Now that TMX is complete, the question of who should bear the brunt of the project’s cost overruns is making the rounds on Parliament Hill.
A federal committee delved into this issue on Wednesday night, with some witnesses and MPs insisting the oil and gas sector should shoulder the burden because they are the ones profiting, while others argued the pipeline benefits all Canadians.
Oil industry executives called to testify at the Oct. 9 committee meeting on Trans Mountain’s massively over-budget pipeline expansion were met with a combative NDP leader.
“The TMX pipeline was built for Canada and Canadians,” said Jon McKenzie, president and CEO of Cenovus Energy.
“No, it wasn’t,” NDP Leader Jagmeet Singh interrupted. “It was built for your sector, for your industry.”
“You're literally asking Canadians to pay you to burn the planet,” Singh said.
The TMX price tag was an estimated $7.3 billion in 2018 when the federal government purchased the pipeline from Kinder Morgan for $4.5 billion. But construction costs skyrocketed over the years, reaching $34.2 billion in Trans Mountain’s latest estimate. Now, the Canada Energy Regulator is hearing arguments about whether the tolls charged to ship oil through the pipeline should be increased and by how much, to account for a portion of the steep cost increases.
But oil shippers, including Cenovus, are fighting to keep the cost of shipping oil as low as possible in unfolding regulatory hearings.
A September report from the International Institute for Sustainable Development shows that allowing discounted tolls could amount to a $8.7 to $18.8 billion subsidy, depending on a range of factors. At the high end of the spectrum, this would amount to $1,255 per Canadian household.
“Nobody knows for sure what's going to happen over the next 24 years, and that's why we provide a range,” the report’s author, Thomas Gunton, told Canada’s National Observer in a phone interview. “But the important point is, no matter what assumptions you make, there is no likely scenario in which the government will recover their investment in Trans Mountain and there will be a significant subsidy between $8.7 and $18.8 billion,” said Gunton, who is also founding director of the Resource and Environmental Planning Program at Simon Fraser University.
In the committee meeting, Conservative and Liberal MPs largely used their facetime with oil industry executives to ask what type of economic benefits TMX will offer Canadians.
Conservative shadow minister for natural resources Shannon Stubbs asked McKenzie to “expand on the contributions that Cenovus and the oil and gas sector make for jobs, businesses, powerful paychecks for Canadians and as well, importantly, all the very, very significant revenue that is sent … to all three offices of government to provide the social programs and services that all Canadians in every region benefit from, support, expect.”
NDP MP Charlie Angus noted that neither McKenzie nor Greig Sproule, vice president of tolls and tariffs for the Canadian Association of Petroleum Producers, even uttered the word “climate” in their opening statements to the committee.
Singh asked McKenzie whether he accepts that the oil and gas sector shares responsibility for the impacts of climate change, which is known to exacerbate extreme weather events like the hurricanes battering the East Coast and the wildfire that razed Jasper.
McKenzie responded that it “highlights the complexity of the issue,” adding that he’s not a forester and knows nothing about hurricanes.
“I don't know if CO2 caused these fires,” McKenzie said.
“In short, it comes down to the question, ‘Who do you think will pay for this pipeline?’,” said another witness, Reuben George, member of the Tsleil-Waututh Nation, during the committee meeting. “Should it mostly be the oil companies who are its only customer and primary beneficiaries and who are reporting record profits? Or should it be mostly taxpayers who are struggling with the cost of living?”
Tsleil-Waututh Nation has long opposed TMX and is intervening in the toll hearings to argue oil shippers must pay. The heart of the community is in the Burrard Inlet and Tsleil-Waututh Nation has conducted several economic analyses on TMX, which it will submit to the committee as evidence at Bloc Quebecois MP Mario Simard’s request.
Travis Meguinis, Commander in Chief of Red Nation Natural Law Energy, also appeared at the meeting. Natural Law Energy is a coalition of Indigenous communities that invests in oil and gas and renewable energy projects.
Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer
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