CHELSEA, QUE.—When it comes to pipeline politics, the unproven claims flow much faster than Alberta bitumen. Diverting as the ongoing interprovincial punch-up has been—Rachel Notley, Justin Trudeau, Andrew Scheer, and most of Canadian punditry championing the $7.4-billion Kinder Morgan TransMountain project, over the protests of B.C. Premier John Horgan—it doesn’t address the fundamental questions.
The first: will twinning the existing pipeline from the Alberta oilsands to Vancouver harbour really rescue Alberta’s economy (which, inconveniently for pipeline boosters, is currently the strongest in the country)? And, as Trudeau frequently declares with a straight face, will it eventually lessen our national dependence on fossil fuels?
It depends on who you ask, of course, but the problem is that few federal politicians are asking. It is widely assumed that getting Alberta’s heavy crude to tidewater will create multiple jobs and generate revenues for Alberta’s provincial coffers. The well-worn argument is that Canada’s oil exporters are captives of a single market—the U.S., which buys 97 per cent of our oil. That means, they say, we have no leverage and must sell at whatever price Americans are willing to pay.
But there are independent economists, and others, who challenge this assertion. Retired federal energy expert, David Hughes, for instance, has argued that Alberta oil will always sell at a discount because it is more expensive to refine than light crude and because it must travel a long way to get to the U.S. refineries on the Gulf Coast, which are purpose-built to process the sticky product.
He, and other environmental think-tanks and Indigenous opponents of Kinder Morgan, also believe that even if Alberta oil fetches a better price in Asia—which is the raison d’être for the project—those profits could be eliminated by transportation costs. As well, the always volatile international oil market has changed radically since the twinning was first proposed. The shale oil boom in the U.S. has driven up supplies of easily accessible oil and driven down the value of the expensive Alberta product.
Equally, the lifting of a long-standing export ban in the U.S.—and the enthusiastic cheerleading of Donald Trump—means U.S. exporters are also knocking at China’s door, offering oil that is less costly to refine. Others have noted that China doesn’t have adequate refinery capacity to handle Alberta product, and, while that could be remedied quickly, why would any Asian customer invest billions in upgraded infrastructure with a ready supply of less-complicated fossil fuels available? Independent economist Robyn Allan, after studying the issue for First Nations objectors in 2016, concluded “there is not a market for Alberta bitumen in Asia.”
All to suggest that the world may not be quite as thirsty for Alberta oil as Notley and company like to think. Or, at least, not for long. The world, including China, is decarbonizing, switching to electric vehicles, moving away from coal, trying to address the choking pollution in capital cities across the developing world. Yes, the world will need oil for a while, but in a period of shrinking demand, the high-cost and high-emission Alberta product will be first to go.
The pertinent argument is how long this transition will take, with environmentalists urging haste and oil companies, and their political enablers—led by the prime minister—playing for time. Trudeau’s claim that approving the controversial British Columbia pipeline will somehow hasten our move away from fossil fuels—and, by extension, lead to lower greenhouse gas emissions—simply defies common sense.
This pipeline, if construction does start this summer as planned, will extend oil production in northern Alberta for decades more and make our already remote chances of meeting our Paris Accord commitments (as described by the federal environment commissioner last fall) vanish entirely. It will triple the amount of bitumen mixed with condensate flowing through the existing line and increase oil tanker traffic from Vancouver sevenfold. No company invests $7.5-billion on infrastructure meant to last 15 or 20 years. At minimum, approving another giant oil pipeline seems an odd way to begin an orderly transition to a greener world and a more diverse economy for Alberta.
But, as Trudeau frankly admitted last week, the pipeline was a “trade-off”—a concession to Alberta in return for Notley’s embrace of a carbon “levy” and a cap on emissions by 2030. But neither Trudeau, nor Notley are getting credit for their tainted compromise. If Kinder Morgan decides (for market reasons, undoubtedly) not to proceed, it will be lose-lose for both politicians: they will have squandered their credibility with environmentalists and failed their oil-patch friends.
Meanwhile, Trudeau’s major environmental initiative—the national carbon pricing scheme—is unravelling. Notley’s probable successor, Jason Kenney, wants nothing to do with caps or carbon taxes and neither do the three Progressive Conservative leadership hopefuls in Ontario, vying to replace Kathleen Wynne. The federal government could still impose a national carbon tax, but it would be over the outraged howls of hostile premiers and the neo-Harperites in the federal opposition.
On the other hand, if Kinder Morgan goes ahead, it will create 90 full-time jobs, a construction boom for a few years and more job security for Calgary’s oil patch executives—although the patch is rapidly automating, even to the point of self-driving trucks. What is rarely mentioned, outside of Victoria, is the economic penalty for B.C. in the event of a catastrophic spill. Tourism would be hurt, along with coastal fisheries and the lives of Indigenous people in affected areas.
Which brings us to a final question: how does the prime minister square his oft-repeated commitment to shift more control of their own territory and lives to indigenous people with his habit of ignoring their demands? Some 20 communities in B.C., and 17 Indigenous groups that never ceded their traditional territories though treaties, oppose Kinder Morgan—outnumbering those in support.
Previous federal reviews of the pipeline have been criticized for taking a “narrow” sounding of indigenous opinion. New federal review measures for major resource projects were announced last week. But while they promise more extensive, and early, consultation with indigenous and other groups, the prime minister makes it sound like an enhanced exercise in persuasion: we will respect First Nations rights and wishes, as long as they coincide with our end goal. And, hey: great job opportunities in cleaning up spills!
Both these issues—reconciliation with First Nations and the future of Canada’s fossil fuel sector—are urgent and complicated. We need more clarity, fact-checking and focused questioning from our politicians. Instead, false claims and fierce divisions prevail.
Susan Riley is a veteran political columnist who writes regularly for The Hill Times.
The Hill Times