In Canada Federal-Provincial Politics Has Usurped Good Policy

May 31, 2018 – The Canadian federal government with its minority partner, the province of Alberta, took the bait from a blackmailing oil pipeline company, Kinder Morgan, agreeing to pay the latter $4.5 billion CDN for an existing pipeline along with the right to build and complete its twinning.

Back in the spring Kinder Morgan set May 31st as a deadline to hear back from Canada’s political authorities; that the company could move forward unhindered by local governments and environmental opposition. It stated without assurances it could not proceed to build TransMountain, a pipeline running from Edmonton to an oil terminal in Burnaby, on the lower Fraser River in British Columbia. Kinder Morgan was no longer keen to build the pipeline because of ongoing resistance from the British Columbia government, City of Vancouver, and a number of First Nations along the route.

That’s when the blackmail scheme was hatched. If Kinder Morgan could put a gun to the head of the government it would get one of three results:

1. The Canadian government would be the bully in the room using its authority to override opposition to the project.
2. The Canadian government could help find a buyer for the existing pipeline and the project so that Kinder Morgan could walk away.
3. The Canadian government would be the buyer of the pipeline and the project, and pay Kinder Morgan a fee so that it could walk away while rewarding its shareholders and making a healthy profit.

And guess what. The number 3 rolled up when the dice was thrown.

What is sad about this outcome is how far removed it is from the goals of Canada’s current federal government in its effort to curb carbon emissions. Why? Because you cannot contribute to carbon emissions and curb them at the same time unless you have some carbon aces up your sleeve.

Why is this bad policy?

Because the Paris Climate Agreement of which Canada is a signatory called for the nations of the world to keep global warming from rising above 2 Celsius, and better yet to not rise above 1.5. Adding a pipeline to carry diluted bitumen (dilbit) to Canada’s west coast for overseas markets where the carbon within the product will be burned means Asian customers will be adding to global emissions and as a result Canada will have done nothing to help achieve Paris targets.

Adding a pipeline to triple the amount of oil and increase revenue earnings of oil sands producers likely will lead to more, not less dilbit going to world markets. When you consider that oil sands at best during extraction and production produce equal amounts of carbon to other oil producers, and at worst, more than double the carbon, it means even more carbon will enter the atmosphere.

This will all happen while Canada attempts to implement a federal carbon tax meaning that the cost burden will largely fall on consumers, not the emitters. And with the likely abandonment of Ontario’s cap-and-trade participation, it is clear that emitters will continue to pollute the commons raising atmospheric mean temperatures.

What would have been better policy than buying a pipeline project?

A government committed to achieving Paris goals would consider a number of policies including:

1. Putting a cap on fossil fuel production at no more than 10% above present levels followed by an incremental decrease in the cap every five years. That would mean not building more pipelines, and limiting oil producers’ rights to add capacity.
2. Committing to natural and industrial carbon sequestration projects, net-zero emissions and negative emission technologies, and providing research and development dollars as an incentive for Canadian industry to develop world leadership in these fields.
3. Committing to a rapid expansion of renewable energy capacity from hydroelectric, solar, wind, geothermal and storage.
4. Committing to modular nuclear, molten salt, and thorium power plants while phasing existing older nuclear technology that is more expensive to maintain and still produces radioactive waste.
5. Committing to a rapid build-up of urban, and boreal forest, farmland, wetland, and salt marsh carbon sinks.
6. Research into minimizing, stabilizing and possibly reversing carbon emissions from Canada’s permafrost.
7. Applying a progressive fiscal policy to help the economies of provinces where the fossil fuel industry is a major employer so that the labour force in these provinces can successfully transition to low carbon jobs and other types of work.