How much influence should federal policy have on provincial energy decisions?
The amount of federal influence wanted or not on provincial energy policy varies from province to province, from resource benefit regime to resource benefit regime. It also varies depending on how a federal environmental taxation scheme might counter balance energy incentives, or on the size of the federal cheque written or the provincial political climate.
While our constitution may delineate where everyone should play and in which sandbox, the clarity of the legislative guidelines is not normally met in reality. Political conflict pops up as much as political opportunity. And let us not forget the judiciary. Recent court references, particularly as they relate to the legitimacy of carbon pricing or the legitimacy of federal legislation like Bill C-69 have been as clear as mud. Who has the jurisdictional responsibility for mud anyway? If money were to be made there, it would be challenged by someone.
Where I am from, in Newfoundland and Labrador, we would not have had an offshore oil industry unless the federal government heavily weighed in. Whether that was a direct investment in the industry’s development by becoming a part owner of an oil project or crafting specific legislation to make the province a primary beneficiary of the resource. Canada was seduced, not told to pound sand.
“The amount of federal influence wanted or not on provincial energy policy varies from province to province.”
When it comes to the development and export of hydrogen or LNG, regardless of the region, the federal government is again heavily sought after for investment purposes. Though distribution and on-land environment regulatory regimes are more often guided by provinces, cooperation and occasional conflict are part and parcel of this journey.
In Saskatchewan, Premier Scott Moe is leading the rebellion around federal policy infringement, as he sees it, on provincial pocketbooks and economic policy development. Premier Moe is currently refusing to collect and remit revenue from the federal carbon levy. The levy blessed by the Supreme Court has not received the same benediction from his government. Enforcement legislation exists for those who refuse to play by the carbon rules. Will anyone go to jail in this most recent case of federal environmental law colliding with provincial policy and a popular uprising against the tax?
Carbon wars aside, as long as Ottawa writes cheques and the provinces need them to push energy projects in their jurisdictions, there is no right answer to the limits of federal-provincial energy policy incursion.
Scott Reid was director of communications to former prime minister Paul Martin, and is the co-founder of Feschuk.Reid.
At the forefront of Canada’s energy policy development is the need to strike the right balance between meeting the country’s diverse energy needs, addressing environmental concerns, and promoting economic development. Influenced by market dynamics, public input and political agendas, Canadian energy policy is complex and multifaceted – a challenge that any present and future federal government, regardless of political stripe, will face to varying degrees. The nature of politics in Canada requires both federal and provincial governments to play distinct roles in shaping the country’s energy policy.
At home or abroad, ensuring Canada is well-positioned to achieve the government’s energy and climate objectives is seen by the federal government as a political necessity. However, what has once played to the Liberals’ strengths, it is now more often than not playing to their weaknesses. Over the past few months, provinces like Alberta and Saskatchewan have been steadfast in opposing federal policy initiatives relating to the energy sector. The recent decision by the Supreme Court of Canada finding most of the federal Impact Assessment Act unconstitutional has also made it more difficult for the federal government to defend its role in energy policy making and advance its own energy and climate agenda.
Nevertheless, a federation wide approach, with split jurisdictions between federal and provincial governments, exists to ensure the different needs of each region across Canada are met. Whereas it is the provinces who are best suited to manage their own day-to-day decision making, such as resource management, and energy generation and distribution, it is the federal government who is tasked with protecting Canada’s interprovincial and international energy infrastructure like pipelines and transmission lines. The federal government is also best positioned to defend Canada’s interests in international trade. As Canada’s representative on the international stage, the federal government participates and defends the country’s interests in negotiations and agreements, such as the Paris Agreement, and the Canada United States Mexico Agreement.
A persuasive case can also be made for the role of the federal government in creating intergovernmental mechanisms to provide a forum for federal-provincial dialogue. Certain intergovernmental mechanisms, like the Regional Energy and Resource Tables for instance, bring the federal government together with provincial governments to better coordinate on timelines and processes. This kind of federal-provincial dialogue is key to advancing economic priorities in the sector, addressing regional differences and supporting workers through Canada’s energy transition.
Central to addressing challenges and opportunities in Canada’s energy sector is establishing the road for effective cooperation and coordination between both levels of government. Far too often, the ability for federal and provincial governments to collaborate with one another is dismissed, or even forgotten. This proves to be a particularly challenging assumption when much of Canadian policy has been built on intergovernmental cooperation. The notion that energy policy does not pose an added challenge to intergovernmental collaboration is, however, naïve. Canada’s uneven distribution and production of natural resources naturally results in energy policy varying from one province to another, creating the need for the federal government to balance the competing interests from across the country.
As federal and provincial governments across Canada move towards an unavoidable clean energy transition, the concerns raised by the communities and workers they represent and whose livelihoods depend on a successful energy sector must be seen as the impetus for collaboration. Canada’s economic and energy security will be better served by governments that are able to set political differences aside and put Canadians first.
Laila Hawrylyshyn is a Consultant at Crestview Strategy. She builds bridges between industry stakeholders and governments to collaborate on developing and improving public policy. Based in the Ottawa office, Laila’s portfolio focuses on regulatory heavy files in transportation, and energy.
A combative relationship between federal and provincial governments around natural resources is as Canadian as maple syrup. Federal-provincial fights have been unrelenting since our country was founded.
After Manitoba, Alberta and Saskatchewan became provinces, it took decades of acrimonious political battles for them to win control over their resources. This fight has been so fraught because the economic stakes have been so high. From before Confederation, Canada has sold our abundant natural resources to the large and lucrative U.S. market. From buying Canadian coal to being the provinces’ biggest customer for our oil and gas, the U.S. has always been a huge market for our natural resources and energy. Today, the whole world is a potential market.
Let’s be honest, we’re a country with messy, complex, and overlapping responsibilities. Yes, provinces have jurisdiction over their natural resources. However, the federal government retains powers to regulate and manage interprovincial and international trade. So, provinces have rights over resources while the federal government has responsibilities for the transportation of those resources to other provinces or countries.
Both levels of government have the right to levy taxes on these resources and responsibilities around environmental protection, which go hand in hand with managing energy resources. With differing priorities and federal-provincial fights, we’ve seen uncoordinated and even contradictory provincial and federal rules around environmental assessments.
Meanwhile, First Nations have rights over their territories, while the federal government has responsibilities over the relationship between the government and these Indigenous Nations.
Even the October 2023 Supreme Court decision that ruled parts of Ottawa’s Impact Assessment Act (IAA) unconstitutional didn’t provide real clarity. Instead of simply striking it down, the Justices sent that bill back to the federal government to be rewritten.
As the world moves towards a low-carbon economy, the economic stakes continue to rise. We need governments, workers, Indigenous communities, and all other stakeholders to come together to get Canada ready to compete for new investments in a cleaner, sustainable world economy. If we fail to do this, we risk losing investment in Canada. Losing these investments also means losing good jobs for Canadian workers and lucrative opportunities for Canadian businesses.
I’m sure most Canadians would assume that these high economic stakes would inspire governments to come to the table and hammer out a compromise. But in today’s divisive political world, compromise has become a dirty word. Too often, political grandstanding replaces sound policy making.
This isn’t just about how much the federal government influences provincial energy management. Or how much provinces influence federal environmental rules. At the end of the day, all those involved should influence each other. That’s how we first reached the compromises that Canada was founded on.
More than anything today, we need to see Canada’s leaders show leadership. The prime minister, premiers and all political leaders must come together – alongside Indigenous Nations, businesses, and the labour movement. Most of all, we should all be influenced and inspired by a vision of the kind of Canada we want to leave for our grandkids.
Kathleen Monk is Principal Owner at Monk + Associates, an independent public affairs firm. She appears regularly on CBC News Network’s Power and Politics and sits on the board of CIVIX, a non-partisan charity dedicated to building engaged citizens.
