In October, the TransCanada’s Energy East project was officially cancelled, after being blindsided with a final regulatory obstacle. The project, which would have shipped 1.2 million barrels of oil from west to east across Canada, was an important piece of infrastructure for the petroleum energy sector, a vital part of the Canadian economy.
The new requirement from the National Energy Board, that finally doomed the project, was that approval would be contingent on consideration of “downstream greenhouse emissions” in addition to the usual growing list of obstacles for pipeline approvals in Canada.
Initially, this didn’t seem to be a problem. Since the pipeline was a superior alternative to any other method of getting oil to Eastern Canada, it should pass this test as a no-brainer. People in the eastern part of this nation would use the same amount of oil with or without Energy East, but rather than bringing it in by tanker or rail, powered by oil, it could come by pipe, powered by electricity with lower emissions and less risk of spills. Rather than oil from extremist dictator led countries, it could come from the friendly democratic provinces in western Canada. Win-win!
However, TransCanada executives were well aware of the politics across the country and realized that this was a show stopper, in spite of having spent a billion dollars getting the project ready for application. What the condition really meant is that grandstanding politicians and environmentalists were given a very big stick to beat the pipeline up at will. Those that don’t understand the supply and demand fundamentals could easily be convinced that the pipeline was a polluting menace that burned a million barrels of oil a day, when all that was required in Eastern Canada was a few more windmills to keep the wheels of the transportation sector turning. TransCanada evidently saw the combined alliance of federal, provincial, and municipal opponents as an insurmountable impediment to project sanction.
This is how petroleum projects are now treated in Canada, but let’s have a look at other nationally important sectors to compare and contrast the political assassination of Energy East.
What about the auto sector in Ontario? Here is an industry that churns out 2.4 million gasoline powered vehicles every year. What is the downstream greenhouse gas emission footprint of that? We don’t even need a calculator! The standard measure of any ‘green’ activity is the unit ‘cars on the road.’ When Saskatchewan invested $1.5 billion dollars to build an innovative carbon capture and storage project at a power plant, they valued it at 200,000 cars ‘off the road.’ When the Alberta government brought in its Climate Leadership Plan, which mandated the early phase out of the provinces coal fired power plants, they valued it at ‘8 million cars off the road.’
Incidentally, that policy was supposed to generate a lot of ‘social licence’ across the country, but did not get any. It is self evident that the Canadian auto sector is negative 2.4 million ‘cars off the road’ every year. So what should environmentally responsible governments and environmentalists do to such a dirty polluting sector? How about put on some additional heavy taxes, or caps on capacity, or new regulations on gasses vented? Maybe devise a royalty structure to get a fair share of the ill-gotten profits? Instead, governments line up to subsidize new plants, and entice more auto manufacturers to Canada. This industry has been supported by governments for decades, paid for by taxpayers. One of the biggest travesties was the 2009 auto sector bailout to the tune of $13.7 billion of which $3.5 billion will never be repaid. All of this was done to keep alive an industry which will likely be extinct in 25 years, as gas powered vehicles disrupted by electric vehicles, which are not produced in Canada.
To make matters worse, Canada is in the middle of several international trade negotiations, and may be poised to give up other important conditions to save these archaic jobs in the gasoline powered auto sector.
Lets next look at the aviation manufacturing sector in Canada, the prize industry of Quebec (a fierce critic of Energy East). Bombardier, the largest airplane producing company in Canada, has been subsidized to date with about $1.3 billion dollars. The annual output is about 300 jets, which of course burn jet fuel made from oil. In this case we do need a calculator, with which we can compute that adding those aircraft is the equivalent of an extra one million ‘cars on the road’ every year. This is the province that didn’t want an oil pipeline near the St. Lawrence river, yet supplies its Quebec City refinery with Panamax oil tankers running continuously on the St. Lawrence, burning dirty bunker crude, to bring in 265,000 barrels of oil per day that could have come in on Energy East.
Last, lets look at the bastion of all things green in Canada, British Columbia. It is a well-kept secret that BC exports about 60 million tonnes of coal, mostly to Asia, from mines in the interior. This is a lot of high carbon coal, responsible for one third of all shipments out of Vancouver harbour (ironically, the area where BC releases 130 million litres per day of sewage directly into the Pacific Ocean, enough to fill an oil tanker every week). When burned (downstream, obviously) this amount of coal produces the same carbon as 10 million cars on the road, but a great deal more pollution, as it contains noxious pollutants like sulphur and lead. Part of the horrendous smog in places like Shanghai, China are courtesy of coal exported from BC. Yet, while BC environmental groups will vigorously fight oil pipeline expansions or LNG projects in the same general location, they turn a blind eye to the dumped sewage and coal ship armada heading west.
The hypocrisy of Energy East’s opponents is palpable. Many seem to oppose projects based on their province of origin rather than on their scientific merit. Oil is an essential commodity, without which we could not live. This is not an exaggeration. Cut off all oil and gas, and without transportation, heat or electricity, most Canadians would be dead within months. In contrast, we really don’t need more gas powered vehicles. Most of us could get by with our old clunkers without too much inconvenience, and should probably just wait for a modern electric car. Do we really need to travel by air as much as we do? With videoconferencing we can conduct business and communication remotely, treating air travel as a luxury that we could survive without. And finally, do we really need to send Canadian pollution halfway around the world to Asia for a few million dollars in coal royalties to BC? It is sad to see Canada so confused on such important matters.
Larry Weiers has extensive experience in many areas of the energy sector. His most recent role before retiring was VP of Energy Technology and Innovation with a senior North American integrated Petroleum company. He has published an e-book titled “Sustainability of the Modern Human Economy”