Last week, Prime Minister Trudeau made a major announcement about three pipelines across Canada and approved a replacement line that transports oil east into the United States and the expansion of the Trans Mountain pipeline that terminates in Burrard Inlet in Vancouver.
The reaction from NGOs and a number of First Nations was swift and these organizations widely condemned the decision.
The stage is now set for a conflict that is likely to span several years as Kinder Morgan seeks to start the construction process.
While the Federal Government decision clears one major hurdle, a number remain. Premier Christy Clark stated that most of the five conditions her government set have been met. The obvious gap is the fifth condition, where the proponents have to demonstrate the economic benefit to British Columbia.
A report by the Canada Energy Research Institute identified around $291bn of increased GDP nationally as a result of the project, with the bulk going to Alberta and B.C. receiving $4bn. While this form of revenue sharing lacks a strong precedent, there is clearly room in the economic case for B.C. to secure more benefits in return for the risk associated with the pipeline.
It is harder to see the middle ground with environmental groups and First Nations. The Trans Mountain Pipeline is opposed on principle by many of these individuals and groups and it is very unlikely a financial argument will move those positions.
Although concern has been expressed about safety, the deeper concern is about the impact of increased emissions from oil sands extraction. To put it another way, even a 100 per cent certainty of safety would not assuage the apprehension that enabling more oil exports will increase Canada’s emissions and global emissions. Some First Nations will certainly contest the National Energy Board decision and process in the courts, but that will not prevent the project from commencing.
While the Prime Minister spoke about the project as part of a wider energy transition, against the backdrop of a strong federal platform on carbon pricing and a decision to phase out coal, the details of the transition were not described. Unlike countries such as Norway, Canada (Alberta in particular) does not have a strong tradition of saving resource revenues; instead, revenues go toward reducing taxes and funding immediate spending requirements. Norway, on the other hand, puts around 90% of its resource revenue into a fund that invests in non-fossil fuel stocks. So, the Government’s commitment that this decision is part of a transition looks empty until there are clear changes in the use of resource revenues.
The silver lining for many was the final nail in the coffin of the Northern Gateway pipeline. That will be cause for celebration on B.C.’s north and central coast.
Dr. James Tansey, 8 December 2016