Since the 1980s, Canada, Nova Scotia and Newfoundland and Labrador have jointly managed the development of offshore petroleum resources under the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act and the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act, also known as the Atlantic Accord Acts.
Under the Accord Acts, the federal and provincial governments have worked together under a joint management regime, sharing regulatory oversight of offshore energy resource development through joint Boards, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) and the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB).
For each of these jurisdictions, having a single regulator for all offshore energy development has several benefits. It is a leading practice globally, including in countries such as the U.K., U.S., Australia and Norway, and it is familiar to industries that operate in other jurisdictions. The Accord Acts and the existing joint-management regimes have served Canadians well to date; however, they have remained largely unchanged since their creation in the mid-1980s. With the offshore renewable energy industry gaining momentum globally, Canada has the opportunity to be among the leaders in this area by expanding and modernizing the mandates of the Offshore Boards to include the regulation of offshore renewable energy.
The Emerging Offshore Renewable Energy Industry in Canada and Around the World
According to the International Energy Agency (IEA), globally, the offshore renewable energy industry has grown rapidly - between 2010 and 2021, the amount of energy produced globally from offshore wind grew almost twenty-fold. The economic opportunity associated with the renewable offshore industry is growing, too. The IEA also states the global offshore wind market alone is forecast to attract one trillion dollars in global investment by 2040.
Offshore renewable energy development in Canada - particularly offshore wind - can help Canada achieve its goal of achieving net-zero emissions by 2050 while creating sustainable jobs. Canada is home to the longest coastlines in the world, and the potential for offshore wind development is particularly promising in Atlantic Canada, with Nova Scotia and Newfoundland and Labrador having some of the best wind speeds in the world.
Indeed, Canada's world-class-leading offshore wind resources make it well positioned to serve both local and international clean hydrogen markets and to decarbonize provincial electricity grids and move to a non-emitting electricity grid by 2035.
Industry interest in developing offshore wind and hydrogen projects has also grown substantially over the past year, with numerous projects now contemplated off the coasts of Nova Scotia and Newfoundland and Labrador. And last fall, the Government of Nova Scotia announced a target to issue an equivalent of five gigawatts of seabed licences for offshore wind by 2030.
Modernizing and Expanding the Mandates of the Offshore Boards to Include Offshore Renewable Energy
In order to realize Canada's offshore renewable energy potential, a consistent and predictable regulatory regime in federal-provincial jointly managed offshore areas is needed.
To that end, in April 2022, the governments of Canada, Newfoundland and Labrador and Nova Scotia committed to expand the mandates of the Offshore Boards in Newfoundland and Labrador and in Nova Scotia to include the regulation of offshore renewable energy development, such as offshore wind. To reflect the Boards' new mandates, Canada and the two provincial governments also committed to renaming the Boards.
Today, Minister Wilkinson delivered on this commitment by introducing amendments to the Atlantic Accord Acts in Parliament, which will expand the mandates of these Offshore Boards to include offshore renewable energy development.
To reflect the expanded mandates of the Boards, the Minister also introduced amendments to the Acts that will rename the Canada-Nova Scotia and Canada Newfoundland and Labrador Offshore Petroleum Boards as the Canada-Nova Scotia Offshore Energy Regulator and the Canada Newfoundland and Labrador Offshore Energy Regulator respectively.
The decades of regulatory experience, technical expertise and administrative capacity of the Boards position them well to serve as the lead regulatory bodies for offshore renewable energy in Nova Scotia and Newfoundland and Labrador while ensuring the highest standards of worker safety and environmental protection are met. In addition, the Boards have established tools and processes to engage with, and consider input from, a variety of stakeholders and Indigenous peoples, and can be relied upon to fulfill the duty to consult and accommodate. All of these factors are key to promoting the confidence of Canadians, Indigenous peoples and investors in the development of offshore renewables in Canada.
Expanding the mandate of the existing offshore regulators also reflects how other jurisdictions are approaching the regulation of offshore renewable energy projects, including the U.S. and the U.K.
Other Measures to Accelerate Offshore Renewable Energy Development in Canada
In advance of the amended Accord Acts coming into force, the Government of Canada is continuing to establish a strong foundation for Canada's future offshore wind energy industry with provinces and territories through a range of other initiatives, investments and incentives.
For example, earlier this year, the Government of Canada launched Regional Assessments of Offshore Wind Development in Nova Scotia and Newfoundland and Labrador. These Regional Assessments, once complete, will provide information and analysis regarding future offshore wind development activities that would be regulated under the proposed amended Accord Acts for the coasts of Nova Scotia and Newfoundland and Labrador. Specifically, they will provide information to inform and improve Impact Assessments and regulatory reviews of future offshore wind projects by helping to identify optimal areas for wind development - as well as potential issues - which would then inform future calls for bids by the Offshore Boards. In carrying out this important work, the Regional Assessment Committees will engage Indigenous communities and organizations to ensure they have meaningful opportunities to participate.
Additionally, Budget 2023 contains new investments in government-led marine data collection efforts that will further our existing understanding of wildlife and other environmental considerations in the offshore, which could in turn help inform regulatory reviews and calls for bids for offshore wind projects. The Budget also contains investments to support an offshore wind grid integration and transmission study to evaluate near- and long-term wind-integration solutions for Atlantic Canada. The government will continue to work with our provincial partners and relevant regulators to develop these Budget 2023-related programs.
Taken together, the Regional Assessments and the associated investments in Budget 2023 will help us better understand optimal areas for future projects and de-risk these areas so that partners can be well positioned to succeed under the new Accord regimes once passed and so that Canadians can feel confident about our approach.
Budget 2023 also introduced a suite of investment tax credits (ITC) to accelerate renewable energy and green hydrogen production, including the Clean Technology Investment Tax Credit (CTITC), which is worth up to 30% of the capital cost of investments in clean electricity generation systems, including wind generation. The Budget also introduced a new 15% refundable Clean Electricity Investment Tax Credit for eligible investments in technologies that are required for the generation and storage of clean electricity and its transmission between provinces and territories, which is available to taxable and tax-exempt entities. Finance Canada will consult with the public on details of the Clean Electricity Tax credit to be finalized in Budget 2024. Budget 2023 also introduced the CTITC, the Clean Hydrogen ITC, which is worth up to 40% of capital costs for projects producing hydrogen with a carbon intensity below 0.75 kg CO2/kg H2, with less support available for hydrogen produced at higher carbon intensities. In addition, ammonia equipment used to transform hydrogen for transport is eligible for a 15% ITC.
In addition to these investment tax credits, Budget 2023 announced that the Canada Infrastructure Bank will invest at least $10 billion through its Clean Power priority area and at least $10 billion through its Green Infrastructure priority area to support a total of $20 billion worth of investments from the Bank toward the building of major clean electricity and clean growth infrastructure projects.
The Budget 2023 also announced an additional $3 billion over thirteen years to enhance the Smart Renewables and Electrification Pathways Program, renew the Smart Grid program and support science-based activities to help accelerate the development of offshore wind.
This work will complement and support the actions that the Government of Newfoundland and Labrador and Government of Nova Scotia are continuing to take to advance clean electricity and renewable energy development in their respective provinces.
Other Proposed Amendments to the Accord Acts
In addition to amending the Accord Acts to modernize and expand the mandates of the Offshore Boards to include the regulation of renewable energy development, the other amendments introduced today will improve alignment with the Impact Assessment Act (IAA), establish new tools to support the Government of Canada's marine conservation agenda and modernize the existing land tenure regime for offshore petroleum.
Aligning the Accord Acts With the Impact Assessment Act
The amendments introduced today follow through on the Government of Canada's commitment to work with Nova Scotia and Newfoundland and Labrador to implement the IAA in the Atlantic offshore collaboratively. Specifically, the proposed amendments remove outdated references to the former Canadian Environmental Assessment Act, 2012; clarify the roles and responsibilities for the Boards during the Impact Assessment process to better align the Accord Acts with the impact Assessment regime; and simply ensure that the Accord Acts reflect how the Regulators and the Impact Assessment Agency of Canada work together while respecting the principles of joint management.
For example, the proposed amendments clarify that the Boards must provide expert information or knowledge to the Impact Assessment Agency of Canada upon the Agency's request and specify the steps of the impact assessment process where the Boards will provide comments to the Agency.
It is important to note that none of these proposed amendments would change the Impact Assessment Act or the authorities of the Impact Assessment Agency of Canada or the Minister of the Environment, and that the strong environmental protections under that Act will continue to be upheld. The Government of Canada will continue to work closely with the Governments of Nova Scotia and Newfoundland and Labrador and the Regulators to implement the Impact Assessment Act in the Atlantic offshore going forward.
Strengthening Marine Conservation Through Accord Act Amendments
The marine conservation-related amendments introduced today aim to support the Government of Canada in achieving its marine conservation targets of conserving 25 percent of Canada's oceans by 2025 and 30 percent by 2030 by facilitating the application of the Federal Marine Protected Area (MPA) Protection Standard in MPAs in Accord Act offshore areas.
All federal MPAs established after April 25, 2019, are subject to the new MPA Protection Standard. The Standard prohibits specific activities including oil and gas exploration, development and production inside federal MPAs established after 2019. However, for MPAs established in the Canada-Newfoundland and Labrador (Canada-NL) or Canada-Nova Scotia (Canada-NS) offshore where petroleum resources are jointly managed through the Accord Acts, the oil and gas prohibition needs to be specified in regulations under the Accord Acts so that it can be effectively applied to these offshore areas. That is what today's amendments deliver.
For example, the proposed amendments provide authority for Ministers to jointly prohibit the commencement or continuation of oil and gas activities in an area that has been or may be identified as an area for environmental or wildlife conservation or protection; the authority to prohibit the issuance of new interests in an area that has been or may be identified as an area for environmental or wildlife conservation or protection; the authority for the Minister of Natural Resources Canada to negotiate the surrender of an interest with an interest owner and to provide compensation; and the authority, by way of a joint order in the event that negotiations should be unsuccessful, to cancel an interest that overlaps with an area that has been or may be identified as an area for environmental or wildlife conservation or protection and one for the federal minister to provide compensation.
Taken together, these amendments complement the amendments made to the Canada Petroleum Resources Act in Bill C-55 in 2019; address the issue of uncertainty when a MPA subject to the Federal MPA Protection Standard is designated in an Accord Act offshore area; and ensure that Canada has the tools needed to achieve its marine conservation agenda.
Modernizing the Accord Acts' Land Tenure Provisions to Reflect Technological Advancements and International Best Practices
Many of the Accord Acts' provisions relating to land tenure have remained unchanged since their inception in the mid-1980s. The targeted updates in the bill introduced today reflect technological advancements and international best practices found in peer offshore jurisdictions in this area. For example, the proposed amendments would limit the duration of significant discovery licences - which currently have an indefinite term - to 25 years, and they would modify the definition of significant discovery to better reflect both advances in technology in the last several decades and international best practices. The Amendments would also allow the Boards to cancel exploration licences for administrative reasons without the need to go through an Oil and Gas Committee hearing.
Next Steps
The proposed amendments to the Accord Acts introduced today are the product of significant collaboration and work between Canada, Newfoundland and Labrador, Nova Scotia and other partners.
Passing this legislation is a priority for Canada and for Nova Scotia and Newfoundland and Labrador. Nova Scotia has announced its intent to have the proposed new Canada-Nova Scotia Offshore Energy Regulator launch a call for bids by 2025, and it is the Government of Canada's intent to meet this timeline.
Once Parliament has completed its review of the federal bill, the Governments of Nova Scotia and Newfoundland and Labrador will work to pass mirror legislation in their provincial legislature, and the federal and provincial versions of the bills will be brought into force at the same time through orders-in-council.
There is a long history of cooperation between Canada and the provinces on the joint management of offshore energy. We are continuing to strengthen these relationships and to build on the results that they have delivered for Canadians with the amendments to the Accord Acts introduced today.
