Alberta is hurting, but what about the environmentally-concerned Canadians who voted for Trudeau expecting him to be better than Stephen Harper—not just better-looking?
Is the Northern Gateway pipeline dead, or isn’t it? The fact that people are asking raises serious doubts about Prime Minister Justin Trudeau’s honesty, not to mention his environmental cred.
Trudeau was never against pipelines per se; indeed, he endorsed the since-rejected Keystone project. But he spoke unambiguously against the Northern Gateway, which would bring bitumen from the Alberta oilsands across the Rocky Mountains, to Kitimat, on the northern B.C. Coast. From there it would be loaded into super-tankers that would ply the narrow and treacherous Hecate Strait to open ocean. Not on my watch, said a campaigning Trudeau.
Northern Gateway, which would also traverse the Great Bear Rainforest and more than 700 waterways, was approved by the National Energy Board in 2014, with some 200 conditions. But its fate appeared sealed when Trudeau promised, pre-election, a formal moratorium on tanker traffic on the northern B.C. Coast.
That promise was thrown into confusion last week when Transport Minister Marc Garneau would not confirm the moratorium’s reach (or whether diesel and refined oil might be exempted) and when reports circulated that Trudeau might be open to rerouting the Northern Gateway to Prince Rupert, further north. Questioned by reporters, he insisted “the Great Bear Rainforest is no place for a crude pipeline.” But what about the rest of the coast?
This sudden ambiguity appeared to spring from conversations with Alberta Premier Rachel Notley, who has also experienced a change of heart on Northern Gateway. It could be that neither are seriously considering the northern route; that they are floating a trial balloon, intended to make everyone feel better when they endorse the Kinder Morgan pipeline instead.
But that project is also controversial: it would twin an existing line between the oilsands and Burnaby, B.C., which would increase oil tanker traffic from 80 to 400 a year in Vancouver’s harbour.
Notley is desperate to get Alberta bitumen to Asia and is bargaining hard with B.C. Premier Christy Clark, agreeing to buy clean B.C. hydro only if Clark drops her objections to Kinder Morgan. Notley appears to have the prime minister in her corner.
The only obstacle is people living along the contentious routes, both First Nations communities and Vancouver urbanites. Trudeau is trying to hang on to his four seats in Alberta—and, perhaps, erase his father’s legacy—by “getting oil to tidewater,” but he stands to lose the 17 seats his party picked up in British Columbia.
And for what? Currently, there is excess pipeline capacity—a result, partly, of the oil price collapse and abundant, high quality Middle Eastern oil arriving by tanker.
A new Enbridge project to replace an aging pipeline from Alberta to Wisconsin will also add more capacity; half the volume promised by Northern Gateway. That lower-profile project won NEB approval last week and is likely to be endorsed by federal cabinet this fall, with construction to start in 2019.
This doesn’t address Notley’s primary concern, however, which is finding new markets in Asia and Europe, rather than shipping exclusively to the U.S. Having a single customer has meant deeply discounted prices for Canadian product—the cheapest oil on the market.
However, economist Jeff Rubin argues, in an illuminating article for the Centre for International Governance Innovation, that Alberta producers are penalized—and will continue to be—because tarry bitumen is expensive to refine, and must travel long distances to Gulf State refineries, not because of lack of pipelines.
The problem becomes more acute with the collapse of oil prices; indeed, the oilsands only make economic sense when prices are high and rising. Already some 17 projects in northern Alberta have been cancelled and those that continue to pump oil (in an attempt to cut their losses) are losing money daily.
“Why build pipelines to sell oil at prices that do not even cover the cost of getting it out of the ground?,” Rubin writes. As to the oil industry’s hope that prices will rebound and new pipelines will be required after 2020, Rubin says if the world is serious about the Paris climate change commitment that means “a huge and irreversible decline in the combustion of oil.”
Meanwhile, Trudeau and Notley appear less seized with the urgency of getting off fossil fuels than with wringing every last drop of profit from the sector. Asked in New York how stopping climate change can be compatible with more pipelines, Trudeau replied: “Do I agree that in the future we are going to have to get off fossil fuels? Absolutely. Is that future tomorrow? No, its not.”
When, then? We have heard this before and we are still waiting for transformative change—not the retrenchment of a dying industry.
Yes, Alberta is hurting, but what about the environmentally-concerned Canadians who voted for Trudeau expecting him to be better than Stephen Harper—not just better-looking?
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