With ongoing trade tensions and deteriorating trade relations with the U.S, Canada is currently considering building a national energy corridor from coast to coast. Ontario is exploring a new energy corridor with Western Canada, including infrastructure such as rail links and especially pipelines.
Unsurprisingly, it has already stirred up debate, and it shares an eerie similarity with another cancelled pipeline project, the infamous Energy East, a project which sought to upgrade the existing infrastructure to carry Alberta crude to refineries in the east, particularly the Irving Oil Refinery in St. John, NB. The cancellation of this pipeline provides valuable insight and guidance into any future energy project linking the national energy corridor.
Economic Considerations
The current project has several components linked to economic development. Firstly, infrastructure construction, refining, and transport could generate significant employment, particularly in Northern Ontario. It would also improve access to the region, which has significant mineral deposits. Additionally, a domestic corridor could reduce exposure to trade disruptions and provide greater control over energy movement within Canada.
Energy East’s collapse was also affected by economic factors: falling oil prices, rising construction costs, and shifting market demand, which, combined with other factors, made the project unfeasible. The current global oil price fluctuations could affect the corridor’s long-term profitability.
Environmental Considerations
Environmental opposition contributed significantly to Energy East’s cancellation. Critics pointed out concerns about oil spills, waterway contamination, and how the project fits into Canada’s broad goals of energy transition and reducing dependence on resource extraction. For Ontario’s proposed corridor, a robust environmental assessment will be required and have to focus on:
- Protecting sensitive Northern Ontario ecosystems
- Implementing safety measures and spill mitigation, and other emergency response procedures.
Indigenous Engagement
Energy East faced strong opposition from Indigenous communities along its route. Concerns largely stemmed from the lack of consultations, the impacts of potential spills or leaks on traditional lands, hunting and fishing rights, and a distrust of institutional authorities such as the National Energy Board (NEB). For the current Ontario corridor, meaningful engagement is crucial. It is described by the Canada Energy Regulator as a process that begins early in the project planning phase, is accessible and inclusive, provides relevant information, responds to community input by adapting project design, and is meant to continue from the planning phase up to the operations. For the current proposal to receive Indigenous support, it would have to include:
- Early, transparent discussions to identify community concerns and strategies to ensure they are addressed.
- Opportunities for economic participation and co-ownership, ensuring benefits are shared and stay within Indigenous communities.
- Clear adherence to Indigenous rights and jurisdiction, in alignment with federal and provincial regulations.
Political and Regulatory Oversight
Energy East faltered in part also because of political misalignment. Provincial and federal governments were at odds, and public opposition mounted, increasing pressure. A new corridor proposed has already drawn criticism from environmentalists, Indigenous Nations and politicians alike. Canada’s complex regulatory framework has also been cited by many as a barrier for private investments in energy infrastructure. The lengthy timeline for approvals and the need for multiple permits often result in increased construction and operating costs.
An example of this is the TransMountain Expansion. After purchasing the pipeline from Kinder Morgan in 2018 for $4.5 billion, by the time of operations in 2024, costs had ballooned to $34 billion. This dramatic escalation illustrates how regulatory delays, legal challenges, and political friction can transform even well-backed projects into financial quagmires.
Successful advancements of projects would require high levels of coordination between all levels of government, a streamlined regulatory framework and a dynamic engagement between all involved stakeholders. Prime Minister Mark Carney has promised to speed up the regulatory approvals and permitting for major projects considered to be in the “national interest” through legislation, which has seen some support from industry. Additionally, in our Nation Building Series, we have highlighted the leading role AI can play in regulatory reform, offering practical solutions to accelerate permitting processes and strengthen trust among stakeholders without severely impacting the project.
Conclusion
The unfortunate reality is that the past few pipeline projects have already exposed the nature of the regulatory process in Canada: it is time-consuming, inefficient, and above all, uncertain. It has also discouraged private investors, increasing costs for such projects. The lack of interest from private companies in developing pipelines highlights a crucial responsibility that governments at all levels need to take. Despite the hurdles, there are still projects that are completed successfully and with Indigenous partnerships. An example of this is LNG Canada in Kitimat, B.C. The $40 billion project, touted as one of the largest private sector investments in B.C, achieved regulatory approval without major delays, secured agreements with 20 First Nations along its pipeline route, and benefited from strong cooperation between Ottawa and British Columbia. While the approval process was complex, the project’s successful navigation of regulatory requirements and Indigenous partnerships shows that Canada can deliver world-class energy infrastructure when stakeholders work together.
If Ontario’s energy corridor is to succeed where Energy East failed, it will require more than ambition. It will depend on clear regulatory frameworks, coordinated political support, robust environmental safeguards, and genuine Indigenous partnerships. Without these foundations, even the most promising corridor risks becoming another idea left on the table.
Sources:
- https://www.bc-er.ca/what-we-regulate/major-projects/lng-canada/#:~:text=LNG%20Canada%20is%20building%20an,production%20capacity%20of%2026%20mtpa.
- https://www.cbc.ca/news/canada/sudbury/ontario-proposal-pipeline-feasibility-reaction-1.7611764
- https://www.lngcanada.ca/commitments/environmental-protection/#:~:text=LNG%20Canada’s%20Environmental%20Assessment%20Certificate,avoid%20or%20reduce%20those%20impacts.
