What We Heard Report on the Blue Economy Regulatory Review Engagement

Targeted Regulatory Reviews

The Treasury Board of Canada Secretariat (TBS) coordinates Targeted Regulatory Reviews as part of the government’s broader plans to modernize Canada’s regulatory system. Through this initiative, departments review regulations and regulatory practices in cross-cutting sectors and themes to identify opportunities to reduce regulatory issues and irritants and support economic growth and innovation, while continuing to protect the health, safety and security of Canadians and the environment.

These reviews lead to plans of actions called Regulatory Roadmaps. The Roadmaps outline proposals that can include:

• changing legislative and regulatory authorities
• updating policies and practices
• identifying opportunities to support emerging technologies

In support of openness and transparency, these Roadmaps are informed by stakeholder consultations and published online.

Two rounds of reviews have been completed to date, with departments advancing more than 100 initiatives across 6 Regulatory Roadmaps to support regulatory modernization across key sectors and themes. Round 1 (published in 2019) focused on health and biosciences, agri-food and aquaculture, and transportation. Round 2 (published in 2021) focused on digitalization and technology neutral regulations, clean technology and international standards.

A third round of reviews was launched in 2022 focusing on supply chains and the blue economy.

Blue Economy Regulatory Review

In December 2019, the Minister of Fisheries, Oceans and the Canadian Coast Guard was mandated to lead the development of a comprehensive Blue Economy Strategy to help guide future government actions and investments that enable Canada to grow its oceans economy to create good middle class jobs and opportunity for coastal communities while advancing our reconciliation, conservation and climate objectives.

From February to June 2021, Fisheries and Oceans Canada (DFO) ran a public engagement process to receive input based on questions asked in the Blue Economy Strategy Engagement Paper.

In March 2022, the Minister of Fisheries, Oceans and the Canadian Coast Guard released What We Heard: Engaging on Canada’s Blue Economy Strategy, which is a summary of feedback received during the engagement process. Canadians want to foster a blue economy that provides sustainable growth opportunities and enhances the participation of underrepresented groups to promote equity, address labour market skills gaps and drive innovation in the ocean economy.

From a regulatory perspective, DFO heard the following:

• There is a need for consistency across jurisdictions to support dependable decision-making
• Regulations must be agile and responsive to innovation and emerging sectors
• Current regulations do not allow for industry to operate with predictability and certainty
• There are concerns around inconsistent decision-making across regions and a lack of transparency regarding factors that inform decision-making
• Canada’s regulations are out of date, slow to adapt and overly cumbersome

Based on the feedback received from partners and stakeholders, DFO announced the Blue Economy Regulatory Review in December 2022, which is being led in partnership with TBS and support from other federal government departments.

This review will help the Blue Economy Strategy foster a sustainable blue economy, tackle regulatory and operational challenges and explore innovative approaches to seize emerging opportunities within the blue economy. This review is focused on:

1. examining the role of regulation as a driver of ocean innovation
2. identifying regulatory and administrative barriers to environmentally sustainable growth
3. facilitating the development of agile regulations to address concerns of future-oriented ocean industries

1. Marine Renewable Energy and Environmental Protection

With extensive coastal and inland waters, Canada has an opportunity to tap the potential of marine renewable energy (MRE). Offshore winds, tides, ocean waves and river currents all contain energy that can be used to drive turbines and produce electricity, reducing our dependence on fossil fuels. While Canada’s marine energy sector is still relatively small, there is growing interest and demand to meet climate change goals. With this desire for more activity, there will be growing need for approval of marine renewable energy projects.

This theme generated the most interest. Much of the feedback related to issues surrounding regulations and regulatory practices for the review and authorization of MRE projects and recommendations on improvements. Several stakeholders expressed concerns about clarity, consistency, timeliness and coordination in process and decision-making. The following issues were raised:

• insufficient clarity in the regulatory framework and associated guidance makes it difficult to attract investment and creates barriers to the development of the MRE sector in Canada
• processes for reviewing and authorizing projects are complex and time-consuming, leading to delays impacting the commercial and financial viability of projects
• perception of inconsistency in how projects are reviewed and how risk is assessed in project authorization decisions raises questions about fairness, eroding proponent trust in the regulatory process
• a lack of communication and/or information on whether and how regulatory processes are coordinated amongst jurisdictions adds to uncertainty in project timelines

Several recommendations were made on how the legislative and regulatory regime for MREs could be improved, including:

• improving transparency by making guidelines and the risk assessment framework used for project evaluation publicly available and updating them in consultation with affected stakeholders
• adopting a risk-based approach to assessing MRE projects whereby the assessment is proportionate to the risk posed by the project, such that small-scale, lower impact projects have a lesser regulatory burden than higher risk large-scale projects
• increasing flexibility in the regulation of MRE projects to accommodate MRE challenges (such as the staged manner of deployments and challenges associated with the nature of funding) and better facilitate innovation
• improving cooperation among regulators, including across the federal government and between different levels of government (for example, federal and provincial) to ensure coherence across frameworks, timely decision-making, consistency in decision-making and alignment of priorities
• considering the benefits of MRE and clean energy projects and their potential to support the Government of Canada’s climate change objectives as part of the risk assessment and decision-making process
• relying on the body of international data on MRE projects, including best practices and lessons learned to inform evidence-based decision-making
• partnering with stakeholders that have existing infrastructure that could be used to conduct pilots of MRE technologies before rolling out on a larger scale

While many participants expressed support for efforts to improve regulatory processes for MRE projects for economic and environmental reasons, other stakeholders cautioned that MRE development should take into account potential impacts on existing ocean users (such as Indigenous and coastal communities, fish harvesters) and the marine environment. Similarly, participants encouraged the Government of Canada to consider MRE projects’ potential disturbance or harm to marine species and ecosystems when reviewing project applications, and to consider limiting MRE exploration activities in marine protected areas.

Recognizing the wide range of perspectives on this theme, many partners and stakeholders emphasized the value of consultation to ensure that all views are considered as part of future assessments of proposed MRE projects. It was noted that this approach would help to identify opportunities to reduce and offset any potential negative effects of future MRE projects.

Lastly, several participants raised knowledge and data gaps on species (distribution and abundance), geospatial data, and interaction between MRE technologies (such as wind turbines) and the surrounding ecosystem that prevent a full understanding of risks.

To address these gaps, participants emphasized the need for new data collection and surveys. They also suggested using lessons learned and data from the experience of other countries that have undertaken MRE projects and research, and investing in academic programs and research to build relevant expertise.

2. Marine Spatial Planning

Marine Spatial Planning (MSP) is an internationally recognized process underway in over 100 countries to address increasing demands on ocean space and multiple pressures on marine and coastal resources through an integrated approach.

Key drivers of MSP are to:

• sustain and enable blue growth in existing and emerging ocean sectors (for example, marine renewable energy)
• protect and conserve areas of importance
• address conflicts and trade-offs in crowded ocean areas
• maximize the use of ocean space to achieve sustainable outcomes

Reflecting generally on MSP, participants expressed support for its anticipated benefits and advocated for a dynamic approach to MSP that can adapt to future developments.

Regarding regulatory requirements and gaps in MSP, the following issues were raised:

• extent of legislative and regulatory clarity to guide the process
• complexity of federal, provincial, local and Indigenous roles and associated need for coordinated decision-making and action
• availability of predictable funding, particularly to support Indigenous partner engagement

Participants highlighted the need for clarity on roles and responsibilities of federal regulators involved in MSP and improved collaboration and coordination at both the federal level and between the federal and provincial levels of government. Some participants identified existing infrastructure that could be used in collaboration with multiple levels of government to pilot MSP.

Participants requested clarity on:

• the goals and outcomes of MSP
• the MSP process
• how other, sometimes competing, considerations will be integrated in the process, such as economic progress, climate change, conservation and restoration activities

One stakeholder suggested incorporating “ocean accounting” to balance these considerations. Ocean accounting involves measuring the economic, social and environmental values of the ocean, allowing decision makers to understand trade-offs and synergies between ocean uses. Some responses touched on the importance of MSP to consider climate change and the need for adaptive management.

While the need for partner and stakeholder engagement was raised consistently across the five themes, this message was particularly strong under the MSP theme, which received the second highest response rate. Participants stressed the need to:

• engage all relevant Indigenous rights holders, provinces and territories, and other stakeholders early on in the MSP process to obtain buy-in
• draw on academic and non-governmental organization expertise on MSP to help develop processes and plans
• engage with international expertise on MSP to learn what has worked elsewhere, such as in the European Union

Some participants recommended various MSP governance structures that comprise all relevant partners and stakeholders to guide future MSP efforts in planning areas. These ideas seek to formalize governance to ensure that stakeholders are represented in the process, and that there is adequate funding to support their engagement.

3. Marine Autonomous Surface Ships

Maritime Autonomous Surface Ships (MASS) and the interrelated themes of connectivity, automation, digitalization, robotics and big data will fundamentally re-shape the marine sector, both domestically and internationally. This represents an important opportunity to:

• enhance Canada’s economic competitiveness and the efficiency of our trade corridors
• strengthen maritime safety and security
• contribute to jobs and growth opportunities for Canadians

However, they will also be extremely disruptive. Starting in this decade, this shift will impact labour opportunities, employment, energy use, emissions, and the skills and knowledge Canadians need to compete globally in the marine sector.

Participants highlighted the wide range of potential applications for MASS technology, including hydrographic survey data acquisition, coastal surveillance, emergency response and water taxis/ferry services, but emphasized the need for updated or new regulations to accommodate these emerging vessel types and activities.

That said, some participants cautioned against amending regulations prematurely, recommending staying engaged in the development of international regulatory frameworks that would help inform Canadian regulations. Several respondents stressed the importance of Canadian federal regulators working together to support the deployment of international standards by the International Maritime Organization (IMO) that will inform Canada’s regulatory approach to MASS. Other participants indicated that if IMO standards are incorporated into Canada’s regulatory framework, there needs to be more opportunity for Canadian industry stakeholders to shape the standards during their development.

Participants also expressed interest in:

• understanding how existing regulatory requirements under relevant legislation (for example, Canada Shipping Act, 2001) will be interpreted to apply to MASS
• having what constitutes a MASS be clearly defined
• having future MASS regulations also apply to smaller autonomous surface vessels used for research and development
• protecting public safety and the environment, while also not being overly burdensome on innovation
• creating regulatory sandboxes^{Footnote 1} where the testing, research and development of autonomous vessels and related technologies could take place

Participants were also critical of the clarity of the application and approval process for MASS, suggesting that the latest version of industry standards should be referenced in existing Government of Canada policy. Similarly, concern was raised about the need for separate applications for every operation of the same MASS, which participants noted could lead to redundancy and inefficiency for operators. It was also highlighted that Transport Canada’s policy for MASS is limited to vessels under 12 metres in length and less than 15 gross tonnage, leaving a gap for larger autonomous vessels.

Participant feedback pointed to a lack of specific regulations and guidance for Autonomous Underwater Vehicles (AUVs), which have been in operation for decades, and which stakeholders noted creates uncertainty. They emphasized the need for clear and reasonable regulations that address this uncertainty and ensure safety and environmental protection without stifling innovation.

While acknowledging the progress in MASS technology, some participants noted that fully autonomous shipping is unlikely to replace human crew members in the near future and stressed the importance of taking a human-centred approach that would ensure the safety and security of crew members.

4. Ocean Technology

Canada’s Ocean Technology sector is a cross-cutting advanced technology industry focused on products and services to understand and work in or use the ocean. The sector comprises companies, institutions and organizations dedicated to ocean and marine-related technology, education, training, research and development, promotion, delivery and application.

The technology is used to deliver solutions and generate efficiencies through safe and sustainable exploration, development, monitoring and use of ocean resources. Ocean technology is a key enabler and defined as a horizontal sector applicable to such ocean-based verticals as marine transportation, commercial fisheries, defence, offshore energy, environmental monitoring, and marine tourism.

Owing to this broad spectrum of stakeholders, the Ocean Technology theme garnered comments and submissions from the Canadian innovation ecosystem that is developing new and innovative solutions for the ocean sector and traditional sector representatives focused on the benefits of implementing new ocean technology innovations.

Participants highlighted that streamlining regulation to be clear, concise and enable efficient multi-departmental engagement will make it easier for the Canadian ocean technology industry to test and verify new innovations, thus improving the commercialization potential of these technologies.

Several stakeholders, representing a significant portion of the Canadian ocean technology sector, emphasized the need to “future-proof” regulatory frameworks so they keep pace with technological advancements to ensure that regulations and policies do not become outdated. They noted that this much needed flexibility could be provided via experimentation tools, such as the use of regulatory sandboxes. These initiatives could leverage existing facilities and infrastructure to establish regulatory sandboxes for testing/developing autonomous vessels, remote sensors, IT and other ocean technologies, which would help expedite commercialization.

Participants stressed that, given the rapid pace of technological advancement, there is a need for regulations and policies to keep pace so both the marine environment and sectors that depend on the ocean can benefit from those advances.

As an example, one stakeholder noted that there are currently technologies that could be used to reduce fish waste, but that existing regulations could inhibit the ability to take advantage of these innovations. Similarly, participants pointed to a lack of guidance or regulations to support the introduction of and transition to electric propulsion systems for marine vessels. Industry expressed that existing review and approval mechanisms for innovative projects in this sector can take 1 to 2 years, raising concerns that this creates a risk for these projects and a non-refundable risk to investors.

Carbon capture and sequestration was identified as another example of a future-oriented ocean sector project that is bottlenecked by regulatory structures that impede innovation. It was recommended that a legal and regulatory framework to enable offshore carbon capture and storage projects be developed. Participants called on the Government of Canada to add carbon dioxide to the Canadian Environmental Protection Act to allow for research and testing in carbon dioxide capture.

One stakeholder group suggested a targeted improvement to the authorization process for new technologies for shipboard waste management systems. Participants encouraged federal regulators to explore the possibility of amending the Canada Shipping Act and/or its associated regulations to expand the Minister of Transport’s authority to issue certificates authorizing these new technologies, which would introduce greater flexibility in the regulatory framework.

Given the breadth of the ocean technology theme, participants recommended that efforts to support this sector be carried out with a comprehensive plan developed in partnership with marine users, with, for example, funding and incentives to support a safe transition to clean energy.

5. Sustainable Fishing Gear and Practices

Sustainable fisheries mean harvesting in a way that supports current socio-economic objectives without compromising the ability to meet future needs. However, non-target species, such as endangered whales and sea turtles, may become entangled in active fishing gear or abandoned, lost, or discarded fishing gear (ALDFG, or “ghost gear”), causing serious injuries or death and compromising the long-term recovery of these species. Recent studies indicate that ghost gear accounts for up to 70% of macro-plastics in the ocean. Ghost gear also has a damaging impact on marine animals, the coastal and marine environment, and global fish stocks.

More sustainable fishing gear and measures to prevent and address the threat of fishing gear to endangered species and ghost gear to the marine ecosystem are critical to supporting whole-of-government efforts to advance the circular economy, meeting requirements of the Species at Risk Act, achieving Canada’s Zero Plastic Waste Agenda and meeting our commitments under the Canada-Wide Action Plan on Zero Plastic Waste. Reviewing policies and regulations around sustainable gear use is an important step in securing the future of our oceans.

The importance of Indigenous participation

Indigenous and non-Indigenous partners and stakeholders emphasized the importance of Indigenous participation in decision-making concerning marine areas, especially with the potential impacts that changes to regulatory frameworks in the marine space could have on Indigenous communities.

Several participants called for a deeper recognition of Indigenous knowledge and the potential for it to contribute to the sustainable use of marine resources in a manner that prioritizes environmental and climate change objectives.

Indigenous partners suggested that climate change mitigation and adaptation should be a stronger theme in a future Blue Economy Strategy, especially considering the vulnerability of the Arctic to climate change. They also highlighted the need for caution regarding emerging technologies to prioritize the planet’s health and people’s well-being.

Lastly, several Indigenous partners highlighted a limited capacity to participate in consultation and engagements and called on the Government of Canada to explore mechanisms to better support Indigenous participation. The Government of Canada’s duty to consult with Indigenous partners on any regulatory changes or projects impacting their rights and interests was also raised.