The federal government plans to require a separate climate test for proposed pipelines and a planned LNG export terminal, which are now under regulatory review, to determine their impact on Canada’s greenhouse-gas emissions, a move that could impose new delays on billion-dollar projects.

The climate analyses are part of proposed measures – which include additional First Nations consultations – that Ottawa will impose on Kinder Morgan’s Trans Mountain expansion and TransCanada Corp.’s Energy East, both currently before the National Energy Board, a government source confirmed Monday. The measures will also apply to Pacific NorthWest’s planned LNG export terminal, currently in front of the Canadian Environmental Assessment Agency.

The Liberal government is facing angry pipeline politics that are creating regional divisions in the country as political leaders in Quebec and British Columbia vehemently oppose projects that Alberta’s government and industry insist are critical to their economy. That fight spilled into the House of Commons Monday as Parliament resumed, with battle lines being drawn over the government’s energy and environmental agenda.

Natural Resources Minister Jim Carr and Environment Minister Catherine McKenna are expected to announce the measures next month. During the election campaign and in his publicly released mandate letters to ministers, Prime Minister Justin Trudeau promised more robust environmental review of resource projects, including assessing their impacts on the country’s greenhouse-gas (GHG) emissions.

Mr. Carr’s spokeswoman would not confirm the measures, saying cabinet had not made any decisions. “We are working intensely on a transition process for pipeline projects currently under NEB review that is consistent with our mandate and our commitment that no project will need to return to square one,” Micheline Joanisse said Monday. “We will have more to say in the near future.”

Liberal ministers have said projects currently under review by regulators will not be forced to go back to square one with rewritten rules, but will face additional hurdles that will be outside the quasi-judicial regulatory process. The former Conservative government enacted sweeping changes to that process that have been condemned by project opponents, including environmentalists, municipal officials and First Nations.

Alberta’s economy-wide carbon plan will be an important part of the review of the upstream GHG impacts of pipelines, notably the cap on emissions from the oil sands, the federal source said. An industry official who was briefed on the federal measures said the oil and gas sector is being hammered by low prices and worries that delays on export infrastructure will dampen prospects for renewed investment when prices rebound.

In the House Monday, Conservative MPs criticized the Liberal government for failing to support the economically battered, resource-based provinces against critics who would deny landlocked producers access to markets. “Does [Mr. Trudeau] understand his lack of leadership on this issue is creating divisions in the country?” Conservative interim leader Rona Ambrose said.

The Prime Minister said the government supports the notion that Canadian resources need to reach new overseas markets, but added the public needs to be assured that projects are being done in an environmentally sustainable manner and accused the previous government of failing to win public support for pipelines.

“We are working very, very hard right across the country with municipal leaders, with provincial leaders to make sure we’re creating the social licence, the oversight, the environmental responsibility, [and] the partnership with communities to get our resources to market in a responsible way,” he said in the House. “Because that’s what it takes in the 21st century.”

A political firestorm erupted last week when Montreal-area mayors, led by Montreal’s Denis Coderre – himself a former Liberal MP – rejected TransCanada’s $15.7-billion Energy East project even before the National Energy Board has begun public hearings on it.

Mayors of Vancouver and Burnaby, meanwhile, are opposing Kinder Morgan’s $6.8-billion expansion of the existing Trans Mountain pipeline from Alberta to Vancouver harbour, while Liberal Premier Christy Clark said the company has not provided enough information on spill prevention and response. The NEB is in the final stages of oral arguments on the project review and will report in May to federal cabinet, which has the power to approve or reject the board’s recommendations.

Ottawa has already signalled it believes more consultations with First Nations over the Trans Mountain project are required. On Friday, a federal court in B.C. agreed to a Justice Department motion to adjourn a challenge by the Tsleil-Waututh First Nations against the NEB hearings. The Justice Department acknowledged that Ottawa had not adequately consulted with the Tsleil-Waututh First Nations, which agreed to engage with government on “nation-to-nation” consultations. The community, however, is still scheduled to appear at the NEB hearing on Tuesday to oppose the Trans Mountain project.

The Liberal government is eager to conclude the additional reviews and consultations on Trans Mountain within the three-month timeline prescribed in the National Energy Board Act for cabinet to deliberate, sources said, though the act also gives the government the power to grant itself limitless extensions. “We would be concerned with any additional process that would add to the [approval] timeline significantly,” Kinder Morgan spokeswoman Ali Hounsell said.

Former NEB chair Gaétan Caron said the board has long refused to consider what impact a specific pipeline would have on GHG emissions in the producing or refining sectors because there are too many uncertain variables. “The NEB has determined in the past that the upstream and downstream climate-change effects of a pipeline are not relevant because that pipeline in and of itself has no bearing on the rate of production of hydrocarbons in Alberta or the rate of consumption at the other end of the pipeline,” he said.

Environmentalists have warned that the expansion of liquified natural gas export terminals on the coast will drive up greenhouse-gas emissions in the province by encouraging the production of shale gas in northeast B.C., while the industry argues the gas will help drive down global emissions by replacing coal in Asian power grids. Pacific NorthWest LNG – which is controlled by Malaysia’s state-owned Petronas – wants to build an $11.4-billion terminal on Lelu Island in the Port of Prince Rupert.

OTTAWA — The Globe and Mail
Published Monday, Jan. 25, 2016 9:46PM EST
Last updated Monday, Jan. 25, 2016 10:02PM EST