OTTAWA – Federal environmental protections are struggling to keep up with the fast pace of development in the energy industry, leaving Canada exposed to the risks of oil spills, pollution, and damage to fragile habitat, a new audit says.
Scott Vaughan, Canada’s commissioner of the environment and sustainable development, issued his parting words Tuesday after five years in the job, taking a close look at how well Ottawa is managing the significant environmental risks associated with its goal of aggressively promoting resource development.
“Considering the central role of natural resources in today’s Canadian economy, it is critical that environmental protections keep pace with economic development,” Vaughan writes.
Instead, he found that regulators were reeling under changing legislation, confusing lines of responsibility and outdated financial requirements to cover off costs in case of disaster or damage to the environment.
“These shortcomings leave me concerned that environmental protection is failing to keep pace with economic development,” Vaughan said in his report, which notes that the government expects to see $650 billion invested in resource exploration and development over the coming decade.
Specifically, the commissioner found that the two Atlantic offshore petroleum boards are not ready to respond to major oil spills, despite a complex array of regulations and procedures.
The government asked Vaughan to audit the offshore boards after the 2010 oil spill in the Gulf of Mexico prompted questions about how Canada would handle a similar situation.
Vaughan found jurisdictional confusion that has led to a lack of co-ordination and significant gaps in the way authorities were monitoring the activities of companies.
“They have not established or updated policies and procedures to guide environmental assessments, and they are not systematically tracking measures to prevent or reduce environmental impacts,” Vaughan writes.
Plus, the boards – and the handful of federal departments they work with – have not yet figured out how to apply the new environmental assessment regime, which was dramatically overhauled last summer in one of the federal government’s budget omnibus bills.
Vaughan raised similar red flags about the government’s methods of mitigating financial risks stemming from environmental damage.
Liability limits for nuclear accidents or oil spills are decades out of date, he said, leaving taxpayers exposed to huge financial risk if something goes wrong.
For example, companies would only have to cover a maximum of $40 million in damages in case of an offshore spill in the Arctic, or $30 million in the Atlantic Ocean – liabilities that have not changed in a quarter of a century and are far lower than other countries. The cleanup of the 2010 spill in the Gulf of Mexico cost $40 billion U.S.
In the North, Vaughan is especially concerned that officials with Aboriginal Affairs and Northern Development Canada are not inspecting mining operations to make sure companies are living up to their obligations.
In one mining case, the department accepted $17.6 million in promissory notes for reclamation, but the notes were not guaranteed by a bank and were below standards set out by legislation.
Plus, changes to the Fisheries Act included in last summer’s omnibus bill have left regulators unsure about what kind of compensation plans companies should have in place, the report notes.
At the same time, tanker traffic and marine transportation of oil and gas is soaring.
“These findings, when considered with our concerns regarding preparedness to effectively respond to a major oil spill, show clearly that Canadians are exposed to environmental risks and the financial implications that go with them,” Vaughan writes.
Still, the federal government has indicated it is aware of its archaic regime. Ottawa has been reviewing it for months now, and is poised to introduce legislative changes likely this spring that would significantly increase liability limits and curtail taxpayers’ financial risk.
Vaughan also expressed frustration with the slow pace of establishing protections for sea life.
The Ocean Act — along with international agreements to which Canada is a signatory — provides for a network of marine protected areas that would allow ecosystems to flourish without the threat of intense economic activity.
But Ottawa has moved at a snail’s pace to set up the network, the report says.
“The level of protection falls well short of what the Ocean Act calls for, and at the current rate, it could take many decades to reach the goal of creating a network of marine protected areas,” Vaughan writes.
As a result, Canada’s oceans are increasingly threatened by pollution, overfishing and climate change, he said.
Vaughan also looked at federal subsidies to the fossil fuel sector and found that direct subsidies were on the decline. However, he also found that indirect subsidies through tax measures added up to about $3 billion over the past five years, although that amount includes incentives for clean energy.
“The costs to taxpayers of tax incentives are difficult to estimate accurately,” Vaughan states, urging the government to make the money trail clearer.
The commissioner also encouraged the government to get a better grip on the risks associated with the practice of hydraulic fracturing, known as fracking, which is becoming more and more popular in many regions across Canada.
There are some 200,000 fracking wells in Canada, and that number is expected to double in the next 20 years, the report says. However, oil and gas exploration and drilling activities are exempt from reporting releases of pollutants to Environment Canada.
“The government cannot know if Canadians are adequately protected.”
Environment Canada and Health Canada are in the midst of research on the topic.