Canada Scales Back Regulatory Reviews of Energy Projects — Update

By Paul Vieira

OTTAWA--Canada says proposed oil-and-gas pipelines, natural-gas plants and electricity-transmission lines would no longer be subject to a secondary assessment under a scheme introduced by former Prime Minister Justin Trudeau.

The move is part of a broader strategy unveiled Wednesday aimed at fulfilling one of Prime Minister Mark Carney's policy priorities - cleaning up a regulatory system to help address investors' concerns. In turn, officials say, this will entice and accelerate the construction of new trade corridors and resource projects the country needs to build economic resilience and reduce its dependence on trade with a protectionist U.S.

Officials say legislation to implement this effort is expected to be introduced when Parliament returns from the summer break on Sept. 21. The proposed reforms, officials say, will improve regulatory efficiency while maintaining environmental standards and respecting indigenous rights.

"The primary objective of these initiatives is to achieve a one-year timeline for federal reviews and decisions to boost economic competitiveness and investment certainty," officials said in a report Wednesday.

As part of its effort, the government unveiled specific regulations that would streamline the review of energy and electricity projects. The regulations, published in the Canada Gazette, are meant to amend the environmental-assessment process introduced by last decade by Trudeau.

According to the Gazette, the government said pipelines, electricity transmission lines, offshore renewable energy projects, natural-gas generating plants and oil-sands production would face scrutiny from the country's energy regulator but no longer be subject to the environmental-assessment process.

The assessment regime was criticized by the energy sector, business groups and some think tanks as an unnecessary duplication of regulatory work and threatened to stall economic growth. The Trudeau administration said one of the goals of its assessment-review policy was to ensure Canada was on track to reduce carbon emissions and meet a target of net-zero carbon output by 2050. The assessment system fueled a deep rift between Ottawa and the resource-rich western Canadian provinces, and analysts say it fed into a nascent separation movement in Alberta.

Canada's top court ruled in the fall of 2023 that elements of Trudeau's assessment process were unconstitutional because they intruded on the exclusive rights of the country's provinces to manage their natural resources.

"The preference has been to have a much narrower scope of what projects the federal government says it will assess. Today they made moves to streamline exactly that," said Heather Exner-Pirot, director energy and environmental research at the Macdonald-Laurier Institute, a conservative-leaning think tank.

A recent report from investment bank Morgan Stanley indicated that regulatory overlap and an unpredictable approval process posed major barriers to get commodity and major infrastructure projects off the ground.

"Announced projects establish the opportunity set, but they do not enter the productive capital stock until they progress through approval, final investment decision, financing, construction and commissioning," the firm said. "This distinction is particularly important in Canada, where long and uncertain development timelines have historically created a wide gap between proposed and realized investment."

Canada's amendments to the energy regulatory system, alongside other ambitious goals regarding assessment, emerge as Carney is set to host an investment summit in Toronto next week that aims to entice some of the world's biggest asset managers to deploy their cash in the country.

"Canada's major projects landscape is becoming more constructive, but not less complex," said Laura Estep, a regulatory lawyer for Dentons based in Calgary, Alberta. "For investors, project proponents and strategic partners, the opportunity will be in identifying where policy alignment, approvals reform, export demand and energy security priorities are creating more durable pathways for development."

Write to Paul Vieira at paul.vieira@wsj.com

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September 09, 2026 13:49 ET (17:49 GMT)