On May 29, 2018, Canadian Finance Minister Bill Morneau announced that Canadian taxpayers would shell out $4.5 billion to Houston-based Kinder Morgan Inc. to buy a controversial pipeline that has stirred massive controversy across the country. But it didn’t have to go that way.
Imagine this scenario: At 12:40 PM on Tuesday, May 29, 2018, Finance Minister Bill Morneau abruptly cancels a widely expected announcement that the government would nationalize the controversial Kinder Morgan pipeline. Instead, Prime Minister Justin Trudeau rises in the House of Commons to deliver…the speech he never gave.
Mr. Speaker, Honourable Members, and my fellow Canadians:
On April 8, a privately-held pipeline company from Houston, Texas approached this country with an extraordinary ultimatum. As an applicant to a regulatory process ostensibly designed by and for Canadians, Kinder Morgan Inc. sought to dictate a May 31 deadline to give it the “clarity” it said it required to continue work on the Trans Mountain pipeline expansion project.
Kinder Morgan hadn’t even completed its permit applications to the Province of British Columbia. It had largely dismissed the permitting authority of the City of Burnaby. And now, a company born of one of the worst corporate scandals in United States history was telling three democratically-elected federal and provincial governments, at least one courageously determined municipality, and dozens of opposing First Nations along the pipeline route, that they must bend to its will, or face its wrath.
Any private sector entity is fully entitled to make decisions in what it understands to be the best interest of its shareholders. Indeed, it is a corporate executive’s fiduciary duty to do just that.
But Kinder Morgan’s purpose with its April 8 announcement was not to give notice that it was abandoning a project it quite clearly and understandably no longer wished to complete.
It was an attempt to hold us to ransom.
Honourable Members, I rise today to tell you that Canada will not be bullied. We will not be cowed. We will not be manipulated or maneuvered into abandoning the core principles that make us Canadians and responsible global citizens.
I rise to tell you that there will be no deal. No buyout. If Kinder Morgan elects to abandon the Trans Mountain pipeline expansion when its deadline expires this Thursday, we wish them well.
To be honest, when the Cabinet convened this morning, we believed we were about to make Kinder Morgan an offer. But nationalization is a decision that governments should not take lightly, and must only pursue when it is truly in the national interest.
In this case, we were on a trajectory to acquire a pipeline expansion with no viable business plan. No realistic demand for its output over the life of the project. No chance at achieving free, prior and informed consent of all the individual First Nations in its path. No plan to forestall the extinction of a magnificent and cherished whale population, nor any science-based understanding of how to avert the devastating impacts of a possible diluted bitumen spill in coastal waters. No pathway to avoiding the dire climate consequences of pumping an extra 27 megatonnes per year of greenhouse gas emissions into the atmosphere. No chance even to avoid death and devastation at a nearby institution of higher learning in the event of a tank farm fire on Burnaby Mountain.
These were ramifications we could not accept. That Canadians could not, would not, and should not accept.
When a tough decision looms on the horizon, it has become commonplace to say it’s time for a grown-up conversation. So, let’s have one.
Understanding Climate Science
This government will not put taxpayers on the hook for the $4.5-billion payout Kinder Morgan demanded to acquire a pipeline, nor for the $15 to $20 billion it would have cost to complete the project.
We will not make a decision that flouts many of this government’s central commitments and deeply-held principles: Like decisive climate action. True reconciliation with our country’s Indigenous nations. A smart, managed transition to a clean economy. To transparent decision-making that is visible and responsive to our citizens.
On climate change, unlike some Honourable Members opposite, we understand the science. We follow closely the progression of the global disaster that is already upon us, and of the promising solutions that require our decisive support.
Until now, my government has attempted a quintessentially Canadian compromise between global climate action and fossil fuel production. We have sought social licence for oil sands production in our western provinces by committing to a pan-Canadian climate plan and, more recently, asserted that pipeline expansion should lend social licence to a national floor price on carbon.
The last six weeks have clarified our choices.
To our allies on decarbonization, on the green economy, on a just transition for fossil fuel work forces and communities, at home and abroad: Canada is back, my friends. And this time, we mean it.
Two underlying issues made our decision today more difficult than it should be: the widely-held belief that refusing this project would undermine our provincial allies; and the prospect of a compensation claim under NAFTA.
On the political ramifications, we believe in Canadians. And we understand that latent public support for pipeline expansion has been pragmatic, not principled. Very few Canadians believe that building a pipeline is their patriotic duty. They’re bargaining for jobs in a declining industry that has made “de-manning”—a term that troubles me on so very many levels—a core business strategy. We will deliver more, better, more reliable and economically sustainable jobs by embracing the industries of the future, rather than coddling the industries of the past.
If we face a NAFTA challenge, we will win. To claim damages, Kinder Morgan must demonstrate losses, despite admitting in corporate filings that the pipeline expansion will be a business failure if countries uphold their commitments under the Paris Agreement.
The National Interest
The craven position would have been to bow to Kinder Morgan’s unreasonable demands and avoid headlines and political dynamics that might well be damaging to us in the next election.
But Canadians didn’t elect us to be craven, or to govern by headline.
They expect us to embrace tomorrow’s solutions, not repeat yesterday’s grievous errors.
That’s what we’re doing today.
At this morning’s cabinet meeting, we asked ourselves what we really meant by the national interest, and what we could best do to uphold it.
It means keeping faith with the Indigenous peoples across this country that took us at our word when we said we would put an end to boil water advisories in their communities in this term of office.
It means looking out for residents of Alberta and Saskatchewan living in a fragile, boom-and-bust economy that will only become more unpredictable as the collapse of yesterday’s fossil fuel economy continues and accelerates.
It means durable employment for Atlantic Canadians who lost their jobs in the Alberta oil sands and returned home after the last oil price crash—having previously lost their livelihoods with the closure of the Cape Breton coal mines and the collapse of the Atlantic cod fishery.
Pressure to Assert Federal Jurisdiction
First Nations and pension funds might have willingly invested in this pipeline had we acquired it from Kinder Morgan. That would have meant making an unjustifiable political decision on the backs of some of our most vulnerable communities, and of the retirees who built our country.
And counting on future investors was far from a sure bet. With large majorities of British Columbians and Canadians opposed to public investment in the project, and 28,000 British Columbians vowing to do whatever it took to stop it, we knew no investors would risk their own brand reputations by associating themselves with the pipeline.
We knew the determined opposition to this project was led by many dozens of First Nations that had everything to lose if the project crossed their territory. And we knew the urban protests were driven largely by youth who see unmitigated environmental disaster in their future due to the decisions we make today. This is a population I know, because I used to see them in my classroom. It was once my job to encourage precisely this spirit and intensity of democratic citizenship, if not this particular expression of it. The pipeline’s opponents said they weren’t going away. I believed them. And I believed potential investors should, too.
In the last few weeks, I have been under intense pressure to “do more” to assert federal jurisdiction and get this pipeline built. My political opponents seem to think I’m barely competent to tie my own shoes, yet somehow have the ubiquitous power to push through a massive infrastructure project and make opposition melt away.
What would they have had me do? Deploy the Canadian Forces? Arm them with live rounds? In a long, hot, angry summer, it could easily have come to that, and if it had, the blood of our fellow citizens would have been on the hands of the armchair decision-makers who tried to push us into an extreme and untenable position.
And it would have been on our hands if we had bowed to those demands.
At the same time, we saw our grassroots partners in communities across this great country react with grief, rage, and a sense of impending betrayal. We heard analysts and advocates who’ve devoted their lives to climate action and post-carbon futures asking why they should bother. Asking what point there was in doing the hard, grinding, day-to-day work of promoting energy efficiency, building bike lanes, campaigning for transit, or launching greenest city initiatives if the atmospheric space they were creating would just be gobbled up by a pipeline company from Houston.
That’s not the vision of success we promised Canadians.
Leadership Canadians deserve
So today, I am proud to announce how we will invest some of the dollars we would have had to commit to complete the Trans Mountain pipeline expansion.
Over parts of the next two fiscal years—ending no later than August 31, 2019—we will allocate $3.2 billion to put an end to boil water advisories in First Nations communities across the country.
We will accelerate our investment in low-carbon, affordable public housing by $2 billion over the next two years.
And we will increase our commitment to international climate finance to our recognized fair share of $4 billion per year.
This is the leadership Canadians deserve and expect, and that the world expects of Canada. We were elected by Canadians to follow the evidence and make the tough decisions on behalf of today’s citizens and future generations. That’s what we’re doing today.