need to be in place to attract investments for companies to try. We also need clear regulations for approved projects that ensure the protection of the environment and people impacted by them. Unfortunately, our current system is opaque and unclear and creates a sense that even good projects cannot be built. Worst of all, we have recent examples of projects, such as the Trans Mountain Expansion, which follow the rules only to be blocked at the end of a process. This cannot continue. While businesses will need to navigate the process on their own, Canadians should demand more from governments who are all too eager to obfuscate decision-making.
Canada’s future prosperity depends on successful wind, solar, hydrogen, natural gas, nuclear, pipeline, and mining projects. The best thing our governments can do is to design a regulatory system that is timely and accountable – and then have the wisdom and leadership to get out of the way and allow Canadians to build a better future for all.
About the author
Jack Middleton is the vice president of Policy and Advocacy at the Association for Mineral Exploration (AME), based in Vancouver.
References
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Endnotes: 1 This focus of this commentary is on private investment in large-scale projects and not capital projects like transit or bridges. This focus is important because though they do play a role in stimulating the economy, public- or Crown corporation-led projects often have the ability and funds available to manage drawn-out regulatory processes. Private investments do not have this luxury as they are not funded by tax dollars and have clearer return-on-investment parameters. As such, the requirement for clarity of timeline and process is far more important for private investments than publicly funded ones. We acknowledge fully the need for better financial and timeline consistency within public works (lest we be accused of saying public projects do not have problems) but that is outside the scope of this commentary.