The Liberal government approved Trans Mountain Expansion (TMX) Tuesday and so begins a summer of bitter political fighting over the project. What will politicians, industry, and activists be scrapping about? Canadian energy and climate change narratives leading up to this fall’s federal election.
The basics are pretty simple. Prime Minister Justin Trudeau approved – or, re-approved if you prefer, since this is the second time the governor in council has issued a certificate – the 525,000 barrels per day twinning of the Trans Mountain pipeline from Alberta to Burnaby, BC. He added several new wrinkles designed to help sell the deal to Canadians.
One, every dollar the government earns from its ownership of the project will support Canada’s transition from fossil fuels to electricity generated by low-carbon technologies like hydro, wind, and solar. Ottawa estimated that $500 million per year could be generated from corporate income tax revenues from the project alone could generate $500 million per year once the project is completed.
“This money, as well as any profit from the sale of the pipeline, will be invested in clean energy projects that will power our homes, businesses, and communities for generations to come,” Trudeau said in a statement.
This is not window dressing. As I have been reporting since 2015, the global energy transition is here and is gathering steam every year. Canada must mitigate risk to vulnerable industries to help them pivot to the low-carbon future, thus protecting Canadian jobs and businesses, and it must help Canadians seize the economic opportunities – such as cleantech – being created by the transition. Every nickel spent supporting these two objectives is a wise use of taxpayer dollars – or profit, in this case.
Two, indigenous groups will be consulted about ways they can share in the financial benefits of the expansion. Both equity and revenue sharing are on the table.
Project Reconciliation is a coalition of Canadian First Nations – as many as 340 are eligible to join, according to the group’s website – hoping to buy 51 per cent of what was Kinder Morgan Canada before the government bought its assets to avoid the collapse of the company and TMX.
“It’s high time Indigenous Peoples had a seat,” Delbert Wapass, the executive chair and founder of Project Reconciliation, said in a statement. “This is about us taking the lead on protecting the environment and controlling the revenue that will allow us to move from poverty to prosperity.”
Professor Harrie Vredenburg holds the Suncor Energy Chair at the Haskayne School of Business and he’s advising Project Reconciliation during discussions with Ottawa. He says the deal will require no upfront investment from the First Nations.
“The entire acquisition will be financed through capital markets and is based on the 20-year contracts with [oil sands] shippers on the pipeline,” he said in an interview. “It will basically replace what were once shareholders in Texas and are now the federal government. Indigenous communities in western Canada will earn dividends from the project and income for indigenous communities as they strive towards economic sovereignty.”
Trudeau was blasted by critics both pro and con, all of whom were furthering their own political agenda.
In the case of Andrew Scheer, leader of the Conservative Party of Canada, his job is to reinforce the CPC narrative that Trudeau hates oil and gas, has undermined investor confidence, and cannot be trusted. He told reporters that the Prime Minister actually promised in 2018 TMX would be operating this year, but “I don’t believe he actually wants it built.”
Alberta Premier Jason Kenney sang from the same songsheet in his statement: “But approval is not construction and, regrettably, for far too long this project has been mired in uncertainty.”
While the Prime Minister didn’t provide reporters with a date, he did say that construction would resume in short order. News stories over the past week have shown quantities of large diameter pipe being shipped by train and truck to points along the TMX route.
Just as predictably, environmental groups harshly criticized the decision to expand fossil fuels only days after Parliament voted to acknowledge a “climate emergency” in Canada. Their narrative is all about the climate crisis and taking drastic action now.
“Today’s decision locks Canada into carbon-intensive infrastructure, challenging our country’s ability to move toward a healthier environment and to lead in the growing clean-energy sector,” said Ian Bruce, David Suzuki Foundation science and policy director.
“This announcement represents cynicism and hypocrisy at a level that is quite breathtaking,” Green Party leader Elizabeth May said in a statement. “We cannot achieve our Paris commitment to keep global average temperature increase to 1.5 degrees C, the level required to ensure that we continue to have a livable world, and build a pipeline.”
With the TMX decision, Trudeau and the Liberals continue to tread the centre line, to colour within the lines of the “energy consensus” – that pragmatic compromise a majority of Canadians have made to support oil and gas development as long as Ottawa supports the energy transition with policy and funding.
“We have a responsibility to ensure that the decisions we make today move us toward a cleaner, sustainable economy,” the Prime Minister said. “Major resource projects can move forward, but only if we do so in a way that protects the environment and respects Indigenous rights.”
Pipelines and wind turbines, Trudeau famously said in 2017, and Tuesday it was pipelines, cleantech, and indigenous economic reconciliation. Will it be a winning election formula?
It might if Canadians vote the same way they answer pollsters’ questions.
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