Canada's Regulatory Burden Squanders LNG Opportunities

The Canadian government's approval of Enbridge's Sunrise expansion of the Westcoast natural gas pipeline is seen by some as a positive step, but others argue it's too little, too late. The project adds only about 8% to the system's current capacity and highlights the broader issue of regulatory burdens hindering large-scale pipelines and liquefied natural gas (LNG) terminals.

The Impact Assessment Act of 2019 introduced subjective criteria into project assessments, slowing down projects and increasing costs. The previous assessment system was more efficient, with 17 projects assessed and approved in the first five years compared to only one under the new system.

Last year's Bill C-5 aimed to fast-track projects deemed in the 'national interest', but energy project proponents fear this new process could expose project proposals to additional legal challenges, further delaying approvals. The Carney government is doubling down on Trudeau-era policies that increase costs for building and operating LNG projects, adding an estimated $14.6 billion in compliance costs.

Only one of the 18 proposed LNG export projects in Canada over the past decade has been built, with just two more under construction. Developing LNG resources could generate $11 billion in economic activity and support 96,550 jobs annually, but regulatory hurdles continue to hold back progress.