Natural Resources sees itself as oil industry’s “champion in government,” documents reveal

June 4 2021

Experts warn Minister O’Regan’s “boost” to industry may be skewing Canada’s approach to climate crisis

Canada’s Department of Natural Resources is acting as a “champion” for the oil and gas industry, intervening in the work of other federal departments to advocate for less regulation of the beleaguered sector, according to documents seen by The Breach.

In meetings with the department from May to September last year, the country’s biggest oil lobby groups complained about feeling “under siege,” dealing with “high-cost policies” and a “crisis” that predated the pandemic, and struggling with “elements within the government that do not want to see the success of the oil and gas sector in Canada.” 

As the United States and countries in Europe continue to outpace Canada by constraining oil production and reducing carbon emissions, Canadian companies appear to be leveraging their influence within the department to shield themselves from even minor environmental policies proposed by the Trudeau government.

Documents providing an overview of several meetings show a pattern of Natural Resources Minister Seumus O’Regan and top-ranking officials soliciting industry’s views. Ministry officials then repeatedly promised to advocate on behalf of industry to departments like Environment Canada, even in instances where they admitted they were not involved in scientific deliberations.

In September 2020, Deputy Minister Jean-François Tremblay pledged to Canada’s twelve largest oil and gas lobby groups that the department would “continue serving as the sector’s champion in government, and to continue to tell the sector’s story within government.”  

In return, oil lobby groups consistently praised the department’s officials, as they pushed to delay regulations that would reduce the carbon intensity of fuels used in cars and homes, to avert attempts to protect sensitive areas from offshore exploratory drilling on the Atlantic coast, and to get more federal public financing support for oil projects.

“Participants were grateful for the department’s work to date, from the Minister down to the working level, on engaging them and ensuring their perspectives are heard in the Centre and at [Environment Canada],” read a summary of one of the meetings.

Environmental organizations and academic experts are warning the oil industry’s influence over the department may be skewing the federal government’s approach on the climate crisis, with Natural Resources acting as a “lobbying-arm of Big Oil.”

“Giving a boost” to Oil and Gas Industry

A briefing note prepared for O’Regan ahead of an August 2020 meeting with executives from Irving Oil indicates he may have been ready to go to bat for the industry against a key climate regulation of the Trudeau government.

First announced five years ago, the Clean Fuel Standard has yet to be implemented and has been the target of intensive lobbying by the oil industry, which has to date diminished the strength of the potential regulation. In 2018, unidentified oil companies hired high-profile public relations firm Navigator to design a campaign strategy to fully block its implementation.

The briefing note acknowledges that “industry, including Irving, continue to express several overarching concerns,” and shows the department would raise them with Environment Canada, who is leading the regulatory process.

“NRCan continues to work with industry stakeholders to ensure the petroleum sector perspective is accurately reflected to [Environment Canada],” the note instructed O’Regan to tell the oil executives.

Kathryn Harrison, a professor of political science at the University of British Columbia, said the favouritism toward the oil industry was striking.

“The petroleum sector in Canada to my knowledge has never been shy in presenting its perspectives all by itself directly to any government department,” Harrison said. “It seems what this is about is Natural Resources giving a boost to the petroleum’s sector’s concerns to another federal department, rather than making sure the sector’s views are ‘accurately reflected’ to Environment Canada.”

According to the document, O’Regan provided reassurances to the Irving executives that Environment Canada could be persuaded.

“We have seen examples of [Environment Canada] making adjustments reflecting the current context,” O’Regan was instructed to say. “For instance, they shifted timelines in response to industry requests post-COVID.”

In March 2020, the federal government delayed the implementation of the Clean Fuel Standard again, following lobbying by the Canadian Association of Petroleum Producers (CAPP).

“It’s important,” O’Regan emphasized, “that industry continues to bring forward any new information or new solutions to enhance the regulatory design.”

A few months after the fall meeting with O’Regan, the updated Clean Fuel Standard released by Environment Canada included major concessions to the oil industry, cutting the regulation’s overall emissions reduction target by a third, and narrowing its scope by only applying it to liquid fuels, instead of solid and gas fuels.

A spokesperson from the Natural Resources Canada told The Breach that “we work with other federal ministries to craft whole-of-government solutions on these issues.”

“Natural Resources Canada regularly engages with stakeholders from across the natural resources sectors, particularly with respect to supporting Canadian workers through COVID-19 and finding solutions to meet our climate targets.”

Bora Plumptre, a senior analyst on federal policy with the Pembina Institute, said he’s still hopeful the Clean Fuel Standard will become policy, even in its diminished state.

“While Natural Resources Canada has exercised their influence behind closed doors, I’ve been impressed with how Environment Canada has maintained a degree of independence in their decision-making, in the face of industry opposition and complaints from provincial representatives,” he said.

While a large section of industry continues to play an obstructionists role, Plumptre pointed to some companies who appear to be preparing themselves for the regulation by making investments in clean fuel facilities and supply chains.

At another meeting in October with the CAPP, Deputy Minister Tremblay solicited the country’s biggest oil lobby group’s concerns about a different impending regulation.

Earlier that year, a scientific advisory secretariat at the Department of Fisheries and Oceans had proposed prohibiting exploratory drilling in sensitive areas and vulnerable marine ecosystems off the coast of Newfoundland and Labrador.

According to government documents, Tremblay noted that the changes were “identified as unworkable” by industry.

The briefing notes instructed Tremblay to acknowledge that the department “is not involved in the science process” [sic], but to tell CAPP that their “staff are engaging with the Department of Fisheries and Oceans colleagues on these issues.” 

The deputy minister asked CAPP: “From your perspective, what are the key risks with the [Canadian Science Advisory Secretariat] recommendations as currently drafted?” 

This regulatory process has yet to conclude.

“Handmaiden of industry”

Natural Resources Canada has traditionally been the most industry-friendly department within government, but it appears to have taken its role as advocate for the oil and gas sector to new heights during the pandemic and as other branches of government began pursuing regulatory changes that would slightly damper their profitability.

“The [Environment Canada] agenda does not appear to acknowledge the pain the industry is in, and there is concern about imminent policy and regulation changes (e.g. plastics being banned),” lobbyists from the Chemical Industry Association of Canada said at a meeting in July, 2020.

“There are significant challenges ahead,” CAPP told the department two months later. “The crisis did not start with COVID and will continue past the COVID recovery. Capital investment has been falling for years and continues to drop.”

“In general, the industry has felt under siege and it is critical to continue to work with public servants to address challenges,” lobbyists from the Canadian Gas Association said at the same meeting.

“As governments start to take more concerted action to address the climate crisis, oil companies are freaking out and going above and beyond to try to neutralize climate policies and increase the subsidies propping up the sector,” said Alex Speers-Roesch, an analyst with Greenpeace Canada who obtained the government documents through an access to information request and shared them with The Breach. 

“Natural Resources Canada’s role as a voice for industry has been intensified to the point that it’s effectively become a handmaiden to the oil industry, its lobbying arm within the federal government.”

Last month, The Breach revealed a secretive committee that the department had formed during the pandemic with the heads of Canada’s top oil and gas companies to identify “opportunities” for the industry post-pandemic.

According to the briefing notes for O’Regan’s meeting with Irving executives in August, he underlined how much money the federal government is giving the energy sector through direct bailouts and the wage subsidy.

“As you are well aware, we have invested close to $2.5 billion in the energy sector and provided measures to strengthen liquidity support as part of our COVID-19 Economic Recovery Plan,” he said.

Through 2020, the federal government’s financial support for the oil and gas sector reached nearly $18 billion, both in direct subsidies and $13.5 billion in public financing from Export Development Canada.

According to the government memo, O’Regan touted the Liberals’ climate plans but also told Irving Oil,“before we can get there, key sectors, such as the petroleum sector, need to stabilize before recovery.”  

In May, the International Energy Agency called for all new oil and gas developments to be halted to keep the world within manageable limits of global heating, its strongest warning ever.

“I question whether stabilizing the petroleum sector is, in fact, consistent with the government’s commitment to net zero by 2050 and ‘building back better,’” Harrison said. “Especially in light of the deep contraction of the oil industry needed in order to stabilize the global climate.”

“It’s hard for me to imagine a ‘stable’ oil industry if we are to stabilize the planet’s climate.”

Rave reviews from the Oil lobby for Natural Resources Canada (May-September, 2020)

“There are a lot of files where NRCan leadership will be key.” – Canadian Gas Association
“Members are impressed with engagement from Minister of NRCan, who understands the concerns of industry and has been a champion for the sector.” – Explorers and Producers Association of Canada
“NRCan needs to be champions and provide strong advocacy for the industry within the government, as it seems that there are elements within the government that do not want to see the success of the oil and gas sector in Canada.” –Canadian Energy Pipeline Association
“The Minister’s public comments are appreciated as they have been extremely well-done and helpful.” – Explorers and Producers Association of Canada
“NRCan has always been a key champion for the petroleum industry, and this has only become more important in light of COVID-19.” – Canadian Gas Association
“The federal government will need to be a champion of the sector and indicate that it is ‘wanted’.” – Petroleum Services Association of Canada

[Top photo: Natural Resources Canada is located in the Sir William Logan Building in Ottawa, Canada.]