For hard working Canadians it can be painful to watch, but there’s no denying that there’s been some masterful political maneuvering on display recently. This is in reference to the berserk request by the National Energy Board to examine climate change impacts of the Energy East pipeline. This change in the NEB’s stance appears to be part of Prime Minister Trudeau’s master plan for solving pesky energy headaches.
It’s easy to see the expediency of Trudeau’s path. He is caught between pursuit of popularity and cutting the economy off at the knees. We can mock the stupidity of implying the two are equal, but that’s reality in politics. Hollering about that injustice is a waste of time and energy. One of the aspects of Canada’s energy business that I admire most and am proud to be a part of is the ability to just get on with it, to not get too hung up on obstacles and to always see a path forward. At the end of the day that’s all you can do, it’s an outlook that has built our industry and country, and that attitude is fundamentally what separates builders from complainers. So here then, in that spirit, is a look at the situation.
From a petroleum perspective, Trudeau’s balancing act is not all bad and could have been far worse. That is, as long as it plays out in the direction indicated. The Trans Mountain pipeline expansion has a reasonable chance of success; Trudeau has been supportive and even the BC government has only vowed to “ensure that the interests of British Columbians are protected.”That’s not an absurd position, though it might turn out to be depending on how far they take the fight. While the news of course made the new BC government’s position sound pugilistic, the truth is so far more benign – the BC government is at present only seeking intervenor status, which the Alberta government already has and that in itself is not a harbinger of death. Remember too that the BC NDP government campaigned to kill the project, making it politically impossible to turn face and accept the expansion. So, their challenge might be somewhat reasonable, or not, and only time will tell.
Another potential positive is Keystone XL, which also has a reasonable chance of success south of the border. The fight on that front has been largely US based, but with the US now shunning Venezuelan heavy crude the outlook for Alberta’s version might be somewhat improved. At any rate, should both the Trans Mountain and Keystone XL projects proceed, market access for western Canadian crude will be substantially improved.
That leaves two casualties in the pipeline wars, both of which are significant in size. Enbridge’s Northern Gateway is dead, and now Energy East appears to have been sacrificed as well. Canada’s National Energy Board recently impaled the Energy East pipeline project on a stick by announcing that the environmental review of the project would be expanded to include the greenhouse gas impacts of upstream and downstream climate change impacts.
That might not sound like a death blow, but it effectively is, and it’s worth noting for future reference how outlandish and unfair that treatment is. Energy East is in an impossible situation. The project will now be evaluated on the appallingly absurd standard of the GHG impact of what goes into the pipeline, and what comes out the other end. That is, the relatively tiny bridge between the complex world of supply and the all-encompassing, hypocritical world of demand is now deemed responsible for the evils of both.
Think about the hurdles that this piece of pipe must now pass, and think about virtually any other industrial event or process that doesn’t have to justify itself thusly. Take a new investment in an airplane by an airline. How much GHG went into the creation of that airplane? What is the GHG impact of building or expanding airports, and running them? What is the GHG impact of air travel by the traveller? The questions get absurd, don’t they? And that’s the point. No one needs to fly, ever, except out of remote communities. No one needs to fly to New York or London or Florida or Southeast Asia, yet we do it because we feel like it. And no one cares if the process emits GHG or not.
Why should a pipeline be singled out for such an assessment? Why not kids? The first two are just replacements, but what’s the GHG impact of Number 3? Or Number 4? People and their endless demands for food, shelter, and heat are the root of the whole problem. All a pipeline does is sustain those lives; it’s not there for decoration.
OK, off the soapbox and back to reality. Regardless of the lunacy of how he got there, it looks like Trudeau has gambled that the oil patch can be satisfied with Trans Mountain and Keystone XL, BC can claim a major victory in killing Northern Gateway (and everything else up the coast), and central Canada will be calmed by the fact that another pipeline won’t be forced upon them (the irony of which would embarrass them greatly if they ever looked at a pipeline map).
That leaves eastern Canada’s interests ignored though, and leaves intact the legendary injections of Saudi oil into Canadian markets (among other dubious sources). The only good part of that situation is that it is free markets at work. The preponderant feeling one should be left with in the pit of their stomach though is disgust – that we can’t properly optimize our own resources as a country like most others at least try to; that we as Canadians get indignant at human rights violations yet shrug at this mass violator; that we condemn oil from our own back yard that is produced under stringent, highly visible conditions but accept oil from anywhere else in the world without a care.
It works politically I suppose, but it’s depressing to think that this is the best we can do. We are a nation rich beyond belief, and we of any country should be well positioned to move from a fossil fuel based economy to whatever is next in the coming decades. There should be a better way to do it than giving $10,000 Tesla subsidies in some parts of the country while semi-strangling others that pay the bills. With our resources, capabilities, and strong industrial base, we have an infinite array of choices that would be the envy of most countries.
Read more insightful analysis from Terry Etam here