Part of Oil Security Toolkit
IEA (2020), Canada’s legislation on oil security, IEA, Paris https://www.iea.org/articles/canada-s-legislation-on-oil-security
Canada’s oil supply emergency framework is governed by the 1985 Energy Supplies Emergency Act (ESEA). Compared to most other IEA members, Canada is a net oil exporter. As such, the country does not currently impose stockholding obligations on energy importers and does not have a Central Stockholding Entity (CSE). Instead, Canada’s ESEA created the Energy Supplies Allocation Board (ESAB) which prepares for emergencies and implements Canada’s oil supply emergency framework at times of crisis.
An oil supply emergency exists when there is an actual or anticipated shortages of oil or disturbances in the oil markets that affect or will affect Canada’s national security and welfare and economic stability (article 15(1) ESEA).
It is the Canadian Governor in Council who, after the lieutenant governors of the Canadian provinces have been consulted (article 15(1) ESEA), determines whether or not an oil supply emergency exists.
As a net exporter of oil, Canadian legislation does not impose any stockholding obligations. Consequently, Canada also does not possess a CSE. However, the ESEA established the Canadian ESAB (articles 3-14 ESEA). The ESAB prepares, reviews and maintains contingency plans (article 11(1) ESEA) and studies the international petroleum supply situation in order to ensure that Canada is fully prepared to meet any petroleum supply emergency (article 11(2) ESEA). During emergencies ESAB administers Canadian mandatory allocation or rationing programmes (articles 11(1), 19(1) ESEA).
Availability of stocks
If it has been determined that an oil emergency exists, the ESAB must immediately prepare a mandatory allocation program to ensure sufficient supplies in various parts of Canada providing for an equitable distribution of petroleum across the nation (article 19(1-2) ESEA). Further, the Governor in Council has the authority to regulate petroleum imports (article 26 ESEA) and exports (article 27 ESEA), and to make regulations concerning the rationing of petroleum sales (articles 29(1)-30 ESEA). Moreover, powers exist to utilise various means of transportation (railways, pipelines, waterways, motor transport) to facilitate the allocation and distribution of petroleum products in emergency situations (article 35-40 ESEA).
While the ESEA does not contain specific provisions concerning demand restraint, article 25(1)(g) ESEA stipulates that the ESAB may make regulations limiting or prohibiting the sale of specified petroleum products to avoid wasteful or non-essential uses.
Relaxation of environmental regulations
Article 34(1) ESEA provides that the ESAB may, when necessary in order to preserve available supplies of oil products and after consulting various authorities, relax provisions of law governing or prohibiting the discharge of sulphur compounds.
Canada’s emergency regime is monitored and enforced on the domestic and international level. Each will be considered in turn.
Canadian legislation does not provide for reporting duties.
Contravention of ESEA provisions can be sanctioned by means of fines (CAD1000 – 10000) or prison sentences (up to two years) (article 41(1)(a-b) ESEA). Persons intentionally violating orders of the Canadian Transport Authority may face fines up to CAD20 000 and/or imprisonment of up to two years (article 41(2)(a-b) ESEA). Moreover, injunctions and temporary restraining orders are available to ensure the implementation of the ESEA regime (article 42 ESEA).
Canada is a member of the IEA and as such obliged to comply with the International Energy Programme (IEP). However, as a net exporter of oil Canada is currently not obliged to comply with the IEA’s 90-day stockholding requirement. Nonetheless, Canada is still obliged to submit information concerning its emergency measures to the IEA secretariat (article 32 IEP) on a continuous basis and the IEA monitors Member countries’ compliance with the IEP. The IEP does not, however, make any provision for the enforcement of any obligations imposed by the IEP.