No Future Need for Trans Mountain, Keystone XL Pipelines, Canada Energy Regulator Report Shows

There will be no need and no justification to complete the Trans Mountain pipeline expansion or the Keystone XL pipeline if Canada makes any effort at all to strengthen its climate policies, according to the more ambitious of two fossil demand scenarios in an analysis published yesterday by the Canada Energy Regulator (CER).

Early news reports yesterday focused on the main scenario in the CER’s annual Energy Futures report, which concluded that Trans Mountain, Keystone, and Enbridge’s Line 3 pipeline will be the last three the country ever needs. The Globe and Mail had the report projecting a “hefty” 12% reduction in oil and gas consumption by 2030, rising to 35% by 2050, with renewable and nuclear energy growing 31% by mid-century.

“What we see is that coming out of COVID, in the demand destruction that we’ve seen this year, we do see fossil fuel demand come back,” said CER Chief Economist Darren Christie. “But as that happens, we’ve got the dual effect of increasing climate policy as well as improving technologies on the low-carbon technology front.”

But by late afternoon, The Canadian Press was focusing on the more ambitious “evolving” scenario for energy demand and consumption through 2050, which assumes new efforts after this year to drive down Canada’s greenhouse gas emissions.

“Under the status quo scenario, the regulator projects the three pipelines under construction — Keystone XL, Trans Mountain, and Enbridge Line 3—will be the last ones needed to handle future growth in crude oil production,” CP writes. “Under the evolving scenario, crude production still grows about 18% before peaking in 2039, but the report says Line 3 alone is enough added capacity to handle that increase.”

For more than a year, the Trudeau government has been promising a pathway to net-zero emissions by 2050, beginning with a more ambitious carbon reduction target for 2030. One of the main criticisms of the federal climate accountability legislation released last week was that it didn’t include those details, but the general understanding before and since has been that the full plan is on the way.

Neither of the CER’s scenarios factors in the considerably more ambitious emission cuts that will be needed to deliver Canada’s share of a global commitment to limit average global warming to 1.5°C under the 2015 Paris Agreement. But even the CER’s limited analysis was enough to trigger a mid-afternoon news release from 350.org, the Tsleil-Waututh Nation Sacred Trust Initiative, Dogwood, Stand.earth, the Wilderness Committee, and West Coast Environmental Law, pointing out that even “minimum climate action” would be enough to justify cancelling the two pipelines.

“The analysis undermines Prime Minister Trudeau’s position that the expansion of oil production and TMX and KXL are consistent with Canada’s climate policy,” the release states. “Groups are calling on the federal government to listen to its own analysis and change course while only a small percentage of the Trans Mountain pipeline has been built, and before billions [of dollars] have been wasted.”

“Trudeau’s own actions on climate could make the pipeline he bought unnecessary,” 350.org Canada Team Lead Cam Fenton told CP.

Thomas Gunton, director of Simon Fraser’s Resource and Environmental Planning Program, added that the climate accountability bill on its own is enough to move the country past the status quo scenario in the Energy Futures report. Given that reality, “you’re not going to need these pipelines, so you should at least defer or shelve construction,” rather than incurring a combined C$22-billion price tag for the two projects.

The Pembina Institute agreed that the projections aren’t aligned with the climate accountability legislation—or, for that matter, with Canada’s promises under the Paris deal. “The energy sector is changing globally, with ramifications for the future of Canada’s oil and gas sector,” said Senior Analyst Benjamin Israël, who’s currently in the midst of a three-part blog series on the future of Canadian fossil production. “Leadership and vision are needed to help Canada’s oil industry successfully adapt to this new reality.”

“The 2021 edition [of Energy Futures] will need to include a fully-modelled scenario that describes a domestic economy that reaches net-zero emissions by 2050 and is well suited to compete in a global economy that is successfully limiting warming to 1.5°C,” added Pembina Senior Federal Analyst Nichole Dusyk.

Canadian Association of Petroleum Producers President Tim McMillan said it would still be a mistake to cancel any of the pipelines. “That would be an inefficient transportation system,” he said. “In Canada we have struggled with under capacity or full capacity. Neither of those are efficient systems.”

But “the report itself notes to get to net zero, Canada will have to be more aggressive at moving away from fossil fuels than even what its ‘evolving’ scenario lays out,” CP says. Under that scenario, “Canadians will still get almost two-thirds of their energy from fossil fuels by 2050.”

In its 1.5°C pathways report two years ago, the Intergovernmental Panel on Climate Change called for global greenhouse gas emissions to fall 45% by 2030. There is no known option for Canada to fulfill its part of that commitment and still produce as much oil and gas as the Energy Regulator projects (or as the fossil lobby wants), particularly given the high cost and poor business prospects of the carbon capture technologies the industry hopes to rely on.

The Globe says this was the first time the CER extended its annual energy scenario exercise to 2050, but CEO Gitane De Silva told CP the purpose of the report was not to comment on existing policy. “Really, our hope is that this information will help inform that policy process going forward,” she said.

Later, a CER spokesperson stressed that the report is not intended as a forecast, nor is it meant to judge whether any particular pipeline should be built.