Getting Energy Projects Built: Why Regulatory Independence Matters

There has been much attention of late to regulatory reform to get energy projects built faster, notably cross-country infrastructure to strengthen economic and energy security vis-à-vis the United States. While this is welcome attention to a longstanding Canadian challenge, the issue of regulatory independence is often ignored in these debates.

Who should decide whether an energy project is approved – politicians or regulators? The answer matters a great deal to whether projects will get built at all.

Previous Positive Energy research underscores that the more politicians have direct roles in approving projects, the less clear, predictable and timely are government decisions. This is a problem. Clarity, predictability and timeliness of decision frameworks are the sine qua nons of investor confidence.

This doesn’t mean politicians don’t have a role. They do, as explained in the report. What it does mean is that regulatory independence is a pivotal ingredient to getting energy projects built faster. What’s needed is a clear-eyed view of what makes for an independent regulator, just how independent – or not – Canadian regulators are, and what needs to be done to strengthen regulatory independence.

This report shares interim findings from a research project focused on regulatory independence. Independence is one of the packages of reform identified in Positive Energy’s recent study, “Energy Projects and Net Zero by 2050: Can we build enough fast enough?”

The study discussed in this report builds on those findings. It is based on Positive Energy research on regulatory independence to date and on profiles of fourteen different regulators (federal and provincial) whose activities bear on approvals of energy projects. The next stage of the project involves interviews with policymakers, regulators and leaders affected by regulatory systems (industry, Indigenous, civil society representatives) to better understand the dynamics of regulatory independence for different jurisdictions and project types, and what might be done to strengthen regulatory independence.

This research centres on policymakers impeding the building of energy projects by extending their roles into the processes by which individual applications are handled and decided upon. This compromises the clarity, predictability and timeliness of decision-making, the core requisites of investor confidence.

The report examines:

The rationale for independence: why a system involving independent regulators can best meet public policy goals of promoting economic growth; sustaining the integrity of the energy system (what we call “energy fundamentals”); promoting community acceptance; and, driving toward a lower GHG emissions energy system and broader economy.

The meaning of independence: the attributes of an ‘independent’ regulator.

The state of play in Canada: the level of independence of energy regulators in multiple jurisdictions in Canada.

The concluding section shares recommendations.

• Michael Cleland, Positive Energy Executive-in-Residence
• Monica Gattinger, Positive Energy Chair

With:

• Rafael Aguirre, Postdoctoral Fellow
• Julien Tohme, Doctoral Candidate