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Social license takes centre stage in the pipeline debate

For Canadian pipeline companies, traditional regulatory licensing is no longer enough to win approval. Stakeholders demand a social licence, too – and make them jump through hoops to get it

Dec 5, 2016

by Alberta Venture Staff

Photograph Joey Podlubny

The proverbial Office of Social Licensing was open for business long before Premier Rachel Notley stepped into office, and it predates former prime minister Stephen Harper’s push for Canada’s “energy superpower” status. The concept of the “social licence to operate” has been around since the late 1990s, when mining executive Jim Cooney used it to garner support from affected communities for new mining projects. While social licence isn’t new, it’s relevant now more than ever as companies who fail to meet these social obligations face material consequences in the approval and development of energy infrastructure.

“Rather than offer lip service to a buzz phrase, the best way to build public trust and provide the assurances people are seeking is by walking the walk, by being socially responsible as a company.” – Tim Duboyce, TransCanada

“[Social licence] is the support of all communities and nations that a project would affect,” says Greenpeace campaigner Mike Hudema. To obtain it, governments and midstream companies, along with affected stakeholders such as environmentalists and First Nations, must have a “general consensus that the [pipeline] would be in everyone’s best interest,” he adds. Among the parties involved in pipeline proposal, development and approval, few would dispute that obtaining social licence is paramount, and few would contest Hudema’s characterization of it. But there is as much disagreement over its application as there is consensus over its definition.

The Alberta government made social licence a major theme in its Climate Change Leadership Plan, unveiled in late 2015. According to Notley, the plan will “strengthen Alberta’s social licence for its energy products.” But how, exactly, will it do this? Margaret McCuaig-Boyd, Alberta’s energy minister, says there are two parts to Alberta’s social licence strategy. First, the government supports the National Energy Board’s (NEB) inclusive approval process, where “all different voices are heard in a respectful manner.” Next is assuring affected communities that Albertan product is produced in an environmentally responsible way. “If I had a pipeline coming through my backyard, I would have a few questions,” McCuaig-Boyd says. “We in Alberta are used to energy infrastructure, but we have to remember other parts of Canada are not.”

Then there are the pipeline developers: big midstream companies like Kinder Morgan, TransCanada and Enbridge use this rhetoric in their fight for NEB approval because without it, the chances of putting shovels in the dirt are slim to none. “Canadians want assurance that oil will be transported safely and in an environmentally respectful manner,” says Tim Duboyce, senior communications strategist at TransCanada. “On Energy East, we have made some 700 route changes based on stakeholder feedback since the launch in 2013.” Enbridge’s Northern Gateway took a similar path, engaging with more than 80 First Nations communities during its application in 2010. As of 2015, Kinder Morgan’s Trans Mountain Expansion had benefit agreements with more than 20 First Nations.

But to some, this attempt at obtaining social licence from stakeholders is not enough, and never will be. “People look at the climate science and realize pipelines are not compatible with a climate-safe future,” Greenpeace’s Hudema says. And it’s not just the environmentalists giving oil and gas companies a hard “no.” Hudema says First Nations’ judgement is in, and it doesn’t look good for prospective pipelines. “They have said pretty resoundingly that social licence for new pipelines isn’t there. It’s time provincial and federal governments listened to that.” He says social licence may have been realistic five or 10 years ago, but with a rapidly changing climate, it’s “just not there anymore.”

Further, a resounding “no” from more than 50 First Nations was made official on September 22 when they signed a pan-continental treaty rejecting oil sands expansion. The Treaty Alliance Against Tar Sands Expansion is an agreement to collectively oppose the oil sands, including the transportation of product by pipeline, rail or tanker. It would prohibit the Trans Mountain, Energy East, Keystone XL, Northern Gateway and parallel Alberta Clipper and Line 3 pipelines.

In short, the Office of Social Licensing isn’t handing out many approvals. Nevertheless, governments and pipeline developers bang on the door, ignoring the shuttered curtains and disgruntled attendant on the other side of the counter. Peter Forrester, senior director of aboriginal and legal affairs with Kinder Morgan Canada, thinks it may be time to put social licence to rest. “Constituents may be so diverse and numerous that consent from all of them becomes impossible,” he said in a 2015 report on pipeline development and social licence. Forrester is just one voice, but he speaks to a larger frustration with the tenuous and enigmatic concept, and to a fear that it heralds the twilight of the oil and gas sector’s future.

Perhaps it is time for oil and gas companies to get up off their knees, dust themselves off and abandon the coveted social licence. That’s not to say pipeline developers should disregard engagement and cooperation, but rather that it’s time for companies to be socially responsible at their core instead of begging for permission to prove it. Creating positive stakeholder relations should be an ongoing mandate, rather than a target to reach merely during the approval process. Companies like TransCanada already show signs of abandoning the trend. “Rather than offer lip service to a buzz phrase, the best way to build public trust and provide the assurances people are seeking is by walking the walk, by being socially responsible as a company,” Duboyce says.

Ian Anderson, president of Kinder Morgan Canada, expresses similar sentiments, refusing to use the term altogether. Instead, his rhetoric revolves around engagement, relationship building, trust and genuine interest in what stakeholders have to say. “We understand not everyone will support our project, but we have positive working relationships and openly supportive mayors, stakeholders and aboriginal groups along the pipeline route,” he says.

Still, at the end of the day, it isn’t the environmentalists, the anti-pipeline protesters or even the provincial government who will approve new pipeline projects: The federal government and the NEB will have the final say. Rather than give pseudo-power to those communities in charge of handing out a social licence, perhaps oil and gas companies, along with the provincial government, will hand the mandate back to the federal government, and conceptually reinstate the independent third body, entrusting it to operate the way it was originally intended to.


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One Response to Social license takes centre stage in the pipeline debate

  1. Vern Stocking says:

    We should maybe try to understand, that every village , hamlet, town and city and household in North America have a pipeline running to them , so why are so few people so concerned about safety and environmental issues ?