True partnerships: Building a pathway for future generations

True partnerships: Building a pathway for future generations

The energy transition in Ontario provides an opportunity for meaningful and coordinated inclusion of Indigenous communities at the beginning of what is likely to be an incredible transformation for generations. It is also the only way that Ontario will be successful in building a clean energy economy.

This section does not attempt to develop a universal definition, or a one size fits all approach to building true partnerships with Indigenous communities. Arguably, the fundamental spirit of a true partnership is one that is beyond transactional and where all parties are committed to building, supporting and maintaining a mutually beneficial relationship through ongoing transparency, trust, and collaboration.

This section discusses the interplay between the current legal framework and the electrification and the energy transition. It discusses the diversity of Indigenous communities, as well as the barriers and opportunities, including promising developments and potential partnership models to advance full Indigenous participation and partnerships in the clean energy economy.

The section identifies three key action areas to support a long-term vision for success for the present and future generations, which are meant to complement and build from each other, including the need for early and coordinated engagement, supporting economic reconciliation through flexible financing mechanisms, and improving Indigenous governance participation and collaboration. The section concludes with four core recommendations to advance meaningful Indigenous participation and partnerships in the clean energy economy. Several other recommendations throughout this report identify actions to support Indigenous communities and enable effective participation. Please refer to the complete list of recommendations at the end of this report.

Current legal framework

Building true partnerships with Indigenous communities is an evolving practice that has been gradually supported, albeit inconsistently, across various sectors and governments. Until the 1970s there was no legal construct or political framework (recognized by the Canadian government) that required government, energy developers or corporations to consult with Indigenous communities.Infrastructure projects and the like could proceed without the legal obligation to consult with Indigenous communities, despite the negative impacts of development projects on Indigenous communities. ^{footnote 1[1]}

Engagement with Indigenous communities is distinct from engagement with non-Indigenous stakeholders. As such, it is important to acknowledge the legal duty of the Crown to consult with Indigenous communities and the connection to Indigenous inclusion throughout electrification and the energy transition. Section 91(24) of the Constitution Act, 1867 identifies Indians and Lands reserved for Indians as exclusive federal authority. The existence of 133 Indian reserves within the province of Ontario means that this exclusive authority necessarily overlaps with provincial jurisdiction.^{footnote 2[2]} The provision of energy that is generated and transmitted across the Province, from power generation to electricity and fuels distribution, all take place on traditional and treaty lands.

The Constitution Act, 1982 entrenched the rights of Aboriginal people, through Section 35(1) that recognizes and affirms inherent Aboriginal and treaty rights. The legal doctrine known as the Duty to Consult and Accommodate was established through case law, following various courts’ interpretation of this section of the Constitution. The Duty to Consult continues to develop as a variety of cases make their way to the Supreme Court of Canada, and could impact the way that jurisdictions, including provinces and proponents, satisfy the Duty.

The Duty to Consult impacts electrification and energy transition in Ontario in that major energy infrastructure projects cannot move ahead without Consultation with and Accommodation, where appropriate, of Aboriginal and Treaty rights holders.

In 2021 the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) Act came into force in Canada as federal legislation.^{footnote 3[3]} Following decades of global Indigenous legal and human rights advocacy efforts, the UNDRIP was adopted by the United Nations (UN) General Assembly in September 2007 as an international instrument on the rights of Indigenous Peoples.

It establishes “a universal framework of minimum standards for the survival, dignity and well-being of the Indigenous Peoples of the world.”^{footnote 4[4]}

With the recent broad awareness in Ontario and across Canada of the treatment of Indigenous peoples – from the unmarked graves identified at former Indian Residential Schools to the lack of safe drinking water available to everyone across Canada, there is also a demand from many people in Ontario to find a meaningful, inclusive path forward on new projects that are on Traditional and Treaty lands. This social licence imperative is one more reason that Indigenous people must become a real part of the energy conversation as we move forward.

Indigenous leadership across Canada at all levels has been calling for early, meaningful, and coordinated engagement with Indigenous communities. Given the early stages of a significant and intentional transition to a clean energy economy this is a significant opportunity to correct historic wrongs and walk together on a path of true partnership that seeks to benefit everyone in Ontario.

Successful energy transition and electrification in Ontario requires full participation of Indigenous communities. Managed well, the transition offers significant opportunities for Indigenous economic participation and to advance reconciliation.^{footnote 5[5]}

There continues to be growing acknowledgment from across Canada of the importance of building meaningful relationships and partnerships with Indigenous Nations and communities on various projects, including infrastructure and energy development.

Objectives of reconciliation are well aligned with those of a successful transition, such as working collaboratively to advance a safe, reliable, transparent, and viable future for everyone in Ontario.

Indigenous communities in Ontario

Indigenous communities are present across Canada in every province and territory and include diverse cultures, languages, laws, and governance structures, as well as similarly diverse energy needs and interests.

Ontario alone is home to 23 per cent of all Indigenous peoples in Canada. There are 133 First Nation communities located across Ontario, representing at least 7 major cultural and linguistic groups. These communities are located from Windsor in the South to the northern shores of Hudson Bay. Five of the 20 largest bands in Canada are in Ontario. There are approximately 18 First Nations communities in Ontario that are considered remote, accessible only by air year-round or ice road for much of the year. There are more remote First Nations in Ontario than in any other region. Urban centres with significant Indigenous populations living off-reserve are found in Thunder Bay, Sudbury, Sault Ste. Marie, Timmins, Ottawa and Toronto.^{footnote 6[6]}

Métis people are also represented in Ontario.^{footnote 7[7]} The term “Métis” in section 35 of the Constitution refers to distinctive Métis collectives who, in addition to their mixed ancestry, developed their own customs, way of life and group identity–separate from their First Nation, Inuit or European forebears.^{footnote 8[8]}

The Métis Nation of Ontario (MNO) represents the rights and interests of some of the Métis people and communities throughout Ontario and has built a province-wide governance structure, including a centralized registry of Métis citizens; regions which cover areas where there are historic Métis communities; several Chartered Community Councils which represent Métis citizens at the local level in Ontario; a provincial governing body; a charitable foundation which promotes and support Métis culture and heritage (Métis Nation of Ontario Cultural Commission); and an economic development arm (Métis Voyageur Development Fund).

Just as Indigenous peoples and Nations in Ontario are geographically, culturally and linguistically diverse, Indigenous communities have diverse energy needs, preferences, and interests – and they have their own distinct governance structures, laws, protocols and internal decision-making processes to determine their community’s participation in energy projects, and in what manner a community participates.

The diversity of Indigenous communities across Ontario underscores the importance of early, ongoing and coordinated engagement and partnership building on a nation-to-nation basis, particularly as large-scale development ramps up to reach clean energy economy goals.

Committing to and investing in true partnerships with Indigenous communities will be essential for successful energy transition and electrification.

Context: Full Indigenous participation in the energy sector

Jurisdictional and governance realities

To enable Indigenous participation and achieve true partnerships, it is important to understand the economics of Indigenous governments and how they differ from other forms of government in Canada.

For example, although the federal government has jurisdiction for ‘Indians and Lands reserved for the Indians’, First Nations continue to operate at multiple levels of government – subject to provincial laws, Band Council bylaws, and reporting to the federal government.^{footnote 9[9]} Further, First Nations are often left out of the municipal legislative and service scheme, meaning that First Nations are responsible for public health in their communities but do not necessarily benefit from the service of public health units. First Nations are expected to maintain and upgrade critical infrastructure like roads, sewage systems, water treatment plants and building inspection services, to name a few. Significantly, First Nations are prohibited from taxing community members living on reserve. For generations, the only revenue First Nations received came from direct transfer payments to them – funds that were strictly allocated to federal and later provincial priorities. Funds were and continue to be strictly audited and if not expended on government priorities must be returned to the federal government.

In short, First Nation, Inuit, and Métis communities do not always have access to sufficient funding to support consultation or their economic participation in projects that affect or appeal to them. However, the constitutional protection of Aboriginal rights and the doctrine of the Duty to Consult and Accommodate, mean that if Aboriginal rights are not considered and communities are not consulted, Indigenous groups can and will receive support from the courts to prevent energy projects from moving forward.

Given the diversity of Indigenous people and communities across Ontario, it is necessary to begin consultation by understanding the unique needs and context of each group. It is imperative that the process be driven by building lasting relationships that create and foster open and transparent communication.

Through early engagement and investing in true partnerships, government and the energy sector can collaborate with Indigenous communities and entities to learn what has worked well, build on success and find creative solutions to improve Indigenous inclusion and participation.

Intersecting inequities: Limited access to safe, reliable and affordable energy

Energy is essential in our lives and economic activities. Access to and the use of safe, reliable, and affordable energy are emerging as a priority in policy agendas worldwide and have continued to be a vital determinant of a household's well-being and living standards.

Lack of access to safe, reliable and affordable energy restricts the development of communities and can hinder the province’s overall economic growth. Access to electricity reduces poverty, increases opportunity, improves health, productivity and living standards and powers devices that make daily living more efficient.

Empirical research considering the impacts of energy poverty has found that when compared with households without energy poverty, energy poor households tend to suffer more from health problems, spend more on medical care, have lower educational attainment and lower earning opportunities.^{footnote 10[10]}

Electrification and the energy transition promise the potential of supporting people across Ontario to access safe, reliable and affordable energy but questions remain about how governments and the sector will ensure that the benefits of transition and electrification will be evenly and fairly shared across the province.

Indigenous communities continue to experience disproportionately higher rates of poverty compared to non-Indigenous communities in the province, including energy poverty.^{footnote 11[11]} The Canada Energy Regulator states that a household may be described as experiencing energy poverty when it spends more than 10 per cent of its income on utilities. By this measure, an estimated 8 per cent of Canadian households’ experience fuel poverty.^{footnote 12[12]} According to some estimates, one third of Indigenous households in Ontario, or 42,000 households, have experienced energy poverty.^{footnote 13[13]} In 2021, Statistics Canada released the results of the 2016 Census, which found that low-income rates were lower for the non-Indigenous population than for all Indigenous groups in all geographic areas across Canada. The highest low-income rates were found for First Nation individuals living on reserve, and particularly for lone mothers living on reserve.^{footnote 14[14]}

These challenges are compounded by the increase of extreme weather events (e.g. wildfires, floods and ice storms), which can exacerbate existing inequities in communities, including respiratory, cardiovascular, water, foodborne, chronic and infectious diseases, as well as financial strain and food insecurity.

A 2010 federal study found that death, injuries, and destruction of property related to house fires in First Nation communities, particularly remote communities, far exceeded those in comparable off-reserve communities.^{footnote 15[15]}

Lower income households experience barriers related to equipment and installation expenses to address their homes’ energy needs, improve their homes’ energy efficiency and/or electrical safety features. For some communities, this can result in a higher number of house fires due to poor electrical safety, or the need to access alternative energy sources, including wood-burning stoves, propane or diesel.

Health Canada has examined health risks associated with exposure to particular fuel types and energy sources, including potential adverse health effects associated with diesel fuel use, and suggests ongoing efforts to reduce emissions and exposure.^{footnote 16[16]}

Opportunities for Indigenous communities

Some of the potential benefits of electrification and the energy transition range from overall improved energy efficiency for both homes and businesses resulting in lower long-term energy bills, broader environmental and health benefits related to lower carbon emissions and better air quality, as well as various economic benefits such as new business opportunities, advancing sustainable development models and stimulating local job creation.

The promise and potential of fuel switching

According to the International Energy Agency, some of the benefits of fuel switching include lower energy bills for consumers and protecting households from global energy price shocks.^{footnote 17[17]}

A widespread switch to electricity presents unique challenges for Indigenous communities, particularly tenants and low-income households, who may not be able to access the benefits of electrifying, may not have the option to switch their home energy system or may experience disproportionate costs to fuel switch. Poor access to reliable energy in Indigenous communities compounds the financial strain and ability to fuel switch for low-income households.

For those communities that have established infrastructure, ways of life and economies built around gasoline, natural gas and other non-renewable energy sources, developing flexible, collaborative, and coordinated approaches will be essential to fostering a successful transition and electrification process, and to upholding inherent Aboriginal rights. For example, many Indigenous communities rely on gasoline-powered boats, snowmobiles, and all-terrain vehicles, to hunt, fish and practice culture and treaty rights.

Likewise, gas stations, either wholly owned by an Indigenous community, or operating within an Indigenous community, often represent an integral aspect of a community’s local economy, where both Indigenous and non-Indigenous people purchase gasoline and other goods, including locally made products. As more electric vehicle (EV) charging stations are installed across communities in Ontario, questions emerge about how this will impact local Indigenous economies, and whether the benefits of electrification will be evenly distributed. In collaboration with Indigenous communities, electrification and the energy transition could potentially create positive business opportunities for the local economy where EV charging stations could become a designated space to purchase local goods and products while both Indigenous and non Indigenous patrons wait for their cars to charge.

Many Indigenous communities have identified the importance of building a sustainable energy system for generations to come and emphasize that the pathway to a clean energy economy must be achieved with Indigenous communities’ full participation very early in the policy, program and planning decision-making process. Additional time and supports will be required to support Indigenous communities throughout the transition and ensure inherent Aboriginal rights are upheld.

Promising developments and partnership models

Indigenous participation and partnerships in clean and renewable energy projects are occurring across Canada, with several jurisdictions developing and implementing some form of policy, regulation, procurement measures or support programs to improve and support Indigenous participation.

Over the last two decades, the number of medium and large hydro, wind, solar and bioenergy electricity generating projects (projects generating one megawatt or more of electricity) with Indigenous participation has grown substantially. By some estimates, First Nation, Métis, and Inuit entities are partners or beneficiaries of almost 20 percent of Canada’s electricity-generating infrastructure, much of which produces renewable energy.^{footnote 18[18]} In Ontario, there are over 450 renewable energy projects that are owned by or partnered with Indigenous communities.^{footnote 19[19]}

It is estimated that since 2017, the number of medium and large Indigenous clean energy projects across the country has grown by 29.6 per cent, including hydro, wind, solar, bioenergy and hybrid energy sources. There has also been an increase in smaller Indigenous clean energy projects, with many Indigenous communities installing community-scale or small-generation systems for local supply and in some instances selling power into provincial and territorial grids.^{footnote 20[20]} Likewise, Indigenous participation in oil and natural gas projects has grown substantially in recent years, including participation in pipelines, tank farms and liquefied natural gas facilities, particularly in Western Canada.

Since 2015 Canada has seen a significant rise in Indigenous participation in electricity transmission projects. A reported total of 19 such projects have been completed or are in construction, including some linked to grid access for major projects (e.g., La Romaine Hydro, Quebec), off-grid community interconnection (e.g., Wataynikaneyap Power, Ontario), and grid strengthening (e.g., Bipole III, Manitoba). This development is notable and highlights a significant acceleration in renewable energy projects in remote and Northern communities, contributing to reduced reliance on diesel-fueled generators.

The Giizis solar project in the Ontario community of Kiashke Zaaging Anishinabek began operations in 2020 as Canada’s first fully integrated solar-storage project, tied into the local power and distribution system.

The nature of Indigenous participation across energy projects ranges from ownership or co-ownership to revenue sharing or lease agreements to Impact Benefit Agreements (IBAs) and/or various partnership agreements.

Project ownership

Project ownership is one model that has been used to improve Indigenous participation in various energy projects. In Ontario, there are several examples where the level of Indigenous ownership of clean energy projects ranges from strong minority ownership of 25 to 50 per cent to majority ownership.

For example, Hydro One has launched an equity partnership model where First Nations will be offered a 50 per cent equity stake in all of Hydro One’s future new large scale capital transmission line projects with a value exceeding $100 million. Eight First Nations represented by Gwayakocchigewin Limited Partnership (GLP) and Lac de Mille Lacs First Nation are to hold 50 per cent investment in the Waasigan Transmission Line project. This project is a proposed new double-circuit 230 kilovolt transmission line between Lakehead Transformer Station (TS) in the Municipality of Shuniah and Mackenzie TS in the Town of Atikokan, and a new single-circuit 230 kilovolt transmission line between Mackenzie TS and Dryden TS in the City of Dryden.

The Wataynikaneyap power transmission project

Many Indigenous communities continue to experience regular and prolonged brownouts and blackouts due to poor access to safe and reliable energy sources. This was the case for Pikangikum First Nation, located about 500 kilometres northwest of Thunder Bay, and one of 17 communities in the region that was not accessible by road year-round and relied solely on diesel generators for its electricity.

Pikangikum used approximately 12,000 to 15,000 litres of diesel fuel per day. Most of the fuel was flown into the remote community, at a high cost, just to keep the lights on. Frequent brownouts limited the amount of electricity people could use in the community and moratoriums were issued for non-essential electrical use. Frequent brownouts and poor access to clean and stable energy meant that the community was unable to build new homes required to address housing shortages, and the delivery of critical services was affected, including programs meant to address food insecurity.

In 2018, Pikangikum became the first remote First Nation community to be connected to the provincial power grid as part of the Wataynikaneyap Power Transmission Project.

The Project includes the Line to Pickle Lake, which is a new 300 km system reinforcement between the Dryden area and Pickle Lake, and the extension of the grid to 16 remote First Nation communities across northwestern Ontario over an additional 1,500 km of new infrastructure. With a projected completion date expected in 2024, the project will be the largest Indigenous-led infrastructure project in Canada, and the most far-reaching remote First Nations grid connection initiative in Ontario's history. When complete, the project will provide over 18,000 First Nation people in northwestern Ontario with a clean, reliable and affordable supply of electricity.

The licensed transmission company is equally owned by 24 First Nation communities (51 per cent), in partnership with Fortis Inc. and other private investors. Communities will have the ability to increase their ownership and control to 100 per cent. The Ontario Government is providing a loan of up to $1.34 billion for the Wataynikaneyap Power Project’s construction costs. Ontario’s loan will save ratepayers money by providing financing to the project at a lower rate than could be achieved through private financing alone. The project will also be cost-shared with the federal government, which has committed $1.56 billion in funding at project completion.

Wataynikaneyap Power works with the project contractor to ensure environmental requirements and community protocols are followed, including bans on the use of pesticides to prevent negative health and environmental impacts on community members and the surrounding land. Opiikapawiin Services LP (OSLP), is 100 per cent Indigenous owned and responsible for administering projects and programs for Wataynikaneyap Power. The programs are grounded in First Nations’ knowledge, culture and ceremonies and help to provide skills development and training to support Indigenous employment and participation throughout the project. As of March 31, 2023, 50 training programs have been administered and 603 individuals have completed training.

While there have been barriers and hurdles to advance a project of this scale, this example demonstrates the ways in which government and industry have the capacity to support collaborative, flexible and innovative partnerships with Indigenous communities. The project was designated a priority by both the federal and provincial government, which helped to advance approvals, and signal its importance.

The Project is also supported through the Ontario Aboriginal Loan Guarantee Program (ALGP), which supports Indigenous participation in new transmission and renewable energy generation projects, such as wind, solar and hydroelectric power. The program provides a Provincial guarantee for a loan to an Indigenous entity to finance a portion of its equity investment in an eligible project.

There are also significant positive impacts and mutual benefits to the Project, including enabling community-driven projects; addressing infrastructure gaps in communities; increasing access to safe and reliable energy; and improving Indigenous participation and project ownership with long-term economic benefits for all equity partners.

Considering costs in a holistic way by including the environmental, social and cultural costs associated with a particular project is a key learning from the Wataynikaneyap project. The project also encourages governments and proponents to consider the anticipated environmental, social, and cultural costs of not supporting Indigenous participation and leadership in energy projects.

The increase in Indigenous project ownership represents a promising development that deserves further active support and investment from government and the energy sector. While many equity partnerships represent opportunities for long-term economic benefits, government and the sector should engage with Indigenous communities and entities on how project ownership can better provide immediate and medium-term benefits for Indigenous communities. For example, additional benefits may include, but are not limited to, stable funding to build capacity and skills development that support informed energy discussions and participation in community, regional and provincial energy planning.

In addition to considering how equity partnership models can support participation and produce broader socio-economic benefits, government and the sector should develop a clear plan, informed by engagement with Indigenous communities, on how organizations/entities will support and finance Indigenous equity participation and project ownership on an ongoing basis.

Indigenous participation in clean energy initiatives and building resiliency

Improving housing energy efficiency in Indigenous communities represents a significant opportunity to reduce energy use and costs, support local employment and investments, and generate positive impacts to community health and well-being through safer housing. The Panel spoke to several Indigenous organizations that reiterated the importance of ensuring there is adequate federal funding for quality, safe and affordable housing on-reserve as a precursor to success for energy efficiency initiatives.

The Remote First Nation Energy Efficiency Program, supported by the Independent Electricity System Operator (IESO), is a pilot program delivered in Kasabonika Lake, North Caribou Lake, Sachigo Lake and Wunnumin Lake First Nation since 2019. The program has been expanded to additional remote First Nation communities and is offered at no cost to participants. The program funds a designated community coordinator and delivery agent to conduct energy audits, identify opportunities for the installation of energy-efficient products for homes, small businesses, recreational facilities and band-owned buildings. The program supports, but is not limited to, basic energy efficiency upgrades, appliance replacements, insulation and draft-proofing upgrades, all of which contribute to long-term bill savings and improving the safety and comfort of homes and businesses.

Indigenous communities, and particularly northern and remote communities, experience disproportionate impacts of climate change, including extreme weather events that may result in damage to critical infrastructure, evacuation and further displacement from traditional territories, which impact hunting and harvesting rights, heighten food insecurity and exacerbate other existing health and socio-economic inequities.^{footnote 21[21]}

Building resilience across Ontario, and particularly in Indigenous, northern, and remote communities, will be essential to a successful transition and electrification process.

Energy storage is a critical component of the grid, supplementing wind, solar, hydro, nuclear and fossil fuels as well as demand-side resources and system efficiency assets. Ultimately, storage is an enabling technology that can help consumers save money, improve reliability and resilience, and help reduce environmental impacts.

For example, energy storage is critical to decarbonization as it allows for non-emitting renewable power to supply a greater portion of electricity baseload and peak demand. The accelerated pace of electrification and the energy transition represents an opportunity to continue to explore innovative energy projects between Indigenous communities, utilities, and electricity-planning agencies.

The Oneida energy storage project proposed by Six Nations of the Grand River Development Corporation and partner NRStor, is to provide battery power supply for grid peaking. According to the project proponents, it is expected to yield no less than $1 million per year to the Six Nations community for the projected 20 plus year project lifespan. The project is expected to reduce 4.1 million tonnes in carbon emissions and provide 900,000 hours in local employment over a 20-year period. It will be among the first of its size and demonstrates the economic potential of the role of Indigenous partnerships in low carbon energy projects.^{footnote 22[22]}

A long-term vision for success

Supporting full Indigenous participation and building true partnerships with Indigenous communities across energy planning, development, investment, ownership, and the operation of projects, has the promise of contributing to a more open and participatory electrification and energy transition, where the benefits are distributed locally and collectively.

Although there is an increasing recognition of the importance of partnerships with Indigenous communities and greater Indigenous participation in and leadership of energy projects and planning, government and the sector must play a more consistent and active role to ensure a successful energy transition across Ontario, and to advance the process of reconciliation.

It is critical to engage with Indigenous communities to identify how the transition should progress and what is needed to support communities’ safety, security and success, and their immediate, medium and long-term vision. It is also critical that Indigenous communities are supported to determine how they want to partner with the government and how they would like to participate in energy planning and project development, including supporting Indigenous leadership and ownership in projects.

The following are key action areas, which are meant to complement each other, and that the government should consider in order to co-develop true partnerships and a successful pathway for a clean energy economy with Indigenous partners:

• Early and coordinated engagement
• Economic reconciliation and flexible financing mechanisms
• Governance participation and collaboration

Early and coordinated engagement

The call for early and coordinated engagement has been consistently emphasized by Indigenous leadership and communities regarding energy planning and project development. While early and coordinated engagement alone is not sufficient to enable true partnerships, it is foundational to help to define each distinct partnership between respective Indigenous communities and with the province and proponents.

Early and coordinated engagement with Indigenous communities is critical as the pace of electrification and the transition accelerates and intensifies. Prioritizing ongoing relationship building through regular and coordinated engagement is necessary to improve transparency and accountability to Indigenous communities. This includes facilitating discussions related to the anticipated costs and impacts of electrification and the transition and demonstrating how the feedback received through engagements has informed policy development and decision-making.

With respect to wise practices to facilitating engagement, many Indigenous communities have publicly available engagement and consultation protocols and guidelines that outline how they would like government and proponents to approach engagement and Consultation. Some Indigenous communities have shared their Nation’s policies, laws, constitutions, and regulations that support Indigenous decision making around projects and investments on their lands.

For example, Manito Aki Inakonigaawin, or Grand Council Treaty #3’s Great Earth Law, proclaimed on October 3, 1997, validated through traditional ceremony, and ratified by the National Assembly, emphasizes Indigenous values as driving decision making on, for example, energy and infrastructure development projects in Treaty #3 territory. In February 2023, Grand Council Treaty #3 announced the official launch of the Manito Aki Inaakonigewin (MAI) toolkit. The Toolkit, which is publicly available, is meant to support the relationship between Treaty #3, proponents, the Crown and others, build partnerships, support clear and transparent communication, and protect the environment, including sacred and ceremonial sites throughout the territory.^{footnote 23[23]}

Some Indigenous nations have used other approaches to make Indigenous values-based decisions with community members to guide involvement in projects and determine project impacts. Government and proponents would benefit from enhancing their own internal capacity building to familiarize themselves with Nations’ policies, laws and constitutions ahead of initiating and coordinating engagement and consultation. Improving government and proponents’ knowledge and understanding of community approaches could contribute to trust building and more consistent and coordinated engagement and consultation across the energy sector. Stable capacity funding is required to support early and coordinated engagement and Consultation with Indigenous communities.

Stable capacity funding to Indigenous communities is a critical element to facilitate meaningful engagement and is essential to enable open discussions on how the Province can better support collaborative partnerships, improve the safety and success of communities throughout the transition and advance Indigenous communities’ participation, inclusion, and leadership in energy planning and project development.

Capacity building as a driver for engagement and participation

Many Indigenous communities are inundated with engagement and consultation requests on energy and non-energy related projects, often with narrow lead times to meaningfully incorporate Indigenous perspectives and insufficient stable capacity funding to support meaningful Indigenous participation.

As a result of the legacy of colonialism, many Indigenous communities are responding to multiple, and often overlapping crises with smaller numbers of designated staff available to properly engage on energy projects and technical energy planning discussions.

Evergreen funding to enable early, meaningful and coordinated engagement is a critical lever to address the unique barriers that prevent full Indigenous participation in the energy system. While efforts to build capacity take time to increase communities’ technical energy and systems knowledge, government and the sector must create space for Indigenous perspectives throughout energy and technical planning discussions.

Given the potentially rapid pace of electrification and transition, the government and the sector should support larger scale community capacity building efforts to enable full Indigenous participation in planning, including technical regional and provincial planning discussions, and enable opportunities to address the cumulative impacts of energy development projects.

The scope and scale of capacity building supports may differ across communities based on respective energy needs and interests. Critical capacity building efforts may include:

• Building community knowledge and awareness of Ontario’s energy system, such as the roles and responsibilities of the Province, agencies, transmitters, local distribution companies (LDCs), etc.
• Tailored training and learning tools for Indigenous leadership to support informed community energy conversations.
• Education and skills development to enable participation in regional and provincial energy planning, including technical planning discussions.
• Learning/funding for designated community members/staff to regularly assess and evaluate community energy needs and interests.

Agency-led capacity building

The IESO offers a suite of Indigenous Energy Support Programs that support participation in the energy sector by enabling Indigenous communities and organizations to develop energy plans and projects and hire and train energy workers in their community. In 2022, the IESO provided funding for 83 projects across 53 recipients for a total of $9.8 million in funding, and 28 dedicated energy workers were funded across the province.

Throughout the Panel’s engagements, flexible program approaches with funding for dedicated staff to improve community capacity, was identified as wise practices to enhance community knowledge and participation in energy conversations. Providing longer-term funding and increasing salaries for designated staff, like Community Energy Champions (who help plan, implement and evaluate energy-related priorities), as well as providing funding for relevant training, and for required program equipment/supplies was also identified as positive program elements to support Indigenous participation in engagement and energy planning.

Indigenous-led capacity building

The 20/20 Catalyst Program delivered by Indigenous Clean Energy Inc. (ICE) was highlighted as an existing Indigenous-led program that facilitates capacity building across Indigenous communities. The program provides practical and applied learning about renewable energy projects, community energy planning, energy efficiency and conservation, business management, and advanced energy systems. Participants are supported to move clean energy projects forward on the ground.

The program emphasizes Indigenous communities’ participation in energy efficiency and renewable energy projects as foundational to their health and well-being. Financing the construction of energy efficient homes and the retrofitting of older homes to be energy efficient is a crucial component to both climate adaptation and sustainable development, by reducing energy emissions, and by facilitating job creation for Indigenous people.

Similarly, Conservation on the Coast (COTC) has focused on delivering conservation demand management programs in three James Bay communities - Attawapiskat First Nation, Kashechewan First Nation and Fort Albany First Nation - that own their own local distribution companies. COTC, in partnership with Five Nations Energy Inc. and the IESO, have successfully completed deep retrofits for 40 homes, including the addition of heat recovery ventilators.

Partnerships have been crucial to the success of these community-based capacity building efforts, as well as government support that is flexible, consistent and relationship-based.

Opportunities to expand and scale up existing capacity-building programs should be pursued, including opportunities for additional wrap-around-supports to facilitate communities’ participation and for designated staff helping to deliver community programs.

As mentioned above, building capacity in Indigenous communities should also be met with an ongoing commitment from government and the sector to build their internal capacity with respect to enhancing Indigenous cultural competency, building greater awareness, and understanding of treaties and community engagement protocols, governance structures, and an ability to demonstrate how Indigenous perspectives are included and inform decision-making.

There are several organizations across the energy sector that have developed or are in the process of developing Indigenous or Reconciliation Action Plans, establishing or enhancing Indigenous relations units and seeking to improve partnerships with Indigenous communities. These actions signal a hopeful development taking root and provide an opportunity to improve cross-sector learning and knowledge sharing to establish wise practices across Ontario’s energy sector.

Government’s role in supporting engagement

In addition to stable capacity funding to Indigenous communities, the Ministry has a crucial role to play in supporting engagement and Consultation with Indigenous communities to ensure Indigenous communities are meaningfully involved and benefit throughout the process. This is imperative to ensure the province can keep pace as the demand for electrification and energy transition intensifies.

Most of the proposed solutions for achieving a clean energy economy rely on using Indigenous lands and resources to build clean and renewable energy infrastructure and extraction projects. These projects include new non-emitting electrical generation power plants, expanded transmission lines, energy storage, hydrogen fuel production, and new mines to provide the raw materials needed for electric vehicle battery production. Given that all these projects will be built on Indigenous lands, any opposition or delay to proposed projects will significantly impact the province’s ability to seize the economic opportunities of electrification and the energy transition.

Currently, the Ministry of Energy undertakes and coordinates engagement and consultation with Indigenous communities on proposed policy actions and energy projects in Ontario and often delegates the procedural aspects of the Duty to Consult to proponents on energy projects. The Indigenous Energy Policy Unit within the Ministry also provides guidance to proponents to support engagement and consultation and is responsible for working with Indigenous communities and proponents to address any related issues that may arise throughout the engagement and consultation process.

Ensuring adequate resources and capacity to satisfy the Duty to Consult will be essential as the volume of development projects grows to advance electrification and the energy transition. Supporting the Ministry’s capacity to better respond to an increase in requests for engagement and Consultation will also help the Ministry to better build and maintain long-term relationships with Indigenous communities, support more proactive, coordinated, and open discussions with Indigenous communities throughout the transition and help to facilitate collaborative partnerships and full Indigenous participation in the emerging clean energy economy.

Where governments and proponents have taken the time to invest in long-term relationship-building with Indigenous communities, engagement and consultation will likely be more constructive and productive. As opposed to solely engaging on specific projects as they emerge, establishing sustained channels with Indigenous communities could serve to maintain positive relationships and support collaborative and transparent conversations related to energy planning, policy development and decision making as electrification and the energy transition progresses.

Economic reconciliation and partnerships

Simply defined, economic reconciliation can be understood as the inclusion of Indigenous people, communities, and business in all aspects of economic activity. As outlined in the Truth and Reconciliation Commission of Canada (the “TRC”) Final Report, all reconciliation efforts require the following overarching principles of trust building, joint leadership, accountability, transparency and a substantial investment of resources.

It is not enough to engage with Indigenous communities to advance true partnerships and economic success. Indigenous perspectives in major project benefits and risk assessments, Indigenous-led investment decisions, and Indigenous-held equity stakes are becoming increasingly common.

For generations, Indigenous leaders have advocated for the need to include Indigenous perspectives in projects that impact Indigenous lands and communities. The recognition and advancement of Indigenous rights through advocacy efforts and legal court decisions affirms the importance of including Indigenous perspectives in critical energy and mineral projects.

Many Indigenous communities view the economy as being interconnected with land, resources, politics, ceremony and spirituality. Taking an integrated and holistic view of the economy is to view “shareholders” as the community itself. The values and goals in an Indigenous partnership involve not only maximizing profits but also economic development that supports communities’ long-term economic and social health and well-being.

There are existing Indigenous and community-led organizations that help to facilitate positive partnerships with Indigenous communities on major energy development projects.

A significant aspect of the work of the First Nations Major Projects Coalition (FNMPC) is to support First Nations and companies initiating partnerships on major projects. The organization states that the approach by which partnerships with Indigenous communities or entities are initiated and implemented are vital, and that this includes providing capital markets, governments and the public with assurance of project success. Industry proponents are increasingly interested in better understanding the wise practices and key learnings from successful Indigenous and industry partnerships on major projects.

With appropriate and stable resourcing, Indigenous-led organizations could continue to facilitate more equitable partnerships between Indigenous communities, government, and proponents, and ensure that partnerships produce shared economic success for all parties, in addition to improvements to overall community health and well-being.

Access to capital and flexible financing frameworks

Through federal policy such as the Indian Act, Indigenous communities often do not have reasonable and competitive access to capital for investment and economic development.24 Systemic barriers like the Indian Act have prevented Indigenous businesses from raising capital, and in combination with many Indigenous communities’ remote geographic location and fewer human and financial resources, have placed Indigenous communities at a significant competitive disadvantage.25

Governments play a vital role in major project success through lessening regulatory burdens and administering programs like the Aboriginal Loan Guarantee Program (ALGP). The ALGP is an example of a creative financing mechanism that helps to enable Indigenous participation and address some of the challenges Indigenous communities experience with raising sufficient capital to participate in competitive projects in their territories.

The ALGP supported, in part, the Lower Mattagami Project, a partnership between Moose Cree First Nation and Ontario Power Generation. Under the Amisk-oo-Skow Agreement, Moose Cree First Nation received a 25 per cent equity stake in the project. The Project is Ontario's largest northern hydroelectric-generating construction project in 40 years and has increased Ontario's supply of clean, renewable power by about 440 megawatts. The partnership agreement also provided training and employment opportunities. Moose Cree businesses were awarded over $300 million worth of project contracts and at peak construction periods, the project employed over 250 Indigenous workers.

Opportunities to expand or learn from the ALGP could support Indigenous communities and entities who want to participate in various energy projects across their territories, particularly as the volume of projects is expected to increase throughout the transition.

Indigenous inclusion in environmental, social and governance (ESG) frameworks

Discussions around the use of environmental, social and governance (ESGs) strategies and programs to indicate how an organization is performing and whether an investment is attractive, has been the topic of evolving conversations throughout various corporate, investment and governments sectors, particularly as investors demand more robust governance and oversight. Globally, discussions are ongoing around the development and implementation of policies, regulations and targets related to ESG, including the use of mandatory ESG reporting. The use of ESG is growing in reach globally. As of 2020, 88 per cent of publicly traded companies, 79 per cent of venture and private equity-backed companies, and 67 per cent of privately-owned companies had ESG initiatives in place.26

ESG is currently, and will continue to be, viewed through an investor’s lens. Rising expectations for organizations to measure and disclose their ESG performance will require them to demonstrate through performance metrics and data, that they are assessing and improving the environmental, social, and governance elements of their business. It is likely that they will be increasingly expected to demonstrate that they are addressing the risks of climate change, including both physical risks to their organizations’ assets and risks as Ontario transitions towards a clean energy economy.

As the influence of ESG increases, it represents an opportunity for the inclusion of Indigenous perspectives in each of the three pillars, as there is clear alignment between Indigenous interests and ESG.

As noted above, building a clean energy economy requires development on traditional territories. This requires strong relationships and collaboration with Indigenous nations and communities, which can contribute to achieving long-term business, sustainability, and collective goals. For example, Indigenous people have been living on this land since time immemorial and are aware of the effects of climate change, energy transition, and how energy development impacts collective well-being and their inherent Treaty and cultural rights. Many Indigenous nations and communities emphasize the interconnectedness between people and the land, whereby sustainability is viewed as an active and reciprocal relationship between people and the environment.

In conversation with Indigenous communities, there is an opportunity to provide meaningful guidance on the appropriate integration of Indigenous perspectives into organizational governance, decision-making processes and to collaborate on inclusive operational and governance metrics.

There is also an opportunity to explicitly include Indigenous perspectives in ESG disclosure standards and frameworks. There are ongoing discussions between Indigenous leaders, businesses and organizations with respect to the alignment between ESG and improving Indigenous communities access to equity for the purposes of investment and development. Indigenous nations and communities are increasingly participating in Indigenous-owned investment capital projects in a way that aligns with their values and objectives, which informs and contributes to the broad objectives of ESG investing. Opportunities to consider Indigenous investment capital as a potential requirement for ESG investing is an idea worth further consideration.27

Indigenous value-themed bonds

While financial returns are significant to investors, producing environmental and social outcomes has become increasingly appealing to asset owners. At over US$120 trillion, the bond market (including all bonds) is the biggest capital market in the world. Coupled with increasing investor interest and the broadening of bond types to include Indigenous value-themed bonds, there are opportunities to scale financing to attract capital for Indigenous economic development.

For example, since 2014, the First Nations Financial Authority (FNFA) has issued at least nine bonds/debentures to raise funds to provide First Nations with long-term fixed rate loans. In March 2022, the FNFA issued a debenture worth CAD$354 million. This bond is supporting projects in 19 First Nation communities throughout Canada, including a solar energy farm in Ontario, a hydro-electric project in Quebec, an elder care facility, housing and other infrastructure.

Sovereign wealth fund

Simply defined, a sovereign wealth fund (SWF) is a state-owned investment fund that invests in real and financial assets in a variety of asset classes such as stocks, bonds, real estate, private equity, and hedge funds.

In July 2018, Ontario announced the completion of the sale of over 14 million shares in Hydro One to Ontario First Nations Power Holdings LP, a limited partnership wholly owned by Ontario First Nations Sovereign Wealth LP, which in turn is owned by 129 First Nations in Ontario. The deal represented 2.4 per cent of the outstanding common shares.

The purchase was financed through a 25-year term loan from the Province, with the interest rate for the term loan provided at the Province's relevant borrowing rate, plus 15 basis points. The shares sold in the transaction were pledged as security for the term loan provided by the Province. The Province also provided seed capital of approximately C$29 million in cash to a new investment fund wholly owned by Ontario First Nations Sovereign Wealth LP.

The OFN receives quarterly dividends from Hydro One, which are used to make interest payments on the loan, with the remaining re-invested by an independent investment manager for greater gains. Dividends from utilities remain secure, although economic recessions and impacts to the market are a consideration. This financing framework has been successful in providing ongoing and long-term economic benefits for the collective interest of many Ontario First Nation communities.

As shown above, there are a variety of financing mechanisms and instruments that have been used to support Indigenous economic development and enable Indigenous participation and partnerships with Indigenous communities. Flexible financing models are crucial to ensure that Indigenous communities and entities have access to capital and thus receive a fair opportunity to participate in a competitive economy, particularly as projects and new technologies quickly emerge to advance electrification and the energy transition.

Incorporating Indigenous values and perspectives to inform the development of partnership agreements is a wise practice as there is early focus on relationship building and to time invested in understanding project partners’ values, goals and limitations. In the case of the Wataynikaneyap Project, project partners negotiated requirements as part of their partnership agreement to align with community values and protect the people and the lands’ health and well-being over the course of the project’s life cycle.

Embedded and collaborative governance participation

Indigenous partners bring a significant wealth of knowledge, experience and perspective, as well as valuable approaches to partnerships. Moving towards a clean energy economy represents an opportunity for government to collaborate with Indigenous nations and communities on shared decision-making and synergetic governance models, including Indigenous participation on boards of directors and joint committees, and incorporating Indigenous approaches to topics like resolving disputes and managing land and resources.

The notion of embedded governance participation aims to improve Indigenous participation and the inclusion of Indigenous perspectives within existing structures that govern and regulate Ontario’s energy system. This includes, for example, ensuring Indigenous representation from Ontario on the Boards of Directors of the Ontario Energy Board (OEB) and the IESO. In addition to ensuring Indigenous representation on executive boards, agencies and industry proponents should clearly demonstrate how policy development and decision making include and are informed by Indigenous perspectives.

Indigenous representation on government agency boards would serve as an important signal to some in industry about the importance of Indigenous representation on corporate boards.

In addition to embedded governance participation, the notion of collaborative governance participation refers to new approaches to shared governance between government, industry proponents and Indigenous communities. It requires early engagement and an understanding of Indigenous communities’ various governance structures and laws which inform the nation’s decision making and preferred partnership approach.

For example, Hydro One’s Waasigan Transmission Line project team includes a representative from Gwayakocchigewin Limited Partnership (GLP), a coalition of eight First Nations. GLP consists of eight of the nine First Nation communities that have signed a 50 per cent equity partnership on the line with Hydro One. A designated team member from GLP has a key role as a full member of Hydro One’s Waasigan Project Team. They play an integral role in internal Hydro One meetings to support the project and facilitate meetings with GLP and/or its member communities and the public. Project governance structures like this have the potential to result in increased transparency and improve communication and understanding between project partners.

There are potential learnings from other sectors that may be helpful as various approaches to improving Indigenous participation in the clean energy economy are considered. Wabun Tribal Council operates in Timmins, serving six First Nations. In 2016, the Council developed a policy to improve meaningful engagement with First Nations in mineral resource exploration and development. With several exploration agreements, impact benefit and resource development agreements, the Wabun Model of resource development aims to build meaningful relationships with the mining and development industry. The Council has played a key role in regional planning and policy development.

The Council has signed over 55 Memorandums of Understanding (MOUs) with various mining and resource companies. These agreements are negotiated from a standardized template, in which industry proponents provide a commitment to the First Nations for financial compensation to accommodate for impact, business opportunities, employment and training, creation of a committee of Elders and knowledge holders, support for various studies (archeological, peer review, etc.) if required, commitment to IBA negotiations should a mine develop and funding for the negotiations. Agreements provide a framework for Engagement and Consultation, as well as an opportunity to collaborate on governance process and structures.

As mentioned earlier, Manito Aki Inakonigaawin, or Grand Council Treaty #3’s Great Earth Law, is an important bridge between Indigenous inherent rights and responsibilities to Treaty #3 territory and current laws and policies that impact the energy sector in Ontario. Laws such as this have often been developed over a thousand years for both internal and external purposes by Treaty #3 and represent an opportunity for government to work more collaboratively with Indigenous communities to align the interests of First Nations and proponents.

Any creation or establishment of energy planning entities should include Indigenous representation to ensure Indigenous perspectives are meaningfully included across all levels of energy planning. The creation of new planning entities also offers an opportunity to explore collaborative governance approaches with Indigenous communities.

Recommendations

The Panel has four core recommendations to advance meaningful Indigenous participation and partnerships in the clean energy economy. Several other recommendations throughout this report identify actions to support Indigenous communities and enable effective participation. Please refer to the complete list of recommendations at the end of this report.

Recommendation 19: The government should support meaningful Indigenous participation in the clean energy economy through consistent and larger scale capacity building initiatives, including:

1. The development and expansion of Indigenous-led and community-driven capacity building initiatives
2. Stable and flexible capacity funding to facilitate meaningful Indigenous consultation and engagement with the Ministry and proponents on energy planning, and project development
3. Expansion of the IESO’s Indigenous Energy Support Program (including increase program budget overall, increase funding for designated energy champions, wrap-around community supports, and flexible program delivery)
4. Tailored and accessible learning resources to enhance understanding of Ontario’s evolving energy system, and improve Indigenous participation in community, regional and provincial energy planning, as well as technical planning discussions

Recommendation 20: The government should advance economic reconciliation through flexible financing models and mechanisms that incentivize Indigenous project ownership across small, medium, and large-scale energy projects. This could include:

1. Expansion of the Aboriginal Loan Guarantee Program and development of other programs, following an assessment of any barriers to program access
2. Opportunities to align funding and cost-sharing agreements, where possible, with the federal government and other provincial governments in Canada, as appropriate
3. Explore opportunities to pilot emerging, flexible financing instruments/mechanisms, such as the use of Indigenous-value themed bonds
4. Review of current energy agency frameworks, including regulatory and procurement policies, to identify opportunities to improve flexibility and enhance Indigenous project ownership

Recommendation 21: To improve embedded governance participation, the government should amend the enabling statutes of the IESO and OEB to ensure Indigenous representation on the Boards of Directors.

Recommendation 22: The Ministry of Energy should review its current resources to enhance the Ministry’s capacity to meet the demand of electrification and the energy transition, including:

1. Appropriate resources to the Indigenous Energy Policy Unit to support proactive relationship-building and increases to the volume of engagement and consultation with Indigenous communities.
2. Continued dedicated policy and legal expertise to support the Ministry’s early engagement and consultation work, such as,
   • Responding to and addressing community concerns
   • Understanding the spectrum of engagement and consultation
   • Identifying impacted communities for engagement and consultation
   • Delegating procedural aspects of consultation where appropriate
   • Ensuring that the Ministry has diligently discharged its constitutional obligations under the Duty to Consult