Environmental Policy on Oil and Gas Exploitation in Canada

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1. Environmental Policy on Oil and Gas Exploitation in Canada

   Canada is the fifth among the largest energy producers in the world accounting for about 6 percent of global energy supplies. It is the largest world producer of uranium accounting for one-third of the global market and the second leading hydroelectricity producer with 13 percent global production (Fletcher, 2015). Besides, its contribution to the global market as a producer of petroleum, natural gas, and coal is significant. Evidently, Canada is rich in total energy only trailing Russia, China, the United States and Saudi Arabia. This document seeks to relate the Canadian government Energy policies related to resource development and exploitation, to the current debate of exploitation of oil and gas in Canada western provinces (Heisler, Markey, 2013). Despite being a significant producer of energy products, Canada is both an exporter and importer of coal and petroleum due to the location of coal and oil fields in the far western region of Alberta that is isolated from its industrial center in Ontario and Quebec and its main population (Kilian, Murphy, 2014). Besides, many of the Canadian refineries cannot handle the type of oil produced in the country hence, export the oil to other regions for refinery and import the refined oil products from such regions. Consequently, the regulatory framework of the Canadian Constitution significantly impacts on the development and exploitation of oil and related products.

   The Canadian federal system of government employs a regulatory framework that divides the jurisdiction over energy between the two levels of governments; the federal and provincial and territorial governments (Smith, 2013). The federal regulation is administered by an independent federal regulatory agency called The National Energy Board (NEB) that regulates the Canadian energy industry. The agency was created by the Canadian Parliament in 1956 with primary role to regulate; international and inter-provincial oil and gas power lines and pipelines, imports and exports of natural gas under short-term orders and long-term licenses, export of oil under short-term orders and long-term licenses and, to regulate offshore areas and frontier lands outside the provincial/federal management agreements. Therefore, the National Energy Board regulates the operation and construction of natural gas and oil pipelines crossing provincial or international borders. With the authority of the National Energy Board Act, the agency approves pipeline traffic, tolls and tariffs on oil products thus directly influencing the energy resource development and exploitation (Smith, 2013). Recently, the NEB posited favor towards the petroleum industry thereby triggering debatable controversies. For instance, the lack of coherence on climate change, as posited by the National Energy Board's regulatory policy on the exploitation of the resource, is a major source of uncertainties. Ontario and Quebec had imposed conditions on Albert Energy East re "upstream" emissions in an attempt to reduce carbon emissions. However, this environmental concern was dropped in 2014. The position of Saskatchewan that provinces opposed to raw bitumen export can have their equalizations withheld further complicates the delicate balance between the government policies and the exploitation of the resource (Smith, 2013). The agency focuses on administrative law and acts by enforcing rules and regulation that governs the development and exploitation of the oil resource through supervision or oversight for the good of the general public.

   Similarly, the provincial regulation of development and exploitation of oil and gas, pipeline and distribution systems is solely overseen by the provincial Utility Boards. The provinces that produce the resource impose taxes and royalties on oil and natural gas exploitation (Smith, 2013). They provide drilling incentives and grant licenses and permits to construct and operate oil and gas exploitation facilities. On the other hand, the consuming provinces oversee the retail price of the commodity to consumers and regulate the distribution systems of the resource. However, there are some constitutional issues bedeviling the division of powers between the federal and provincial governments concerning the development and exploitation of oil and gas resources (Smith, 2013). Constitutionally, the natural resource is under the jurisdiction of the provincial governments. Initially, the three Prairie Provinces had no control over the resource as a result of their entry into Confederation till the enactment of the Natural Resources Acts in 1930. Consequently, the provincial governments own most of the natural gas, coal and petroleum reserves prompting the national government to coordinate its energy policies to the provincial governments’ energy policies (Smith, 2013). This intergovernmental policy coordination poses a higher probability of intergovernmental conflicts that infiltrate the development and exploitation of the resource. For instance, while the consuming provinces use their high population to sway the outcomes of national elections by electing federal governments that introduce favorable energy consumption policies, the energy producing provinces exercise their constitutional authority over natural resources to defeat such policies (Young, Pagliari, 2015). Another potential conflict that can impact the development and exploitation of the resource is the parallelism of federal government and provincial government energy policies. Since the provincial governments have the exclusive authority to legislate over the non-renewable resource, they make laws concerning the oil and gas exploitation and production. On the other hand, the federal government is empowered by the constitution to make treaties with foreign countries. When the federal government makes treaties involving energy production contrary to the expectations of the energy producing provincial governments, the energy producing provincial governments may fail to corporate in enforcing the treaty (Young, Pagliari, 2015). Consequently, this conflict may hamper the development and exploitation of the resource.

   One of the federal government's energy policies is the Environmental Policy. This policy was constructed to protect the environment from the adverse effects of the development and extraction of the natural resources and to enhance the sustainability of the resource base (Alm, Burkhart, 2013). The demand for oil and gas products has escalated globally leading to increased carbon emissions into the environment. Consequently, the global economy that is over-dependent on petroleum and gas products as a source of energy has serious implications on the earth's ecological infrastructure. The environmental policy addresses the concerns over the increased environmental pollution caused by carbon emissions and at the same time seek to promote the development and exploitation of the natural resource. Given the significance of the Canadian energy in the global market, the Canadian resource, and environmental policies has been felt in the global and the Canadian economies (Fertel, Bahn, Vaillancourt, Waaub, 2013). The Canadian environmental policy has faced lots of criticism as being more inclined to the market of exploitation and use of the resource and paying less attention to the environmental implications of the processes involved in the exploitation and use of the petroleum and its products (Alm, Burkhart, 2013). However, the entry of environmental groups into the resource and environmental policy making process has changed the policy discourse by generating ideas that challenge the traditional economic concerns bedeviling the resource management paradigm. For example, the idea of “deep ecology” challenges the anthropocentric perspective posited by the government resource and environmental policy by focusing on the ecological viability of the resource exploitation project other than its economic viability (McLinden, Fioletov, Boersma, Krotkov, Sioris, Veefkind, Yang, 2012). The deep ecology perspective advocates for the transformation of the approach to the environmental policy from a "conservationist" to a "Preservationist" approach so as to promote the non-consumptive approach to resource development and management.

   The preservation approach attributes values other than economic benefits to nature. Thus, it posits the view that the protection of the natural resource is not only for its economic value but also on the habitat preservation (McLinden, Fioletov, Boersma, Krotkov, Sioris, Veefkind, Yang, 2012). It questions the primacy of human action and interest over other ecological components in the habitat. Hence, the environmental policy must take into account the interest of other ecological components other than humans since there is interdependence among all the ecological components.

   The current scope of Canadian Resource and Environmental Policy has induced sustainable economic development by increasing wealth through regulated oil and gas resource exploitation (Alm, Burkhart, 2013). The sustainable development incorporates both economic and ecological factors that affect the development and exploitation of the oil and gas resource. The approach towards sustainable development holds the resources on the basis of their future and present value and focuses on the economic development without environmental decline (Alm, Burkhart, 2013). The harnessing of environmentally enlightened resource exploitation and development provides new business opportunities hence fostering economic development.

   The long-term side effects of resource exploitation through industrial production are considered by the resource and environmental policies as environmental externalities (McLinden, Fioletov, Boersma, Krotkov, Sioris, Veefkind, Yang, 2012). The cost of mitigating the environmental externalities such as; pollution, the deterioration of air, soil, and water, and the extinction of species has an economic impact on the budget, general public and the overall development of the country. When too much of the countries budget is directed to mitigation of environmental externalities, the economy suffers the risk of unsustainability as funds, that would otherwise be directed to economic projects, are directed to environmental externality mitigation projects. This impacts on the general public who bears the burden through taxation (Alm, Burkhart, 2013). The government is most likely to respond to this economic strain by increasing the tax levied on oil and gas products thus presenting a unconducive business environment that scares away investors leading to a backlash on economic development (McLinden, Fioletov, Boersma, Krotkov, Sioris, Veefkind, Yang, 2012). Consequently, the resource and environmental policy seeks to cushion the ecological and economical environments by addressing both resource and environmental depletion that is in the shape of eroded natural capital and vast environmental degradation. In Canada, the oil and gas resource exploitation has gone beyond their replacements and to replenish this natural capital massive investment that will most likely be difficult to secure due to increasing diminishing capital.

   Notably, the Canadian resource and environmental policy is still tilted towards the market context. The idea of deep ecology is currently outside the policy paradigm hence cannot influence public policy decisions. Sadly, the analysis of policy decisions on resource and environment are concerned with the market as the starting point (Carraro, Lévêque, 2013). The resource and environmental policy was intended to hold the polluters more culpable for the damages caused and to assess the environmental implication of resource exploitation so as to mitigate environmental damage. The environmental policy discourse in Canada is significantly affected by the allocation of resource management to private industries at the provincial government levels. The Canadian oil and gas resource management faces an obstacle of complexity and fragmentation of policy issues compounded by jurisdictions that deter efforts during comprehensive policy analysis (Young, Pagliari, 2015). Different levels of government and administrative arrangements are significant barriers to a comprehensive policy analysis hence, limiting the policy-making process.

   In Canada, environmental issues are related to resource management practices and the environmental policy that regulates the management and exploitation of oil and gas resource (McLinden, Fioletov, Boersma, Krotkov, Sioris, Veefkind, Yang, 2012). The concern about environmental degradation, environmental carrying capacities, and resource supplies in Canada is curtailed by the large land size with relatively low population densities that is majorly concentrated on the urban and southern part of the country. The distribution of settlement that presents very low population density to the northern part of the country distance majority of the population from the adverse impact of the resource extraction and exploitation in the northern areas (Alm, Burkhart, 2013). This little concern over environmental degradation posited by the resource and environmental policy compound its consistent concern over the maximization of conditions for resource exploitation.

   The economic dependency on massive resource exports has propped up the laissez-faire approach to resource and environmental policy in Canada (Heisler, Markey, 2013). The resource extraction provides several job opportunities. Thus, the policy makes tend to be quiescent toward the demands for licenses, permits and exceptions from regulations by industries. Therefore, the industrial processes that are geared towards the extraction, development and exploitation of the vast oil and gas resource in this country posit very insignificant concern about the environmental externalities (Heisler, Markey, 2013). This may negatively influence the business environment and economic development. A critical look at the Canadian resource and environmental policy depicts many considerations. To begin with, the massive land mass of the country and relatively low population density is responsible for the country's lack of concern over environmental externalities such as pollution and degradation of the urban environment. Also, that, the Canadian attitudes toward the environment has been colored by the over-reliance on the natural resource to generate economic wealth and encourage development. Besides, the Canadian environmental policies, attitudes and organizations are impacted upon by international events (Fertel, Bahn, Vaillancourt, Waaub, 2013). For instance, organizations ideas, and events in the United States have had a significant influence on the Canadian resource and environmental policy making process by infiltrating into the Canadian territory.

   The Canadian natural resource and environmental policy has changed over the years in an attempt to emphasize the concerns about the sustainability and incorporated resource management (Fertel, Bahn, Vaillancourt, Waaub, 2013). However, the principle governing the policy remain an anthropocentric utilitarianism in which human use is central to resource and environmental management. The Canadian resource and environmental policy reflects vicissitudes in the economic, social and political fabric of the country (Fertel, Bahn, Vaillancourt, Waaub, 2013). The resources and environmental policy was forged to respond to the challenges of increased pressure on the natural resources, global forces on Canadian landscape and the environmental externalities. Notably, the policy has not effectively confronted these challenges.

   The extraction and exploitation of the oil and gas resource in the north have shown a potential for short-term economic growth and limited benefit to the locals (McLinden, Fioletov, Boersma, Krotkov, Sioris, Veefkind, Yang, 2012). This is due to incomprehensive nature of the government resource and environmental policy that does not focus on the conservation of the resource base but tend to encourage its depletion through economic exploitation. Moreover, the locals inhabiting the resource extraction regions are subjected to adverse effects of environmental externalities that may have a long-term environmental impact with negative social consequences (Brandt, 2012). Considering the constitutional provisions regarding the management of the resource, the new industries participating in the resource management and exploitation may be of limited benefit to the indigenous people regardless of the ownership of such companies. For example, if the industries are Canada-owned, the southern-based corporations will enjoy the major benefits, and if foreign-owned only the federal government will benefit from taxes and royalties (Fertel, Bahn, Vaillancourt, Waaub, 2013). Conceivably, the northern oil and gas producing region is economically and environmentally disadvantaged by the resource and environmental policy that ought to have protected their interest. As noted before, the southern region has the bulk of the population thus, can easily influence policy making process in the favor of the resource consuming population through the election of individuals that serves their interest.

   Besides, the ecological consequences on the locals cannot be underestimated. The resource and environmental policy encompasses little concern on environmental issues such as the impact of oil spillage on the locals- an externality that can be catastrophic if not checked (McLinden, Fioletov, Boersma, Krotkov, Sioris, Veefkind, Yang, 2012). Since there is no government policy to protect the locals from economic discrimination, the locals are subjected to discrimination, social problems, and exploitation. For instance, the majority of skilled workers working in the resource extraction sites in the northern Canada are either from the southern Canada or foreigners (Fertel, Bahn, Vaillancourt, Waaub, 2013). Consequently, the influx of foreign workers on this minority of the population does not only induce a sense of discrimination but also creates social and cultural problems.

   In conclusion, Canadian wealth and strength of economy lies in its vast natural renewable and non-renewable resource that contributes significantly to the global market. Consequently, the Canadian resource and environmental policy greatly influence the production, extraction and supply of oil and gas resource that in turn impacts on the economic development of the country. The policy is inclined more onto the market value of the resource and posits little concern over environmental issues. Hence, the market value of oil and gas production and exploitation flourishes while the resulting environmental degradation is relatively ignored by the government. As a result, the indigenous population in the resource producing northlands face the adverse effects of environmental externalities with little benefits from the management of the resource. Without the protection of their interest by the environmental policy, the population from the northlands experiences poor economic development as the resource consuming Southlands greatly benefit from the resource management and experience better economic development.