Ottawa, 5 February 2013—The federal government’s absolute liability limits for accidents at nuclear facilities or offshore oil and gas developments are out-of-date, leaving taxpayers at increased risk of paying for environmental damages in case of a nuclear accident or oil spill from an offshore platform, says Scott Vaughan, Commissioner of the Environment and Sustainable Development, in his report tabled today in Parliament. The audit looked at how the government manages financial assurances obtained from companies working in the northern mining, nuclear, offshore oil and gas, and marine transportation sectors. Assurances are funds provided by resource project developers and operators to help shield taxpayers from the cost of environmental damage and clean-up, either after operations cease or because of an accident.
“The federal government needs to review its absolute liability limits in the nuclear and offshore oil and gas sectors,” said Mr. Vaughan.
The audit found that absolute liability limits for nuclear facilities such as power-generating stations have not changed in 35 years while those covering offshore oil and gas development have not been updated in more than 20 years. Absolute liability limits are also much lower in Canada than in other countries: for example, while Canada’s nuclear liability limit is $75 million, the US limit is over $12 billion.
While Canada’s maritime liability limits for spills from oil tankers are in step with those of other countries, Transport Canada acknowledges that current limits may not be enough to cover the risks associated with the projected increase in the size and number of tankers on Canada’s west coast.
The audit also found that financial assurances valued at about $11 billion are in place for the 71 nuclear installations across Canada, to cover the anticipated costs of site remediation once operations cease. However, the audit noted several shortcomings in the government’s oversight of the mining sector. For example, Aboriginal Affairs and Northern Development Canada did not conduct over 70 percent of required mine site inspections to help ensure that the $500 million it holds from companies to cover the cost of remediating mine site is sufficient.
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The chapter “Financial Assurances for Environmental Risks” is available on the Office of the Auditor General of Canada website.
