Can Canada build enough fast enough to meet its net zero targets? Beneath this seemingly straight-forward question lie multiple sub-questions:

• can Canada build enough fast enough while sustaining the integrity of its energy systems?
• does the country have the policy and regulatory frameworks needed to attract sufficient investment and to enable the vast range and number of projects needed to transform its energy system and broader economy in line with net zero?
• will its approach strengthen the country’s competitiveness and prosperity in the years ahead?
• will there be adequate public and investor confidence in decision systems to build at scale and maintain a sustainable pace of change?

This article addresses this crucial set of questions. It is based on a research study undertaken by the University of Ottawa’s Positive Energy program.^[1] Given the profile of Energy Regulation Quarterly readers, we focus more of our attention on the regulatory dimension of the study. We refer interested readers to the final report,^[2] which provides a fulsome analysis of findings and a more comprehensive discussion of recommendations.

In this article, we begin by underscoring the scale and pace of change implied by a net zero transformation and key aspects of the Canadian context relevant to the challenge. We then describe the study’s research approach and methodology. The following two sections share the key findings and recommendations emerging from the research. We conclude with a call to action and preview of forthcoming Positive Energy research and engagement to advance action.

Scale and pace of the net zero transformation and the Canadian context

Transforming Canada’s energy system and broader economy over the next two plus decades entails some combination of the following: replacing or retrofitting roughly 20 per cent of the electric power system that is greenhouse gas (GHG) emitting; doubling or tripling the power system as a whole; replacing, decarbonizing or retrofitting three-quarters of the energy end use that fuels transport or provides heat to industry and communities; developing new energy infrastructure and markets for new energy sources like hydrogen; and decarbonizing the country’s oil and gas industries. And all of this before 2050. This is a daunting task, bigger and faster than any that has ever been undertaken through deliberate policy — with the exception of wartime — in Canadian history. It raises many questions about pacing, notably what a sustainable pace of change looks like for markets, for governments and for civil society.

Various aspects of Canadian reality compound the task. Canada’s federal system is notorious for making economic projects more challenging than might be the case in a unitary system. This is especially the case for energy. First, most aspects of electric power are explicitly matters of provincial jurisdiction. Second, Canada’s geography and resource wealth are considerable benefits, but variability in provincial economies, power generation, GHG emissions profiles and resources, generate diverse provincial and territorial interests and inequities in getting every place to net zero emissions. Third, the variety of needed projects involves numerous and different decision-making processes managed by various regulatory authorities, some federal, many provincial or territorial, some municipal, and, emerging, some Indigenous.

Study description and approach

Against this backdrop, Positive Energy undertook a research study on public confidence in government decision-making systems for energy projects. By “public” we mean a broad and overlapping spectrum of citizens, consumers, communities and investors. Without their confidence, Canada will not be able to transform its energy system and broader economy in line with net zero. The research approached the question from two directions — looking back at what has happened in the past two decades and looking forward over the next two decades at what’s to come.

In our look back, we undertook a review of literature in Canada and abroad on government decision-making for energy projects, with a view to identifying Canada’s performance, how to address performance challenges, and international best practice.

We also undertook “project profiles” examining 18 energy projects undertaken since the beginning of this century, some of which are now in service, some under construction, and some of which were abandoned by proponents or rejected by governments. In selecting the projects to review, we aimed for representativeness across project types, sizes, successes/failures, regions and jurisdictional approval processes (federal, provincial, Indigenous, or combinations thereof ). The projects included pipelines, power lines, oil and gas exploration and processing, hydropower, wind, solar, electrical storage and nuclear waste management. Collectively, they are reasonably representative of experience in Canada over the past two decades. Our aim was to identify the length of time from project inception to in-service (or abandonment), the proportion of that time accounted for by the regulatory process and key areas of challenge/ tension or success/innovation moving a project to completion.

In our look forward, we undertook confidential interviews on the current and future investment environment with over thirty leaders. We asked our interlocutors to speak to Canada’s attractiveness as a place to invest, the challenges the country faces on government decision-making processes for projects, and what actions might be taken to make the system work better. Our objective was to gain a range of perspectives, primarily from those in the private sector directly involved in project development (individual companies, industry associations, the financial and investment sector, and Indigenous leaders involved in projects), but also former regulators or policy advisors, and environmental advocates.

Key findings

The most important finding is that the challenge of rebuilding the energy system over the next two and a half decades is much bigger than a question of regulatory reform respecting federal impact assessment, an area that has received much attention in recent years. It is also about more than just timeliness of decision-making: it involves clarity and predictability of current and future policy and regulatory frameworks and processes. There was broad consensus among interviewees that Canada currently lacks the investment environment needed to build enough fast enough.

Key findings span four broad areas:

• Activities outside of government decision-making processes for projects take time and involve uncertainties. The time it takes to move a project from inception to in-service involves far more than just regulatory decision-making. Project design and engineering, relationship-building with communities, project financing and construction, all take time. Market factors — pace of consumer uptake, uncertain future demand, labour and materials availability, and evolving financial and capital markets — also shape the pace of new projects. Reforming regulatory systems for projects can only shave off so much time. Regulatory reform efforts need to be accompanied by both a sense of urgency and a sense of realism about how much reforms will deliver in time savings, on the one hand, and how long it will take to frame up and successfully implement reforms, on the other.

• The entire public policy system. Many interviewees pointed to the absence of a shared national vision, lack of alignment between federal and provincial governments, lack of public understanding of the scale of the transformation before us, and lack of planning processes for key areas of the energy future, as major stumbling blocks for the country. Lack of clarity and future policy uncertainty over key instruments like carbon pricing, tax credits and sectoral regulations, challenge the calculation of project economics. This finding underscores that the challenge is about more than just timeliness of decision-making — it is about clarity and predictability of government frameworks just as much if not more.

• Challenges within regulatory systems are many and complex — but tractable. Again, the challenge is about more than just timeliness. Political involvement at various stages of project decision-making is a major source of uncertainty, as are multiple requests for information and lack of clear guidelines from regulators. These challenges apply in particular to federal impact assessment, but this is not only a federal problem. It also dogs regulatory processes carried out by provinces, territories, municipal governments and Indigenous governments. In addition, lack of clear delineation, coordination and streamlining between federal, provincial and territorial roles, conflicting mandates among regulatory and permitting agencies, and lack of intragovernmental coordination reduce the attractiveness of Canada for investors. This is a broad set of large and complex challenges, but with political will and management skill, they are tractable. Success will depend on developing a comprehensive understanding of the issues at hand, and then, most importantly, identifying an action and implementation plan that drives real change and meaningful improvements on an ongoing basis.

• Relationships with Indigenous nations and communities are a very big part of the solution. There has been a transformation in the relationship between project proponents and Indigenous communities in recent years. Indigenous nations are increasingly taking equity stakes in projects, leading projects of their own, undertaking Indigenous-led impact assessments and leading project monitoring. Much work remains to be done to support and scale up this progress, including building Indigenous governments’ experience with balancing community buy-in, timeliness and risk. Time invested now will pay dividends in the years ahead. Alongside efforts to build relationships with Indigenous nations and communities, proponents and governments also need to invest time and effort to build and maintain the support of other communities as well (municipalities, local communities, rural communities, etc.). Community support is essential for projects of all types. Presuming that projects that help reduce emissions will be supported by local communities is a dangerous assumption. Communities are often seized more with local social, economic and environmental impacts than they are with global climate change.

Recommendations: address multiple packages of reform within and beyond the regulatory system

Given the scope of the challenge and its possible solutions, there is danger in trying to fix everything all at once and ending up losing coherence and focus. The problem needs to be parsed and different parts approached in different ways. With that in mind, we have organized our recommendations for reform as a series of what we call ‘packages.’ Each can be approached on its own, will often require a different set of actors to come together, and will involve different timelines, although the urgency of the problem argues for action starting as soon as possible across the board. Given the breadth of coverage of our recommendations they are necessarily framed in general terms — although in most cases the detailed possible directions are easily discernible and we have provided a number of potential options for action within each package.

The packages sit within and beyond the regulatory system. Of note, the diverse roles of Indigenous communities and the variety of issues to be addressed are woven throughout all of the packages.

Recommendations respecting three packages lie primarily beyond the regulatory system:

• Provide more predictability and clarity of policy, strategy and vision: governments at all levels need to do a better job of collaborating and aligning their efforts. Lack of clarity and uncertainty over future policy and the country’s vision for its energy future shape investor confidence just as much — if not more — than the regulatory system for projects. Whether carbon pricing, investment tax credits, or emissions regulations for electricity, oil and gas, uncertainty over foundational policy measures inhibits the ability of investors to calculate project economics and make the investments necessary to pursue Canada’s net zero aspirations. Likewise, while there is a widespread national consensus around the need for emissions reductions, if we look much deeper than that, the consensus comes apart. These challenges have been with us since climate policy emerged over thirty years ago and they won’t ever be ‘solved.’ Unfortunately, the direction of current politics doesn’t bode well for addressing these issues. Instead, it suggests we are in for less predictability and clarity, not more.

Regardless of political context, however, it is unlikely that a detailed shared national vision can be developed and sustained in a country as diverse as Canada. But federal, provincial and territorial governments need to regain the instinct to collaborate. Collaboration sends a crucial message to investors and citizens: Canada is serious about net zero and governments can set aside their differences to chart a constructive path forward. Much of this is likely to happen through bilateral or multilateral processes, and it needs to be scaled up significantly. Crucially, federal efforts to collaborate must speak to core regional or provincial priorities and take into consideration existing provincial and territorial initiatives.

• Establish planning processes: governments need to take action on a number of areas where planning is essential (energy delivery, electric power systems, supporting the roles of Indigenous communities, and costs), but they must do so without overturning a largely market-based system. Far too little attention has been given to the future of energy delivery to the end user. This will involve not just technologies but consumer behaviour, decarbonization strategies across a wide variety of industry sectors, community, regional and provincial energy planning and infrastructure systems. Electrification and electric power systems will likely be the centrepiece of emissions reductions efforts, but planning for electric power systems cannot be done in isolation. It must include thoughtful coordination across energy sources (notably natural gas) and energy uses (transportation, building heat, industrial processes, etc.). One of the biggest questions is about cost: who pays for what, when and how? There is an urgent need to develop a realistic consensus about cost allocation among ratepayers, taxpayers, and investors over the medium to long terms. Positive Energy is turning its attention to this package with a forthcoming set of discussion papers.

• Build machinery and capacity in policy and regulatory systems: all actors need to cooperate and resolve to invest in building policy, regulatory and decision-making systems in the public, private, Indigenous and broader civil society sectors that are up to the challenge of net zero. Labour, skills and supply chain challenges need priority attention, as does capacity building within regulatory agencies. This package lies both within and beyond the regulatory system. Governments need to evaluate whether their policy and regulatory systems are up to the scale of the challenge when it comes to their institutional systems, skills and capabilities. In virtually all instances, capacity building will be needed. Organizational attention will generally turn first to the need for more staff, but fiscal realities will likely put a cap on how much new hiring can be done. Importantly, while more people will surely be needed if the volume of projects envisioned materializes, but there is much that needs to be done that doesn’t involve adding more people. This includes restructuring basic approaches to decision-making (breaking down silos, cross-departmental coordination, public-private-civic collaboration) and ensuring staff have the right capabilities (the right skills and competencies). Success will also turn in large part on whether policy and regulatory leaders and those at the working level have the culture and mindset to drive change, as discussed further below.

Recommendations respecting four packages lie within the regulatory system:

• Clarify who provides policy direction for projects and who regulates them: governments should focus their attention on policy, planning and structuring regulatory systems, and refrain from intervening in individual project decisions. Regulators should focus on assessing project applications and making decisions/recommendations to government. Governments at all levels have, over the years, reformed many of the country’s regulatory systems in ways that see a much larger role for politicians (ministers, cabinets) in individual applications, including final approval and conditions on projects. If this continues, the systems will grind to a halt. Not only is cabinet ministers’ time limited, but regulatory frameworks that involve political decision-making at various stages will undoubtedly see ministers pressured to use it. Investors, if always faced with the uncertainty and unpredictability of late-stage political interventions — or worse, political interventions at multiple stages — will tend to shy away.

Looking forward, the default should be to let the regulators regulate again. The regulators’ job should be to colour within the lines drawn by governments. If the lines are specified through their enabling legislation, regulation and appropriately framed government directives of general application, regulators have scope to be innovative without violating principles of democratic accountability. Governments should only modify or overturn regulatory decisions under very limited circumstances — ministerial and cabinet roles should be narrowly circumscribed, transparent and clear. Limiting the role of ministers or cabinets in final approvals to accepting, rejecting or, in rare instances, sending a project back to agencies to reconsider specific issues — rather than adding conditions — would convey a much-needed message of predictability to investors and communities. This is another area where Positive Energy is pursuing further research and engagement, as discussed further below.

• Establish collaborative intergovernmental relations and decide which governments are best placed to get the job done: these should be treated as practical questions in the spirit of cooperative federalism and should include using substitution or other agreements that ensure government responsibilities — federal, provincial, territorial, Indigenous, municipal — are met without unnecessary overlap or duplication. All levels of government need to approach this question constructively. Noting the capacity issue raised above (package 3), one obvious solution is to avoid duplication of effort. Importantly, intergovernmental relations include relations with Indigenous governments, which will increasingly take on lead roles in regulation, whether as knowledge holders, partners in impact assessment, contributors to ultimate decisions, ongoing monitors or regulators who lead their own impact assessment and regulatory processes. Each project and each community will require their own approach. Governments and proponents need to be open to this and develop their capacity to work constructively with Indigenous governments in a variety of ways.

• Distinguish between changing mandates and changing mindsets: reforming regulatory mandates will only get us so far. Mindsets will often need to change towards greater innovation and risk-taking within public agencies, whether departments or stand alone agencies such as regulators. Governments are increasingly alive to this challenge, including the federal government through its recently issued Cabinet Directive on Regulation. Fundamental culture change within governments needs to be approached deliberately and seriously, and with the recognition that culture change is difficult and takes time.

The regulator’s job is to question, to be skeptical, to demand evidence, to carry out due process and to be prepared to say no when warranted. Different regulators will inevitably approach this with different mandates and different mindsets. There is danger in assuming all regulators are the same. Context, history, culture, prevailing practices and experience matter.

Given the unique challenge and urgency of net zero, there will be a growing need for regulators to say yes to the adverse impacts created by new projects and to streamline processes to arrive more rapidly at decisions. This will likely be more difficult for some than others and will definitely be more difficult for some risks than others. What’s required is a risk-based approach to regulation. Most regulators have already moved in this direction. They are building on years of experience and knowledge without constantly reinventing the wheel. They are avoiding full reviews for routine projects, brownfield sites or for risks that are well understood and for which well-established risk mitigation measures exist. They are avoiding the temptation to request ever more information from proponents. But more can definitely be done to reduce timelines and maximize learning within and across organizations. Creating a national forum for regulatory and permitting excellence would help accelerate innovation, learning and best practice sharing. So would establishing an independent advisory body to provide advice from outside parties (industry, Indigenous organizations, academia, etc.) about what’s working, and, importantly, what’s not.

• Build a functioning whole of government machine: governments need to develop intragovernmental coordination mechanisms to help projects move through the variety of policy, regulatory and permitting processes for an individual project application in a timely and predictable way that minimizes regulatory burden. Various approaches have emerged to attempt to address these challenges. Generally, they involve creating a single window for projects to navigate the web of policy, program, regulatory and permitting frameworks (e.g., British Columbia’s Clean Energy and Major Projects Office, the former federal Major Projects Management Office, the new federal Regulatory Efficiency Action Council and Clean Growth Office). The aim is to provide focus, leadership and the necessary degrees of coordination consistent with timeliness, minimizing regulatory burden and predictability. These bodies aim to ensure the system keeps driving towards a decision on a project, whatever it might be.

Crucial to supporting these efforts is ongoing assessment and evaluation of regulatory reforms and their impact: are they achieving their intended aims? Establishing a body to evaluate the effectiveness (or not) of reforms and seeking input from people with experience in regulatory processes would be a good place to start.

Next steps: develop a process and action/ implementation plan for each package of reform.

We urge governments and other organizations to collaborate on a process to convene the key players needed to advance solution-seeking in each area of reform. Some of this work is already well underway through various federal, provincial, territorial and intergovernmental processes, but much remains to be done. The aim should be to develop a detailed action and implementation plan so that Canada can achieve meaningful and durable progress on the goal of net zero.

Positive Energy is using its convening power and research expertise to help develop paths forward for priority areas. As noted above, we are pursuing work on planning as well as the respective roles of policymakers and regulators in energy project decisions (some of this work will be profiled in future articles for ERQ). We are developing discussion papers, undertaking detailed empirical work, and convening policy and regulatory leaders to advance thinking and action on these crucial topics.

But this needs a lot of hands on deck. Even where there is agreement on “the what” of reforms and even when commitments are made to take action, success will hinge on maintaining momentum and effective implementation. We urge all those with a stake in moving Canada to a truly sustainable future to keep a sharp focus on creating a clear, timely and predictable investment environment to ensure the country can build enough fast enough in the years ahead.

* Michael Cleland is Executive-in-Residence at Positive Energy. Monica Gattinger is Founding Chair of Positive Energy and Full Professor at the School of Political Studies, University of Ottawa.

1. University of Ottawa, “Positive Energy” (last visited 11 November 2024), online: <www.uottawa.ca/research-innovation/positive-energy>.
2. Michael Cleland et al, Energy Projects and Net Zero by 2050: Can we build enough fast enough? (Positive Energy, 2025), online (pdf): <www.uottawa.ca/research-innovation/sites/g/files/bhrskd326/files/2024-12/241213-pe-fast-enough-proof04-share%20%281%29.pdf>.