Operating context and key risks

Operating context

Canada’s wealth of natural resources, which include renewable and non-renewable energy, minerals and metals, and forests, are key to our economic prosperity and provide Canadians with good jobs and business opportunities. In 2016, our natural resource sectors directly or indirectly provided 1.7 million jobs and accounted for 16% of GDP in Canada. NRCan’s present and future challenge is to promote its economic and environmental goals at the same time, building the natural resource sectors’ contribution to our economy, while also achieving environmental results such as reduced greenhouse gas (GHG) emissions, through sustainable practices.

As NRCan pursues its economic and environmental goals, domestic and global factors affect its operating context.

Domestically, wildfires around Fort McMurray, Alberta in the spring and summer of 2016 not only threatened lives and livelihoods, they also adversely impacted the forest industry, oil production, and employment. Meanwhile in the global economy, the prevalence of financial and debt woes and the increasing trend toward protectionism translated into slower overall economic growth, slower growth in global trade and investment, and low commodity prices. For example, the prices of minerals and metals remained far below the levels of several years ago and although the price of crude oil increased modestly in 2016, it remained less than half the price seen in mid-2014. Notwithstanding this broader global context, the International Monetary Fund estimated that Canada’s annual rate of economic growth over 2016-2021 will average 1.8%, which is the second-highest expected rate among G7 countries.

Budget 2016 and Budget 2017 presented expanded opportunities for the Department with renewed emphasis and significant investments for addressing climate change and adaptation, as well as a strong focus on innovation such as in the field of clean technologies.

The Paris Agreement of 2015 continued to anchor Canada’s commitment to a 30% reduction in its GHG emissions by 2030 compared to 2005 levels. Our natural resource sectors, as Canada’s predominant sources of GHG emissions, remained key players in advancing efforts for emission reductions and delivering on our international commitments. NRCan deepened its engagement in actions against climate change through the Pan-Canadian Framework on Clean Growth and Climate Change (PCF), and supported PCF priorities related to energy efficiency, electricity infrastructure, energy technology and innovation, and international collaboration.

As economic growth through innovation is a priority of the Government of Canada, the global movement to address climate change provides an economic opportunity that we have begun to seize through innovation. With increasing worldwide demand for clean technologies and a global market estimated to more than $1.15 trillion in 2017,^{Footnote 1} Canada emphasized its efforts on targeting opportunities to become a global leader in clean technology innovation in 2016-17. These efforts aim to create good jobs for Canadians while helping to meet our climate change goals. NRCan has continued to take action to ensure that Canada’s clean technology companies in the natural resource sectors are well positioned to compete in this large and growing global market. Commitments in Budget 2016 and Budget 2017 reinforced NRCan’s focus on advancing research, development, demonstration and adoption of clean technologies in the natural resource sectors and contributing to the multi-country initiative Mission Innovation, which aims to accelerate global clean energy innovation.

Key risks

The key strategies deployed by the Department to manage its risks and opportunities are outlined below.

Risks

Mitigating strategy

Link to the Department’s programs

Link to mandate letter commitments or to government‑wide and Departmental priorities

Climate Change

If Canada’s actions to meet international climate change commitments are insufficient and if Canada fails to keep pace in adapting to climate change, then the competitiveness of some of Canada’s natural resource sectors could be threatened, including their ability to access foreign markets.

In 2016-17, NRCan’s risk responses included:

Engaging with provinces and territories to advance the Pan-Canadian Framework on Clean Growth and Climate Change (PCF) and the Canadian Energy Strategy (CES) to support the transition toward a low-carbon future and ensure Canada is a global leader in the sustainable development and use of the full range of its energy assets.
Leveraging Budget 2016 funding to establish energy efficiency policies and programs and maintain clean energy policy capacity in order to:
- Advance the development and demonstration of clean energy technologies;
- Help deploy infrastructure for alternative transportation fuels;
- Invest in technologies to reduce GHG emissions from the oil and gas sector; and,
- Facilitate regional dialogues and studies to identify electricity infrastructure projects with the highest potential to reduce GHG emissions.
Delivering the Energy Innovation Program to reduce emissions from energy production and use, and to find long-term solutions for reducing and eliminating air pollutants. Projects included research, development and/or demonstration of electric vehicle infrastructure, cleaner oil and gas technologies, and clean energy innovation in priority areas such as:
- Promoting renewable, smart grid and storage systems;
- Reducing diesel fuel use in northern and remote communities;
- Addressing methane and volatile organic compounds;
- Reducing GHG emissions in the building sector;
- Promoting carbon capture, use and storage; and
- Improving industrial efficiency.
Conducting enhanced research and analysis to develop scientific knowledge of forest disturbances (e.g. wildland fire, pests and climate change) to forecast impacts and develop mitigation and adaptation strategies.
Pursuing domestic and international partnerships in research, development and demonstration (RD&D) to advance climate change objectives.
Providing geoscience knowledge to inform climate change adaptation solutions for transportation and community infrastructure in the North.
Conducting research to better understand the risk potential (i.e. remobilization) of metals in lake and river ecosystems in a changing climate.
Supporting climate change adaptation by industry and by communities through capacity building, collaboration, providing tools and information, and implementing requirements defined by the Federal Adaptation Policy Framework.
Enabling governments, private companies and Canadians to make informed decisions regarding climate change and adaptation by providing new ‘big data’ tools and infrastructure for analyzing geospatial data, and expanding publicly accessible landmass information through the Open Maps platforms.

1.1 Market Access and Diversification

2.1 Energy-efficient Practices and Low-carbon Energy Sources

2.2 Technology Innovation

3.1 Protection for Canadians and Natural Resources

Canadian Energy Strategy
Pan-Canadian Framework on Clean Growth and Climate Change

Energy Infrastructure

If the public does not trust in Canada’s ability to expand its infrastructure in a safe and environmentally sound manner, then Canada’s ability to increase production and diversify markets may be limited.

In 2016-17, NRCan’s risk responses included:

Partnering with provinces and territories in implementing the CES.
Supporting the Government of Canada review of environmental assessment processes, in particular regarding energy infrastructure.
Implementing a transition strategy for Major Resource Projects.
Working to modernize the National Energy Board.
Contributing to increased understanding of pipeline safety and integrity through research and development of materials, and in turn, developing codes and standards for the safe design, construction, operation and maintenance of oil and gas pipelines.
Working with the Canadian Northern Economic Development Agency to develop the evidence base to support infrastructure corridors in the North.
Making science and knowledge available to key stakeholders to support decision-making (e.g., Federal Geospatial Platform, Advanced Mineral Project Inventory, Forest Ecosystem Science and Application, Adaptation Platform, Geo-Mapping for Energy and Minerals (GEM)).
Engaging communities that are close to proposed pipeline and shipping corridors, and using the findings from these engagement activities to inform Cabinet decision-making.
Committing to establish Indigenous Advisory and Monitoring Committees to support the meaningful participation of Indigenous communities in the monitoring of the Trans Mountain Expansion (TMX) and Line 3 Pipeline Projects over their full lifecycles.

1.1 Market Access and Diversification

1.3 Investment in Natural Resource Sectors

Canadian Energy Strategy
Interim Strategy for Reviewing Major Natural Resource Projects
National Energy Board Modernization
North American Energy Collaboration
Renewed Relationships with Indigenous Peoples

Hazards and Emergency Management

If Canada’s measures to mitigate, respond to, and recover from, in a timely and effective manner, natural and anthropogenic (human-induced) emergency events involving critical infrastructure are insufficient, there could be significant impacts on Canadian public health and safety, the environment, the economy and public confidence.

In 2016-17, NRCan’s risk responses included:

Strengthening Canada’s pipeline safety regime by implementing new measures on prevention, preparedness and response, and liability and compensation.
Modernizing the safety and security regime for Canada’s offshore and nuclear energy industries.
Supporting government-wide emergency preparedness efforts led by Public Safety Canada, particularly for aspects related to energy production and distribution, energy supply disruption, offshore oil, and gas and nuclear incidents.
Contributing to the development of a comprehensive action plan that supports better prediction of, preparation for, and response to natural disasters.
Renewing NRCan’s Strategic Emergency Management Plan to align with the whole of government EM strategy renewal in response to natural and man-made hazard.
Enhancing earthquake monitoring.
Developing tests and maintaining and supporting emergency management plans under the Emergency Management Act.
Enhancing emergency management by increasing resources for training, exercises, and strengthening integrated response planning and operations.
Updating the 2016 Canadian Wildland Fire Strategy to assist with the implementation of wildland fire preparedness and response.
Developing floodplain-mapping guidelines, in partnership with Public Safety Canada; new science and technology to prepare for the 2018 launch of the RADARSAT Constellation Mission; and supporting data that is accessible through the Open Government Portal, including Open Maps.
Generating and disseminating knowledge about hazards to government and industry clients through monitoring services, provision of scientific, technical information and expertise.
Providing subject-matter expertise (including radiological monitoring, civil liability, and other technical support) under the Federal Nuclear Emergency Plan, led by Health Canada.
Increasing infrastructure protection against cyber threats, and increasing participation in National Security initiatives and exercises to ensure NRCan is recognized as a security partner in the broader community and supported in case of security incidents, including cyber security.

1.1 Market Access and Diversification

3.1 Protection for Canadians and Natural Resources

4.1 Internal Services

Interim Strategy for Reviewing Major Natural Resource Projects
Renewed Relationships with Indigenous Peoples

Clean Innovation

If Canada fails to anticipate or respond to increased demand for more innovative approaches to energy, mining and forest sector challenges, it will struggle to remain competitive and to take advantage of global market opportunities.

In 2016-17, NRCan’s risk responses included:

Implementing initiatives related to Mission Innovation, in collaboration with other departments.
Along with other MI member governments:
- Adopting an enabling framework, forming a steering committee, and announcing a baseline investment amount and doubling target for clean energy research, development and demonstration (RD&D). Canada announced it would target a doubling in federal clean energy RD&D investments, from a baseline of $387M in 2014-15 to $775M in 2019-20; and
- Launching seven Innovation Challenges to encourage increased engagement by the global research community, industry, and investors, while providing opportunities for new collaboration among MI members.
Advancing collaboration for a North American Partnership on Climate, Clean Energy, and Environment.
Implementing initiatives to improve energy efficiency, to support RD&D of clean technologies, to support demonstration of electric vehicle charging technologies, and to invest in the oil and gas sector to reduce GHG emissions.
Developing strategic partnerships to support innovation in the natural resource sectors, such as:
- The Investments in Forest Industry Transformation program pursued new wood-based products or uses for forest fibre, as well as innovative technologies; and
- The Green Mining initiative that brought together stakeholders to develop green technologies, processes and knowledge for sustainable mining.
Developing technologies to reduce capital/ operating costs as well as GHG and environmental impacts for the emerging industries of rare earth elements and chromite.
Pursuing pilot projects with stakeholders to test new technology for removing contaminants from mine wastewater.
Undertaking a national engagement exercise including 11 ministerial roundtables, dialogue with over 350 domestic and international clean technology stakeholders, and an interactive website.

1.2 Innovation for New Products and Processes

1.3 Investment in Natural Resource Sectors

2.1 Energy-efficient Practices and Low-carbon Energy Sources

2.2 Technology Innovation

2.3 Responsible Natural Resource Management

3.1 Protection for Canadians and Natural Resources

North American Energy Collaboration
Clean Technology and Innovation
North American Partnership on Climate, Clean Energy, and Environment

NRCan’s risk environment consists of ongoing risks that require ongoing mitigation, but do not lend themselves to being fully addressed over a period of one or several years.

Throughout 2016-17, NRCan closely monitored its global and domestic context and implemented strategies to manage its risks and seize its opportunities. These strategies aimed to ensure that Canada’s resource sectors remain globally competitive;, enjoy expanded access to foreign markets; build safe and secure energy infrastructure; pursue innovative approaches and clean technologies; use sustainable, environmentally sound practices; and advance our international commitments on climate change.

Taking action to address climate change is important for protecting human health and the environment. At the same time, meeting our international commitments on climate change is important for maintaining and expanding the access our natural resource sectors have to foreign markets and for supporting the competitiveness of their products. NRCan collaborated with a wide range of domestic and international partners in 2016-17 to make progress on our climate change commitments and to continue adapting to a changing climate. Among other actions, the Department worked with the United States and Mexico to advance North American energy collaboration; with provinces and territories to promote energy efficiency and develop cleaner, renewable energy and get it onto a smarter electricity grid; promote energy efficiency; and with industry and communities to build capacity and support climate change adaptation. NRCan widely shares knowledge, information and tools with the full range of stakeholders.

Using environmentally sound approaches to continue building and improving the secure infrastructure needed for transporting Canada’s energy resources to domestic and international markets is essential for earning public trust and diversifying our market access. Among other actions, NRCan partnered with provinces and territories to continue implementing the CES, which involves working together with Indigenous communities, industry, researchers, and other organizations, with the shared purpose of further developing energy resources in an environmentally and socially responsible manner. While infrastructure projects continue to encounter environmental, social and regulatory challenges, progress is being made to help Canada improve its energy infrastructure.

Canada’s ability to prevent, respond to, and recover from natural and man-made emergencies involving our critical infrastructure is of paramount importance to public health and safety, the environment and our economy. The public, and notably Indigenous communities, need to have confidence that Canada has established effective emergency management practices. In 2016-17, risks to critical infrastructure continued to increase in complexity. To mitigate this risk, NRCan put in place emergency management plans, contributed to the Federal Response Emergency Plan led by Public Safety Canada, and shared its specialized knowledge on hazards with other governments and industry. The Department implemented new legislative provisions under the Nuclear Liability and Compensation Act to enhance Canada’s ability to respond and recover from damages from a potential nuclear incident. NRCan also worked on new standards to improve pipeline integrity and contribute to the effective and safe transport of fossil fuels in Canada. NRCan played a key role in responding to the Fort McMurray wildfires by providing advice and expertise in the area of geomatics. By processing data from satellites to create geospatial analysis, NRCan was able to equip officials and first-responders with comprehensive intelligence, thus facilitating better and faster decision-making.

Fostering the development of innovative solutions to challenges in the energy, mining and forest sectors is vital if Canada is to be competitive and take advantage of growing global demand and market opportunities. The strong focus of Budget 2016 on innovation presented an opportunity for the Department to support innovation with respect to clean technologies in the natural resource sectors. As a result, NRCan has invested in initiatives to promote research, development and demonstration of innovative clean technologies that focus on the most pressing environmental issues and create a supportive environment that helps Canadian companies grow and position themselves as world leaders in the clean technology market. These initiatives have helped Canadian companies that are operating in emerging industries to take the essential first steps toward commercializing their novel technologies.

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Date modified:: 2017-11-09

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Operating context and key risks