How Red Tape is Inhibiting Canada’s Potential as an Energy Project Leader

What is Red Tape, and What Does It Mean:

For many people, jargon from any government or corporate institution can be fuzzy or confusing. The phrase “red tape” means unnecessary rules or processes that delay resource development.

Please remember that there is a significant distinction between all regulations and red tape. Some regulations are essential to ensure that businesses are honest, competing fairly and acting in a sustainable but profitable manner. Regulations outline the rules that businesses must follow, in order to protect consumers and the environment, while helping businesses succeed.

How Red Tape is Hurting Canada:

A 2022 report, found that Canadian businesses lose $11.3 billion CAD annually to red tape procedures such as, regulatory and cost compliance. Another statistic from the same report found 87% of Canadian business owners state red tape causes excessive stress, and roughly 63% of them advise their children not to start a business due to the stress.

Canada is a place where hopes and dreams of having a better life are fulfilled. Canadians shouldn’t be stressed about administrative paperwork or paying large amounts of their own money to get through long and dreadful processes that should be either quick or shouldn’t exist. In a perfect world both of those statistics should be zero, however the current numbers are far higher than they should be.

Just recently, a massive tidal energy project which Sustainable Marine Energy Ltd. was developing, told the Department of Fisheries and Oceans (DFO) they would not go through with their proposed tidal project. Their reasoning for pulling the plug was government red tape around environmental regulations despite providing sufficient environmental monitoring data and working with the DFO. Sustainable Marine Energy Ltd CEO Jason Hayman stated that the DFO cited their project as high risk without providing any justification leaving additional employment and revenue that the project would have provided to leave Canada.

Investors have indicated that uncertainty around environmental regulations, regulatory duplication and the cost of compliance are three main policy areas where Canadian provinces underperform compared to the United States.

If environmental regulations were more concrete, there was less duplication, and the cost of compliance was cut, Canada would appear more attractive for energy investment from a domestic and foreign standpoint.

Why is There Such Regulations:

Regulations in clean electricity are developed around three main principles.

1. Maximize greenhouse gas reductions.
2. Ensure grid reliability to support the Canadian economy.
3. Maintain affordable electricity for Canadians.

With these three principles in mind, the Government of Canada is trying to meet their 2050 net-zero goals through a joint effort between provinces, Indigenous partners, and non-government organizations. Some might argue that the goal of net zero by 2050 is in too short of a period or too aggressive of a plan to be met. However, the Government of Canada believes that to avert the worst impacts of climate change, we must be committed to reaching net zero by 2050.

Balancing Regulations and Investment:

For Canada to be a leader in energy production, projects need to move

forward without the worry about administrative paperwork that will take weeks to complete and to receive an answer. At the same time, there should be an environment where businesses are acting honest in a sustainable manner and competing fairly in the market.

The Government of Canada has previously introduced the “Red Tape Reduction Act” which controls the administrative burden that businesses feel with regulations. Within the act is a “one-for-one” rule. For every regulation increase that burdens business, there must also be an offset and a repeal of an existing regulation. By doing this, the Federal Government believes it should ease the burden that is felt by businesses and help them remain leaders investing in both traditional and clean energy projects.

In 2020 the Treasury Board of Canada Secretariat reviewed the “Red Tape Reduction Act” and found that the “one-for-one” rule is working at offsetting the administrative burden and repealing out-of-date, and unnecessary regulations that businesses face.

The review found three key points that need to be considered.

1. Reviewing regulatory stock as a way of making sure that regulations are relevant to business.
2. Broaden the scope of rules beyond business to cover administrative burdens on individuals, organizations, and businesses.
3. Explore different ways to address cumulative regulatory burdens.

For investment to remain and continue developing here in Canada, there should be a collaboration between many entities, including the Government of Canada, businesses, and non-government organizations, to ensure investment in Canada’s energy future flows continuously without the worry of running into unnecessary regulations or paperwork.