Study: Bill C-69 no cure for Canadian investment disease

With Bill C-69, “Ottawa’s proposed cure looks likely to worsen Canada’s present disease,” according to a new study.

The disease: Investment in Canadian natural resources is plummeting.

Citing a Natural Resources Canada data series begun in 2014, the C.D. Howe Institute study says planned investment for major forest, energy, and mining projects fell from a peak of $711.7 billion (Can.) in 2015 to $584.9 billion in 2018.

For energy projects only, the 2018 total was $510 billion, down from a peak of $598 billion in 2016 and about even with the level of 2014.

The declines reflect cancellations and slumping additions to planned investments.

For energy, investment additions fell to $35 billion last year from $146 billion in 2015.

Of course, oil and gas investments dropped worldwide in that period. But the Canadian outlay fell more, say study authors Grant Bishop and Grant Sprague, citing data from Statistics Canada and the International Energy Agency.

As a share of global upstream investment, the capital outlay in Canadian oil and gas extraction fell from nearly 9% in 2014 to less than 6% in 2018.

As discussed here 2 weeks ago, Bill C-69 purports to cure a presumedly ill federal approvals apparatus. Vague and open-ended, it mainly would give project opponents new ways to stymie work.

Of major concern to project investors, the Howe study says, would be expansion of the range of projects subject to political decision-making. Current law limits decisions by ministers and cabinet officials to projects found, after independent analysis, likely to produce “significant adverse environmental effects.”

Bill C-69 would require public-interest determinations by those officials for projects with any—not just “significant”—adverse effects. Its loose definitions would broaden “subjective discretion.” And it would require consideration of “various new and uncertain factors” in any impact assessment.

“By increasing the role for political decision-making and crowding fuzzy policy questions into project-specific assessments,” the study says, “…Bill C-69 risks amplifying current uncertainty and further undermining investor confidence in Canada.”

(From the subscription area of www.ogj.com, posted Feb. 22, 2019. To comment, join the Commentary channel at www.ogj.com/oilandgascommunity.)