Stephen Hazell
Opinion & Analysis
The Energy Mix
Prime Minister Mark Carney may be the smartest politician in Ottawa (and not just in his own mind) after suspending the Canada-U.S. trade talks on August 21, then winning three byelections big-time on August 31.
But his choices on which major projects the federal government should subsidize are not smart, and may well lead Canada to fiscal and ecological calamity. That distinct possibility points to the need for a new approach to assessing the risks to nature, climate, and communities, as well as to federal finances and corporate investment.
The Carney government’s unprecedented discarding of environmental laws and abandonment of climate and nature policies and international commitments is no longer news. Less public attention has been paid to the 10-year, $280-billion commitment in the 2026 Spring Economic Statement to subsidize pipelines, liquefied natural gas (LNG) terminals, nuclear plants, northern roads, and mines, as well as defence projects.
We’re hearing little about the implications of this massive spending spree for the federal deficit, carbon pollution, and destruction of nature. The economic viability of many major projects is clearly suspect, and their ecological and climate impacts extremely concerning, yet few of these impacts have received serious study or much public attention.
Portions of the $280 billion are allocated to various federal agencies to subsidize megaprojects promoted by provincial governments and industry. Canada would borrow the $280 billion from domestic banks as well as Wall Street (where Carney worked for 14 years).
The Calgary-based Major Projects Office (MPO) was established last year to assess the feasibility of referred major projects, such as the $43.7-billion West Coast Pipeline and $1.5-billion Mackenzie Highway, and to develop financing plans for them to draw on the $280-billion fund. Staffed by seconded bankers and bureaucrats, the MPO is opaque and tightly controlled by the Prime Minister’s Office, with even senior industry executives complaining about poor consultation.
MPO Lacks Capacity to Assess Risks
How likely is it that the MPO will properly assess the ecological and fiscal risks of proposed major projects in the absence of transparent discussions with Indigenous nations, communities, scientists, knowledge-holders, and the public? What capacity does the office even have for more in-depth review, when their mandate is to speed up development decisions? And what will it cost the country—economically, environmentally, and in the impacts on our social fabric and reconciliation efforts with Indigenous peoples—if the MPO gets it wrong?
A crisis averted helps illustrate the point. Global oil and gas behemoth ExxonMobil proposed the Mackenzie Gas Project in 2002 but abandoned it 15 years later following hearings and unsatisfied pleas for federal subsidies. The proposed 1,200-kilometre pipeline carrying expensive gas through partially unroaded wilderness with unstable permafrost driven by accelerating climate change was simply too risky an investment. ExxonMobil made the smart business decision and saved at least $16 billion in construction costs. As well, Canadian taxpayers likely saved billions in subsidies that would have been demanded by ExxonMobil to build and operate the pipeline.
Fast forward to today. How likely is it that a few months of in-house study by the secretive MPO, with a scant mandate or capacity for public or community engagement, will deliver sound advice to governments on the feasibility of major projects and their fiscal and ecological risks? The Alto high-speed rail and Mackenzie Highway projects are already facing challenges and delays due to federal reluctance to undertake impact assessment that has meaningful public participation and Indigenous engagement.
In the face of the global climate and biodiversity emergencies, the Prime Minister, most provincial premiers, and bank and extraction industry CEOs have eliminated impact assessment requirements for major projects to the extent they can. Other environmental laws are being systematically rolled back as evidenced by the 2025 Building Canada Act and the 2026 proposal to gut the Species at Risk Act and establish zones of environmental lawlessness.
The Carney government’s path forward seems to bet on the past, echoing Prime Minister John Diefenbaker’s Roads to Resources program of the late 1950s. Government commitments to massively subsidize oil and gas pipelines, carbon capture and storage projects, nuclear plants, ports, and northern roads are risky bets that corporate investment will be stimulated.
This corporate welfare is beguilingly troped as “Canada as an energy superpower” and “Build Canada Strong”. But Canadian families facing affordability and health challenges benefit little, and climate and nature perils that are burning, drowning, and choking our Earth remain unaddressed.
Assessing the Risks to Canada of a $280-Billion Spend
With impact assessment in perhaps irreversible decline, how to ensure that only sustainable major projects are subsidized with the $280 billion? The operating principle should be: transparency and public engagement in federal reviews and decision-making before commitments to subsidize major projects are finalized.
Prime Ministers Brian Mulroney, Jean Chrétien, and Paul Martin all understood that development projects seeking federal financial support should first be assessed for their environmental impacts. The Canadian Environmental Assessment Act (CEAA)required as much until it was repealed by the Stephen Harper government in 2012. The current Impact Assessment Act does not, even though the $280 billion in funding now being promised dwarfs federal subsidy programs for resource developments in recent decades.
Surely the fiscal and ecological risks of extending billions in federal loans and equity to proposed major projects should be reviewed in advance by independent economists, scientists, and knowledge-holders, with public participation and Indigenous engagement. To rely on the Prime Minister and the MPO to make these decisions in secret is to invite calamity for nature, climate, and the federal budget. The Auditor-General of Canada would no doubt audit how the $280 billion budget was spent, but those audit results would show up years too late to prevent a probable waste of federal dollars on uneconomic, unsustainable projects. The best path forward is to designate all major projects seeking federal subsidies for impact assessment with meaningful public participation under the Impact Assessment Act.
The second-best but perhaps more politically feasible path is to adapt existing corporate risk assessment practices to public reviews of federally-funded major projects. Risk assessment seeks to identify what could go seriously wrong with a project and anticipate the probability and severity of harm. Business risk assessment sensibly seeks to avoid corporate financial losses. But most business risk assessments do not address systemic risks from factors like climate disruption, ecological degradation, geopolitical fragmentation, infrastructure vulnerability, or resource insecurity, even though these factors are increasingly relevant to project feasibility
As a matter of federal policy, public risk assessment would seek to avoid financial losses from government investment of the $280 billion, but also to avoid risks of severe harm to ecosystems and communities. Compared to impact assessment, which usually takes a more comprehensive view of all changes to the environment, health, or social or economic conditions resulting from a project, risk assessment is top-down and narrow, seeking to identify the possible show-stoppers for a project.
Impact assessment is bottom-up, seeking first to understand the ecology, economy, and society to be affected, then the possible impacts, then the potential significance of those impacts. A key advantage of public risk assessment is that it would take less time, even assuming that independent expertise, meaningful public participation, and Indigenous engagement are featured. On the other hand, risk assessment would be higher-level, meaning that less serious impacts would be glossed over and major ecological “unknown unknowns” missed altogether.
A Legislated Framework
To be effective, a framework for publicly assessing risks of proposed federal decisions to fund major projects would need to be legislated. The public risk assessment framework would apply to all federal departments, agencies, and Crown corporations with responsibility for disbursing monies out of the $280 billion in funds, and when invoked, would require independent expertise, meaningful public participation, and Indigenous engagement. Other federal environmental laws such as the Canadian Environmental Protection Act, the Species at Risk Act, and the Fisheries Act would continue to apply to major projects.
The Impact Assessment Act and its predecessor the Canadian Environmental Assessment Act were misrepresented and wrongfully vilified by extraction industries and their political allies over decades. Even the principle that government decisions on proposed development projects should be informed by independent impact assessments to ensure their sustainability has been eroded and undercut.
Mandated federal impact assessment of major projects is still the best path to achieving net-zero GHG emissions and reversing nature loss. Recognizing that the communications battle to revive the Impact Assessment Act may be unwinnable, public risk assessment of proposed federal subsidies to major projects could still help avert ecological and fiscal calamities.
Legislating public risk assessment is admittedly an attempt to save the sustainability furniture. But in this moment, as our leaders fiddle and Canada drowns, burns, and chokes, withholding foolish federal funding from the worst major projects may be the most that can be achieved for climate, nature, and affected communities.
Stephen Hazell is a retired environmental lawyer and a member of the board of Energy Mix Productions.