OTTAWA — Warring regulators have shaken investors’ faith in Canada, sent one company into bankruptcy and imperilled the massive green-power potential of the tides in the Bay of Fundy, Natural Resources Canada says.

“Canada needs to be seen as responding effectively to address the urgency of these issues,” senior officials wrote in a briefing note for their deputy minister last spring. Remaining trial projects are barely hanging on, and if those fail, it could “deal a decisive blow to the industry in Canada.”

The Bay of Fundy, between New Brunswick and Nova Scotia, famously has the world’s highest tides, where an estimated 100 billion tonnes of seawater flows in and out of the land’s funnel-shaped geography twice a day. The Nova Scotia government estimates that one section of the bay could produce 300 megawatts of renewable energy, the same as a new nuclear reactor Ontario is building.

Yet a test site in the Bay of Fundy underwritten with public money is on the brink, said the briefing note, which The Logic obtained through an access-to-information request. Intended to host five trial projects, the not-for-profit Fundy Ocean Research Centre for Energy (FORCE) had shrunk to three, two of which “have either suspended operations or are at risk of doing so,” the document said.

One defunct participant is Sustainable Marine Energy, which walked out of Canada in May. The Scottish tidal-power company and its Canadian subsidiary are both now in bankruptcy.

“We probably burned through 20 million bucks worth of taxpayer money, and we also burned through about 20 million bucks worth of investor money,” Jason Hayman, Sustainable Marine’s former chief executive, said in an interview.

(The still-functioning operation is led by Ireland’s DP Energy, which did not respond to The Logic’s inquiries.)

The government is pinning a lot of hope on a task force it formed last spring to straighten the situation out, which is due to report in the next few weeks, a little behind a previously announced deadline of the end of 2023.

“The proposed purpose of the task force is to provide advice on how to clarify requirements for fish protection and reduce turnaround time for regulatory decisions for tidal energy projects in the Bay of Fundy,” said the announcement at the time.

It did not mention the opinion inside Natural Resources Canada that if this doesn’t work, the industry is sunk.

An interim report in September laid out the challenge. The Bay of Fundy has a lot of marine life, including threatened species like wild Atlantic salmon and great white sharks. To protect them, Fisheries and Oceans (DFO) won’t let people put things like turbines in the bay unless the equipment is definitely not a danger. The trouble is there aren’t enough examples of tidal-power turbines in places like the Bay of Fundy—there really are no other places like the Bay of Fundy, with its giant tides and the clouds of silt they stir up—to be definitive.

“As part of the regulatory process, [the Department of Fisheries and Oceans] communicates to proponents a clear regulatory pathway with projected timelines to support a staged approach for tidal energy developments that have the potential to impact marine life, including species at risk,” the department’s spokesperson Christine Lyons wrote in an email to The Logic. 

“A staged approach allows proponents to deploy a reduced number of devices first, in order to demonstrate the ability to monitor and validate predicted impacts on fish and fish habitat prior to deploying multiple devices or platforms.”

That “staged approach” doesn’t give the nascent industry what it needs, the task force’s interim report said: “Economies of scale, supply chains, and investment security dictate a minimum pace and size. The tidal sector needs a regulatory pathway for small arrays of multiple devices to demonstrate the viability of commercial tidal stream energy. DFO’s staged approach to turbine deployment does not provide the required certainty.”

“You need to fund the whole development trajectory,” said Hayman, and that demands some confidence that, if an installation functions and doesn’t do harm, it can stay in place and be expanded.

FORCE itself has spoken up about the problem in a submission to the federal government’s review of regulations governing the “blue economy” of marine-based industry and commerce—a stated government priority. More than $200 million has been invested in tidal energy so far, an amount “at risk of being stranded” because of regulatory uncertainty, the submission said.

The same rules that have restricted tidal power could hold back offshore wind projects, it noted—the ones needed to feed joules into a new hydrogen export industry.

Sustainable Marine had been working on a tidal-power project in Orkney, off the U.K.’s northern coast, in the early 2010s. A combination of Brexit and a British turn away from green power scotched it, Hayman said, and Sustainable Marine was drawn to Canada by what seemed to be an attractive environment and a “pre-consented” place at FORCE, where the company could get started with minimal regulatory delay.

Making a turbine that will generate electricity as the current whirls through it isn’t that hard, Hayman said—you construct a big steel propellor, fix it to several hundred tonnes of ballast, and chuck it into fast-moving water. The trick to a viable tidal-power operation is making one you can service.

Sustainable Marine’s solution was to put the critical parts on a floating platform—“in the dry, in a hull like a boat,” Hayman said. By fall 2020, Natural Resources had promised the company up to $28.5 million to help build it. In mid-November 2023, with Sustainable Marine’s former Canadian assets in the hands of a bankruptcy trustee, the platform broke loose and ran aground, just so much floating junk.

Protecting marine life is unquestionably important, Hayman said, but there should be a competent regulator that can balance risks, not a system that gives veto power to fish biologists whose only job is protecting the specific creatures swimming in the Bay of Fundy right now.

“What we’re trying to do is actually beneficial to the oceans,” he said. “The biggest threat to marine life is climate change.”

The Department of Natural Resources’s spokesperson Michael MacDonald told The Logic it’s optimistic about the task force.

Its meetings and joint work “will allow task force members to achieve improved clarity and transparency in regulatory decision-making,” he wrote in an email.

Hayman, though he’s out of the Canadian tidal-power business, is less confident. He read the interim report after speaking to The Logic and sent his thoughts by email. The document talks about making the environmental rules clearer, but not about establishing a new regulator with a broader remit.

“I believe this is why FORCE was set up in the first place—but somehow the ‘why’ has been forgotten,” he wrote.