41 Nobel Laureates Weigh in Against Teck

With the federal cabinet still on track last week to decide whether to approve the C$20.6-billion Teck Frontier megaproject, 41 Nobel laureates urged the government to reject the project, a columnist argued that any decision was better than postponing the issue, and the company that ultimately pulled the plug on its own proposal was already considering exiting the tar sands/oil sands entirely.

In an interview recorded Friday for CBC’s The House program, Liberal MP and prairie point person Jim Carr said cabinet would meet its month-end deadline for a decision he cast as a balance between Alberta’s interest in jobs and tax revenue and “environmentalists who insist that approving the project would make a mockery of the Trudeau government’s international commitments on climate change,” CBC reported.

“I believe that when the decision is made, the arguments will be advanced why it is in the public interest and the national interest,” said Carr, a former natural resources minister and one of the two emissaries who traveled to Houston to negotiate Canada’s purchase of the Trans Mountain pipeline in 2018. “And always and ultimately, Canadians will decide if they agree.”

“Carr insisted he was not signalling that cabinet is ready to approve the project, although he acknowledged that the decision the government announces in the coming days—whatever it is—will be a tough sell,” CBC added.

But The House got a sharper take from one of the backbenchers who participated in a reportedly raucous Liberal caucus meeting on the project earlier this month. “There is no clear picture of how this project, which lasts until 2067, fits within our net-zero commitment,” said MP Nathaniel Erskine-Smith (L, Beaches—East York). “When you look at this project, when you look at the climate commitments specifically, I think it’s a pretty easy ‘no’.”

The anti-Teck position got a boost from the 41 Nobel laureates who published their letter in The Guardian late last week. “Projects that enable fossil-fuel growth at this moment in time are an affront to our state of climate emergency, and the mere fact that they warrant debate in Canada should be seen as a disgrace,” they wrote. “They are wholly incompatible with your government’s recent commitment to net-zero greenhouse-gas emissions by 2050. And with clear infringements on First Nations rights, such projects fly in the face of rhetoric and purported efforts towards reconciliation.”

The group of chemists, doctors, Nobel Peace Prize winners, and others urged Trudeau and the rest of the federal cabinet to “act with the moral clarity required by the state of this crisis and reject the proposed Teck Frontier mine proposal.”

While acknowledging the pressures from both sides, Globe and Mail columnist Adam Radwanski argued that any decision on Teck this week would be better than no decision at all. “What postponing would do, based on how this issue has played out so far, is cause the decision—about a project that may not happen regardless because of financing challenges—to keep taking on outsized stakes,” he wrote. “And it would continue to hijack the national discourse around how to reconcile environmental and economic imperatives in transitioning toward a low-carbon future.”

He added that “it’s remarkable how quickly the Teck decision, which has loomed since a federal-provincial panel’s qualified approval recommendation last July, has already become inescapable. As recently as November, even some people in leadership roles around Alberta’s energy industry would respond blankly to mentions of it. Leaders of environmental groups talked about rolling out campaigns against it heading into 2020, but few gave the impression it topped their agenda.”

Just a few months later, Radwanski said, Teck Frontier wasn’t crucial to the future of the Alberta oilpatch, nor would its emissions make or break Canada’s carbon budget. [Although, as Brian Kelly points out in his analysis this morning, that was partly down to the way carbon budgets are conventionally calculated.—Ed.] But “every day that it drags on, the Teck debate distracts from other governmental choices that could have greater bearing on future economic competitiveness and sustainability,” including “many complex, ambitious policies” the government has promised to advance its low-carbon agenda. With Environment Minister Jonathan Wilkinson taking the lead on both files, Radwanski said he was bound to be distracted by Teck Frontier until cabinet makes a decision.

Meanwhile, even before it cut bait on the project, Teck was signalling it might exit the tar sands/oil sands entirely, after declaring a C$900-million asset loss on its existing Fort Hills facility in Alberta due to low global oil prices, and musing that it would write off another $1.1 billion if Ottawa refused to approve the Frontier mine.

“Amid widespread weakness across its core metallurgical coal business, Teck’s chief executive, Don Lindsay, said on Friday in a conference call with analysts that in a couple of years if Fort Hills is not performing, it will consider selling both its stake in Fort Hills, as well as the Frontier project,” the Globe and Mail reported.

“We would look at doing something to realize that value [in Fort Hills], whether it’s a spinoff, or some sort of transaction,” he said. “If we did that, then probably Frontier would go with it.”

Last month, the Globe recalled, Teck told investors the Frontier mine would need higher oil prices, as well as more pipeline capacity and an investment partner, to start work on the project. “On Friday, Teck talked up the potential economics of the project, but offered no hard data, saying in a statement that because of technological and operational improvements, the miner believes Frontier will be ‘technically feasible and commercially viable’.”

But the Globe said Teck and Fort Hills were just one part of Teck’s problems after the company’s financial results for the fourth quarter of last year were “drastically weaker than expected”, triggering a 15.5% drop in its share price Friday. While the company partly blamed the coronavirus for a 31% drop in the price of the metallurgical coal at the heart of its business, Scotia Capital analyst Orest Wowkodaw said the company’s disappointing forecast for coal “serves to further erode management credibility” at Teck.

Ironically, the solution for Teck might come from a surging renewable energy economy that will create new demand for other minerals it produces, like copper. “Its foray into the oilsands clearly hasn’t gone as planned,” wrote Dan Woynillowicz and Merran Smith, Deputy Director and Executive Director of Clean Energy Canada. “But Teck has other more promising long-term opportunities that support, rather than resist, the energy transition. As a major producer of copper and metallurgical coal, it stands to benefit from the growing demand for these materials from electric cars and batteries, solar panels and wind turbines.”