Canada court ruling on key environmental law risks deterring investments

Canada Nickel

19/10/2023 15:58

By Nia Williams and Divya Rajagopal
       Oct 19 (Reuters) - A Canadian court ruling that voided
most of Prime Minister Justin Trudeau's environmental assessment
law for resource projects has sparked fresh policy uncertainty
and risks deterring investments, company and industry executives
said.
    Canada's Supreme Court dealt Trudeau's Liberal government a
blow last week when it ruled the Impact Assessment Act (IAA) was
too broad in designating which major projects should fall under
federal environmental assessment.
    Already, Canada has a reputation for being a difficult place
to build major projects due to high regulatory and environmental
hurdles. The prospect of further policy changes risks unnerving
investors and industry executives urged Ottawa to amend the
legislation quickly.
    "We haven't gotten any sort of concern from investors yet,
but I think if the uncertainty draws out in terms of how they're
going to move forward, then that could start to have an impact,”
said Mark Selby, CEO of Canada Nickel Company  CNC.V , whose
proposed Crawford Nickel Project in northeastern Ontario is
going through the IAA process.
    Selby said he was "very happy" with the IAA process so far
and surprised by the court decision.
    Canada's main oil-producing province Alberta, which brought
the legal challenge against the IAA, celebrated the ruling as
win for provincial jurisdiction and natural resource
development. The Canadian Association of Petroleum Producers, an
intervenor in the case, also said the law hindered project
development.
    The ruling leaves 23 major natural resources and
infrastructure projects that were undergoing assessment waiting
for clarity as the Impact Assessment Agency of Canada (IAAC)
reviews the court's opinion.
    "Prolonged uncertainty is a roadblock to building the mines
and infrastructure we urgently need to achieve our climate
change, supply chain security and critical minerals goals," the
Mining Association of Canada said in a statement.
    The ruling comes as Canada seeks billions of dollars of
fresh investments to unearth minerals that play key role in the
transition to a greener economy. More than $20 billion in
foreign capital has fled the oil patch since 2017, partly
because of delays in building new pipelines. 
    The CEO of Suncor Energy  SU.TO , whose proposed oil sands
Base Mine extension in northern Alberta is undergoing an impact
assessment, warned this week that unpredictable Canadian energy
policy scared away capital.
    Suncor did not respond to requests for comment on the impact
of court decision.
    The ruling also raises questions over Canada's ability to
push through key climate legislation and the possibility of
Ottawa facing fresh legal challenges to other policies. Both its
Clean Electricity Regulations and an oil and gas emissions cap
are firmly opposed by Alberta.

    ONE LESS COOK
    Despite the immediate uncertainty, some policy experts said
the court decision should ultimately improve Canadian
environmental assessments. 
    The federal government has pledged to work quickly to
improve the legislation. An IAAC spokesperson said the agency
will communicate more details on its planned approach in coming
days.
    Heather Exner-Pirot, special advisor at the Business Council
of Canada, said the ruling was an opportunity to improve flawed
federal policy.
    A cabinet committee focused on regulatory efficiency for
clean growth projects, set up in September and chaired by Labour
Minister Seamus O'Regan, will look at possible amendments to the
IAA, a government source said.
    "O'Regan is the most pro-development minister there is,"
Exner-Pirot added.
    Canada will likely end up with legislation similar to the
Canadian Environmental Assessment Act (CEAA), which the IAA
replaced, said Robin Junger, former head of British Columbia's
Environmental Assessment Office and a partner at law firm
McMillan.
    He said amending the IAA could remove duplication with
provincial environmental assessments and permitting, resulting
in "one less cook in the kitchen".

 (Reporting by Nia Williams and Divya Rajagopal
Editing by Denny Thomas and Josie Kao)
 ((nia.williams@thomsonreuters.com; +1 403 531 1624; Reuters
Messaging: nia.williams.thomsonreuters.com@reuters.net))