Dissecting what the Throne Speech said about energy

What does polluter pay mean?

Etienne de Malglaive/REA/Redux

There were some interesting nuggets in today’s Speech from the Throne.

We heard that, “directly and indirectly, the natural resource sector employs 1.8 million Canadians, many in skilled, high-paying jobs.”  That’s a big number — more than 10 per cent of the Canadian labour force. In September 2013, Statistics Canada estimated that 382,000 Canadians were employed in the forestry, fishing, mining, oil and gas sectors. The other 1.5 million people are, presumably, employed in support sectors including finance, hotel and food, construction, and utilities. However, in terms of direct employment, our natural resource sectors account for 2.1 per cent of total employment. There is no question that some of these are high-paying jobs — the average hourly wage paid to salaried employees across the economy was $32.92 per hour in July 2013; mining, quarrying and oil and gas saw wage levels of $49.93 per hour. Still, the average hourly earnings in forestry and logging was lower than average, at $25.31 per hour.

We also saw a nod to the government’s push to grant Canadian resources greater market access: “Canada’s energy reserves are vast—sufficient to fuel our growing economy and supply international customers for generations to come. However, for Canadians to benefit fully from our natural resources we must be able to sell them. A lack of key infrastructure threatens to strand these resources at a time when global demand for Canadian energy is soaring.”  This stance is interesting since the industry has recently been seen to downplay the role of new pipelines in enabling oil sands development given the rise of oil-by-rail.  The government’s argument is also a double-edged sword: If infrastructure prevents resources from being stranded, it must also be the case that this infrastructure increases greenhouse gas emissions over and above what they would otherwise be by enabling development. The issue of whether the oilsands would find a way to market has been a key issue in the U.S. State Department’s review of the Keystone XL pipeline.

The government also committed to, “continue to ensure that our natural resource sectors remain open to foreign investment when it is market-oriented and in the long-term interests of Canadians.” But what do “market oriented” and “in the long-term interest of Canadians mean?” The government has so far failed to clarify the standards of its foreign investment review process, which garnered headlines as the government rejected BHP’s takeover of Potash Corp and became even more muddled in the aftermath of the CNOOC/Nexen and Petronas/Progress takeovers. As long as foreign investors aren’t provided with a clear process, and as long as they are unable to take controlling interests in Canadian firms, these muddled rules will likely continue to increase the cost of attracting capital for Canadian resource companies. Nothing here suggests that the government intends to change its approach.

The statement that followed was even more interesting: “Canada’s natural wealth is our national inheritance and our Government will ensure that the jobs and opportunities it brings are available to all Canadians.” This sounds akin to previous comments by the prime minister supporting projects like TransCanada’s Energy East pipeline. Furthermore, the speech emphasized the importance of First Nations’ participation in these benefits — is this perhaps a nod to the ongoing charm offensive in B.C. to persuade First Nations on the merits of Northern Gateway?

Interestingly, many elements of the speech echo positions previously taken by Prime Minister Harper’s rivals. A commitment to enshrine in law the polluter pay principle might make one think that a page from an NDP speech made it into the Governor General’s hands. Polluter pay has been a defining issue for NDP Leader Thomas Mulcair. Quebec’s Sustainable Development Act (PDF), enacted while Mr. Mulcair was Quebec’s Environment Minster, defines polluter pay as the assurance that, “‘those who generate pollution or whose actions otherwise degrade the environment must bear their share of the cost of measures to prevent, reduce, control and mitigate environmental damages.” Mr. Mulcair has used polluter pay as a justification for measures like cap-and-trade and more recently for increased vigilance with respect to reclamation liabilities. Mr. Mulcair would argue that projects like the Giant Mine Reclamation project illustrate the failure of previous governments in this regard, since taxpayers are being forced to pay the costs of cleanup for a now-bankrupt operation. Watch for Mr. Mulcair to ask again exactly what pollution Prime Minister Harper will make polluters pay for, and how. It’s hard to imagine it will be via a job-killing carbon tax.

Finally, near the end of the Speech, we saw significant attention to the aftermath of the tragedy at Lac-Mégantic. In particular, the government pledged to, “require shippers and railways to carry additional insurance so they are held accountable.” This requirement to carry liability insurance appropriate to their hazardous cargoes is a direct response (and one consistent with the polluter pay principle, one might add) to the bankruptcy of Montreal, Maine, and Atlantic railways in the wake of the disaster. One might ask whether the same attention will be devoted to pipelines, as appropriate compensation for risk was an issue raised in B.C. Premier Christy Clark’s five conditions for support for more oil pipelines in the province.

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