Trudeau Blames Markets for Energy East Demise, as B.C. First Nations Demand Kinder Morgan Climate Test [B.C. Sign-On]
Analysis & Special Reports
The recriminations and defence, celebrations and analysis continued into the weekend and the beginning of this week, as the Canadian fossil industry and its opponents absorbed TransCanada Corporation’s decision last week to pull the plug on its intensely controversial, C$15.7-billion Energy East pipeline proposal.
Within a day of the pipeliner’s blockbuster announcement, First Nations and their supporters in British Columbia were insisting that the National Energy Board (NEB) apply the same climate test to the controversial Trans Mountain pipeline expansion proposed by Houston-based Kinder Morgan that it introduced in August for Energy East.
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Prime Minister Justin Trudeau took to Facebook Saturday, trying to navigate a middle ground between his government’s attempts at effective climate policy and its avid support for continuing pipeline development. He placed the responsibility for the TransCanada cancellation squarely on changing global oil and gas markets, adding that heated debate over the decision was to be expected.
“Debate is one thing,” he wrote. “Stoking national divisions, using a private corporation’s business move as a pretext, is another. That doesn’t help anyone. What’s more, in this case, the stoking is based on an evidently false premise.”
Trudeau held to his government’s position that a “clear, transparent regulatory process is key to the success of major resource projects,” noting that Ottawa had approved two major pipelines worth nearly $12 billion during the first two years of his watch, with a third expected soon. “That is precisely three major pipeline projects more than the previous government managed to initiate in a decade,” he boasted.
But the more salient point, the PM said, is that fossil markets have changed in the four years since TransCanada first proposed the massive, 4,500-kilometre project.
“Energy East was conceived at a time when the global supply of crude was relatively tight, and practical alternatives for shipping Canadian heavy oil to global markets were few,” Trudeau wrote. “Since then, as Alberta oilpatch workers know all too well, we’ve suffered a multi-year oil price slide, which is only now beginning to correct itself. And other pipelines are now in the works. TransCanada is a private company. Its directors are entitled to make decisions for their business based on market forces.”
In the Globe and Mail yesterday, University of Alberta assistant professor Andrew Leach, who chaired the province’s Climate Leadership Panel in 2015, opined that Donald Trump’s decision to reintroduce TransCanada’s Keystone XL pipeline “signed the death warrant for Energy East.” On iPolitics, columnist Alan Freeman said the eastbound project “was never a Plan B project. It was a Plan C project—and it was always a stretch.” For Energy East to be viable, he wrote, oil would have had to stay above US$100 per barrel, and every other project proposed during the Harper-era pipeline binge would have had to fail.
“From the moment I saw that map of a 4,500-kilometre pipeline from northern Alberta to Saint John, NB back in 2013, I knew it made no sense,” Freeman recalled. “What was Energy East for? Feeding three refineries in Eastern Canada that had no supply issues in order to sell low-cost bitumen to markets in Europe and Asia? All that for a bargain price of $15.7 billion?”
None of which stopped the Koch Industries-funded Fraser Institute’s Ken Green fromweighing in with the view that Trudeau and Alberta Premier Rachel Notley faked a “yes” in their determined support for Energy East, but governed as though they wanted the project to fail.
Green admitted that “the low world price of oil was surely part of this decision,” and that other pipelines were approved while Energy East was before the NEB (slowed downlargely by its own improprieties, he might have added), with the result that Canada will have no more demand for new export capacity until 2040.
But he still blamed TransCanada’s decision on the overdue reality check the NEB eventually delivered in August. “The ultimate straw that likely broke the camel’s back,” he writes, was the Board’s decision to “add an ‘upstream/downstream’ emission test to its project reviews. The upstream/downstream test risks seriously reducing the profitability of pipeline projects that would have to, in some way, internalize the costs of the greenhouse gas emissions resulting from the production and consumption of the oil they transport, not simply those caused by the act of transporting the oil.”
Echoing other fossil boosters, he concluded that “the death of Energy East/Eastern Mainline casts further doubt on whether Canada is still capable, as a country, of building important national infrastructure of any kind,” claiming that climate action by the federal and Alberta governments had undercut the industry by undermining investor confidence.
In Alberta, United Conservative Party leadership candidate Jason Kenney, a former senior lieutenant to Stephen Harper, was only too happy to pick up the theme. “If we’re going to start measuring so-called downstream emissions of oil that comes out of a pipeline and is consumed, are we going to start regulating the emissions burned by Bombardier aircraft that are subsidized by Justin Trudeau’s government?” he asked last week. [Editor’s note: Well, yes, actually, at least equivocally.]
Notley and her Cabinet maintained it was Alberta’s $30-per-tonne carbon levy and its hard cap on tar sands/oil sands emissions that gave the federal government the political cover it needed to approve the Kinder Morgan and Line 3 pipeline expansions.
Within the climate and energy community, meanwhile, the focus is turning to Kinder Morgan, with British Columbia First Nations and their supporters insisting the NEB apply the same climate test to the controversial western pipeline that it introduced for Energy East.
“It’s unfair to British Columbians that the NEB only considers the climate impacts from some tar sands pipelines and not all,” said Grand Chief Stewart Phillip, President of the Union of B.C. Indian Chiefs. “The people of British Columbia got a rushed, fundamentally flawed, drive-by federal review of Kinder Morgan, and zero consideration was given to its climate impacts.”
“To regain any credibility, the NEB would need to start Kinder Morgan’s proposal from the start and include the climate tests that Energy East would have had to participate in,” agreed Stand.earth Energy Campaigner Sven Biggs. “Anything else is picking winners in pipeline construction—and Canadians lose.”
“Better policies and regulations that hold companies accountable to the urgent need for climate action means that today’s business conditions make pipelines a losing bet,” added Greenpeace Canada Climate Campaigner Mike Hudema. “Energy East would have blown Canada’s carbon budget and, if built, Kinder Morgan’s Trans Mountain will do the same. British Columbians and Indigenous peoples deserve the same stronger climate test that was applied to Energy East.”