The 'plan' to approve a pipeline, detailed by the federal and Alberta governments on Friday, exemplifies not federal-provincial cooperation but why Canada struggles to build infrastructure. The decision is driven entirely by politics rather than market demand.
Pipeline proposal details
Alberta Premier Danielle Smith announced that her government will propose a new pipeline to the West Coast by July 1. In exchange for designating it a project of 'national interest,' the province will raise its industrial carbon tax from $95 per tonne to $130 per tonne by 2035. While the tax price was a point of contention, it is among the least significant hurdles the project will face.
According to the memorandum of understanding (MOU) signed last fall between Alberta and Ottawa, any pipeline will depend on developing a massive carbon capture facility. It will also remain subject to many typical regulations that often kill projects, and it gives anti-energy British Columbia Premier David Eby an effective veto.
Ottawa has agreed not to implement a carbon emissions cap in Alberta, but this is less a concession and more extortion to secure Alberta's agreement to multiple environmental roadblocks.
Alternative approach
There is another way to ensure infrastructure projects are approved while maintaining environmental standards. Prime Minister Mark Carney could weaken the Alberta separatist movement, reverse former prime minister Justin Trudeau's sabotage, and boost Canada's economic competitiveness by repealing the Impact Assessment Act.
Among the Liberal government's anti-development regulations, this legislation causes the most damage. It imposes unnecessarily onerous environmental and political assessments, largely explaining why Canada cannot build anything. While not the only needed reform, its effort-to-payoff ratio is unmatched, and the Alberta-Ottawa MOU does not seriously address this issue.
If Canada wants to build infrastructure at unprecedented speeds, repealing the Impact Assessment Act is where to start. As columnist Jamie Sarkonak noted, Natural Resource Canada's project inventory dropped from $711 billion in 2015 to $572 billion in 2023. Had investment kept pace with population growth, it would have reached $985 billion.
The act forces companies to consider social impacts like access to schools, crime rates, and the ratio of white males to others in nearby communities, in addition to environmental reviews. This leads to absurd outcomes. Carney appears aware of the problem, as he has worked around the act while keeping it in place, likely to avoid angering the Liberal party's environmentalist wing.
