In 2017, Canada's energy sector faces continued uncertainty and inertia. From taxes to transportation, Canada's natural resource industries – and their benefits to the national economy – are under threat from a dramatically changing legal, regulatory and political landscape. Foremost among those challenges are infrastructure development, carbon pricing, and waning investor confidence.
Notwithstanding recent approvals, the future for pipelines reaching tidewater – a polarizing issue in Canada – remains uncertain. The inability to transport oil and gas to market impacts the national economy, including government revenues and Canadians who rely on the sector for their jobs. Chief concerns in 2017 include regulatory process uncertainties and the necessity for a "social licence" to operate, over and above meeting legal requirements. Then there are battered commodity prices, now entering their third year.
Climate change and carbon pricing regimes are also transforming Canada's natural resource industries. The Government of Canada's clear message is that economy-wide carbon pricing will reduce greenhouse gas emissions. British Columbia, Alberta, Ontario and Québec have already introduced carbon pricing, with uncertain implementation, divergences in approach – carbon tax versus cap and trade - and heightened the risk of patchwork climate architecture among provinces and the federal government.
As we enter into 2017, federal climate policy may have negative impacts on emissions-heavy and trade-sensitive industries' ability to be competitive. There is also uncertainty as to how the federal government's leadership on climate change will address Canadian pipeline development, energy market access, and foster innovation.
What is clear is that Canada's natural resources – fundamental to its standard of living – are facing unprecedented challenges in 2017. This is not lost on investors, for whom patience is waning and capital is fluid, particularly into the United States and other lower cost jurisdictions. With optimism - and leadership - in short supply on the energy front, 2017 will be a turning point for not only the sector, but also as to whether the country can reach its full potential for nation building and positive economic transformation.
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