For Justin Trudeau and his Liberal government, the hits just keep on coming with the Trans Mountain pipeline expansion. Last week, Trans Mountain announced the project will be an eye-watering $8.8 billion over its initial budget. And in a move that can’t help but raise eyebrows, CEO Ian Anderson will be retiring effective April 1.
If this is his idea of a practical joke, the Trudeau government surely isn’t laughing. It couldn’t have predicted the arrival of a years-long pandemic, or a huge flood that cut a destructive swathe through the pipeline’s right of way. But for those who believe Trudeau actually bought TMX intending to kill it, these cost revisions and changes to how it will be financed look like a smoking gun. For those who thought he never should have bought it in the first place, they’re vindication and validation. The truth, as tends to be the case, lies somewhere in between.
Despite a lot of pant-wetting from Alberta’s oil and gas enthusiasts, the announcement that the federal government won’t fund any more of the cost overruns on the project doesn’t mean they’re pulling the pin on it. As Reuters’s Nia Williams reported, “The government has engaged BMO Capital Markets and TD Securities to provide financial advice and [Finance Minister Chrystia] Freeland said the two advisers confirmed the project remains commercially viable and public financing for the project is a feasible option.”
Just because it can continue to build the project doesn’t automatically mean it should, though. As Greenpeace’s Keith Stewart said, "it's time to cut our losses on this white elephant." West Coast Environmental Law’s Eugene Kung used exactly the same language in a statement, concluding that “It’s time to recognize TMX for the tragic boondoggle it is, cut our losses and cancel this white elephant of a project.”
But is it? The operative question now isn’t whether he should have bought it in the first place but whether he should finish it at all. And the answer, at least from an economic perspective, is still a pretty clear yes. A combined $8.9 billion has already been spent on the project, and that will immediately be crystallized as a loss if it’s halted. Would the remaining $11.5 billion — heck, round it up to $15 billion — deliver a positive return on investment for taxpayers? It’s kind of hard to see how it wouldn’t if you zoom out and look at the bigger picture.
For one thing, canceling the project right now would deprive Indigenous communities along the route of billions of dollars in economic opportunities, to say nothing of the prospect of them buying the project outright at some point, as has been widely rumoured. It would also significantly raise the odds that Canadian oil would again start trading at a major discount compared to the benchmark West Texas Intermediate, as rising global demand and record Canadian supplies run up against a sudden lack of pipeline capacity.
The last time that happened, in 2018, it cost the NDP government in Alberta upwards of $4 billion in lost royalty revenues. According to a paper from University of Calgary economist Kent Fellows, if it had persisted for a full year it would have cost the Canadian economy more than $13 billion - including an $800 million hit to the federal treasury.
But so what, right? After all, it’s just money, and the last two years have proven that the government can find it if it really wants to. And if that’s all it was, I might be inclined to agree. Here’s the problem: killing TMX won’t mean that oil doesn’t get consumed, or the emissions from it won’t be released into the atmosphere. It just means they’ll get to market by different — and more expensive — modes of transportation. Even if those Canadian barrels that have been pledged to TMX could somehow be kept in the ground, that would simply push global prices even higher — and fatten the bank accounts of other oil producing regions, countries, and companies.
Killing TMX might absolve some Canadians of their guilt about the climate crisis, but it wouldn’t do anything to actually address or ease it. And we can do better than that.
The federal government should complete the project and redouble its commitment to using TMX as a bridge to a lower-carbon future. It should take all the incremental federal tax revenue the project will create, regardless of who owns the pipeline, and invest it in green technologies and emissions reduction programs. It should implement a cap on oil and gas emissions that puts real pressure on the industry to start bringing them down immediately, not in some distant future. And it should push the next government of Alberta — the one that could be led by Rachel Notley — to invest its increased royalty revenue in similar green projects and programs.
There’s an opportunity here to pursue meaningful economic reconciliation with Indigenous communities, fund environmental programs and priorities, and engage in some much-needed nation building at a time when the fabric of confederation is stretched precariously thin. It almost certainly wouldn’t make anyone on either side of this highly-emotional debate happy, of course. But good public policy decisions are about pursuing long-term benefits, not avoiding short-term political costs.
Comments
Wealth that degrades our life-support systems is illusory. The costs of climate change and fossil-fuel pollution are prohibitive.
Fossil fuels are a losing proposition. That's why we're ditching them. Why go deeper into debt to finance the solution?
Canada does not need fossil-fuel dollars to fund the transition. Like selling cigarettes to cure lung cancer.
If Ottawa has billions of (our) dollars for pipelines, it has billions of dollars for renewables. Put a realistic price on carbon. Use carbon revenues to build our sustainable future. End fossil fuel subsidies — or divert them to renewables and public transit.
Transitions start by moving in the direction you wish to travel. Doubling down on fossil fuels takes us in the wrong direction. Oilsands expansion prevents Canada from meeting its targets.
When you're in a hole, stop digging.
Prof. Naomi Oreskes: "The costs of climate change are so great that they now threaten the very prosperity that economic growth is intended to generate. So we can say we're interested in fossil fuel development, gas pipelines, or fracking, or tarsands… because they're going to generate economic growth. But the reality is that the cost of those things will be many times greater than the economic value that they produce."
"Killing TMX won’t mean that oil doesn’t get consumed, or the emissions from it won’t be released into the atmosphere. It just means they’ll get to market by different — and more expensive — modes of transportation"
Max Fawcett is recycling oil industry propaganda. Oilsands producers, pipeline companies, and AB politicians are unequivocal: New pipelines are key to oilsands expansion. Hence, climate activists' strategy: Stop the pipeline, stop oilsands expansion.
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Premier Kenney on his $1.5 billion gamble on Keystone XL: "If we are going to have a future for our energy workers, it's necessary that sometimes the government steps in to de-risk projects that have become too risky in the capital markets."
Kenney draws a clear line between new pipelines and the industry's future.
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Canadian Energy Pipeline Association CEO Chris Bloomer: "We have a huge resource that can continue to be developed and growing in this country. It's really a question of, 'Are you going to leave the resource in the ground or are you going to produce it?' And if you produce it, you are going to need new pipeline capacity."
Exactly. That's why activists oppose pipelines. New export pipelines enable oilsands expansion. New fossil fuel infrastructure locks us into a fossil fuel future.
New pipelines drive more production and higher emissions. Lower costs and higher profits spur new investment and production, locking us into a fossil-fuel future. Lack of pipelines and lower prices constrain production, expansion, and emissions. The industry has made this point repeatedly. Oil producers demand more pipelines to ship ever greater volumes of oil abroad.
Even using the industry's gross under-estimates, Canada's oilpatch is the FOURTH MOST CARBON-INTENSIVE on the planet, behind Algeria, Venezuela, and Cameroon. Canada's rating is nearly twice the global average. Burning LESS Canadian oil is a NET BENEFIT.
Rystad Energy: "Among the top 10 oil and gas producing countries, Canada had the highest CO2 emission intensity per barrel of oil equivalent."
Canada's oil industry has been crystal clear on the link between oilsands expansion and new pipelines:
"Suncor won't approve more oil production expansions until Canada makes progress on approving pipelines" (Edmonton Journal, Sep 5, 2018)
"The country's oil industry has said A NEW PIPELINE IS CRUCIAL FOR THE DEVELOPMENT OF THE OIL SANDS, which is projected to produce over 5.5 million barrels a day by 2030, according to a 2016 Canadian Association of Petroleum Producers (CAPP) report." (Sep 29, 2016)
"Cenovus Energy said it throttled back production at its oilsands facilities with the price of Canadian heavy oil lagging well behind the U.S. benchmark price, a problem exacerbated by a lack of pipeline space." (Mar 22, 2018)
"Imperial Oil reduced oilsands operations in recent months as the company had no way of sending oil to market. In the first quarter of this year, production was pulled back by about 12,000 barrels per day.
"…Husky Energy temporarily scaled back production by 5,000 barrels a day and Cenovus decided to fluctuate its production to produce less when limited pipeline space lowered prices in the province.
"…Company executives continue to say they are confident new pipes will be built. If not, growth plans may be shelved. 'For this industry to grow, we need expanded market access,' said [Imperial Oil CEO Rich] Kruger. 'It will be a big part of our deliberations and considerations of any new expansions.'" (May 01, 2018)
"The message [the CEO of oilsands giant Suncor Energy Inc.] left with Trudeau was that pipeline access must be assured if the industry is to attract the capital it needs to grow, Steve Williams said on a conference call on Wednesday.
"We don't want these new projects to have to bear the burden of some of these (oil price) differentials,' he said, reiterating Suncor's commitment to build no new major oilsands projects without new pipelines. (May 2, 2018)
"Until the country resolves its long-standing pipelines problems and competitiveness challenges, the chequebook on big-ticket oilsands projects will stay holstered.
"'We do not see ourselves making major investments in Canada until we can see some clarity on market access issues,' [Suncor Energy chief executive Steve Williams] said Wednesday on a conference call w analysts.
"…But it will take real progress — such as steel in the ground for new pipelines — before companies make billion-dollar decisions on building new oilsands projects." (May 3, 2018)
"If companies don't have the ability to get their product to market efficiently through pipelines, they have to make a tough decision to sell at a discount — or not produce it in the first place.
"…With the current pipeline restrictions for both crude oil and natural gas, the company will be proactive in our actions to manage our assets," [CNRL] president Tim McKay said on a conference call.
"If we see very low prices, we obviously will shut in volumes."
"…During the first quarter, the Calgary-based company didn't produce almost 17,000 barrels of oil due to the widening price differential between benchmark West Texas Intermediate crude and Western Canadian Select heavy oil.
"…Canadian Natural scaled back about 7,100 barrels of heavy oil production, deciding to curtail output and delay well completions. It also shut in 9,700 barrels per day of thermal oilsands production due to low prices." (May 4, 2018)
"Rich Kruger, chief executive of Imperial Oil, told his shareholders late last month that capital investment is at historic lows because of expanding regulatory timelines, escalating fiscal costs and market-access challenges. The company is mulling the future of its 150,000 barrel a day Aspen project but if they can't transport the oil to their customers it may not go ahead, even if it receives regulatory approval." (May 16, 2018)
"Large producers such as Suncor Energy have warned recently they won't approve major new oilsands investment until the country sorts out its market access mess." (May 23, 2018)
"Executives from Suncor Energy Inc., Canadian Natural Resources Ltd., Imperial Oil Ltd., Husky Energy Inc. and Cenovus Energy Inc. say the decision, especially when combined with a deal by the federal government to buy the Trans Mountain pipeline and its expansion project for $4.5 billion, could allow them to consider expansion projects again." (July 10, 2018)
"Kruger said Imperial had concerns about taxes, regulatory changes and the availability of new pipelines and would consider all those factors before detailing further growth plans.
"Cenovus, which is currently working on an expansion of an oilsands project that will be complete next year, is similarly hesitant to begin new projects.
"'We will not be turning on another oilsands expansion until we get a better view of market access,' said Al Reid, Cenovus's vice-president, stakeholder engagement, safety and general counsel, referring to delays to the Trans Mountain, Enbridge Inc.'s Line 3 and Keystone XL export pipelines." (July 11, 2018)
"Loss of Keystone XL expected to hurt future oil industry growth: experts" (Canadian Press, 21-Jan-21)
"Experts say the cancellation of Keystone XL has put a 'damper on investment expectations' for the oil industry.
"Phil Skolnick, a New York-based analyst for 8 Capital, agreed with other observers that the end of the pipeline will stifle investment and production growth for years in the Canadian oilpatch."
…And, he added, after more than 5 years of poor oil prices and a lack of access to capital markets to raise money, their expectations for growing their oil production have been greatly diminished.
…Uncertainty about future capacity make it impossible for producers to make decisions about new multibillion-dollar oilsands projects, which could take 5 years or more to plan and build.
Richard Masson, an executive fellow and energy expert at the UofC's School of Public Policy: "It puts a damper on investment expectations."
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Cenovus Energy CEO Alex Pourbaix: "I just believe the industry will expand production to meet whatever egress comes on the pipeline side."
"Varcoe: As pipeline battles continue, new study underscores vital U.S.-Canada energy trade" (Calgary Herald, Apr 07, 2021)
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"Strong cash flow levels for producers and more pipeline capacity for the year will support rising capital expenditures and increased production."
"Varcoe: Oil prices above $75 herald a new year with growing industry momentum" (Calgary Herald, Jan 04, 2022)
Well said, Geoffrey.
"Should the government kill the Trans Mountain pipeline project?"
Let's ask future generations. After all, they will have to live with the consequences.
All government policy and investment must be seen through the climate lens.
Simply put, does this policy and that investment increase or reduce emissions? Lead us toward or away from our climate goals?
In particular, does oilsands expansion enabled by the Trans Mountain pipeline project and other new fossil fuel infrastructure projects improve or destroy our chances of meeting Canada's emission targets?
The answer is obvious. For years, the OECD, the UN, and the federal Environment Commissioner have warned that Canada is NOT on track to meet its targets. The main stumbling block? Increasing oilsands emissions.
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Max Fawcett wrote: "The answer, at least from an economic perspective, is still a pretty clear yes."
Only if you discount the environmental, economic, and health costs of fossil fuels. The fossil fuel industry is profitable only if you externalize those costs.
Tally the costs of the 2021 heat dome in Western Canada and the Pacific NW? What are the costs of endless wildfire summers and ash-filled skies? Ask the residents of Lytton, if you can find them.
And who pays? Exxon? Suncor? Max Fawcett?
Climate change represents the biggest market failure in history. Factor in the environmental, economic, and health costs of fossil fuels, and they become prohibitively expensive. The industry ceases to be viable.
Voodoo economics.
Put a realistic price on carbon emissions and fossil fuel pollution, and energy markets transform overnight.
The IEA's "Net Zero by 2050" Roadmap prescribes "no investment in new fossil fuel supply projects" after 2021.
"No new oil and natural gas fields are needed in the net zero pathway, and supplies become increasingly concentrated in a small number of low-cost producers."
The IPCC advises that the world must nearly halve GHG emissions by 2030 and eliminate them by 2050 to keep warming below the danger limit of 1.5 C. That timeline leaves no room for fossil fuel expansion.
Don't count on "rising global demand". Plan on and build for the sustainable future we need, not the fossil fuel dystopia, global warming, and climate change catastrophe we need to avoid at all costs.
A profitable fossil fuel industry is antithetical to climate action.
That a National Observer columnist is still debating the issue in 2022 is itself a sad commentary on the state of climate change debate in this country.
Max Fawcett, former editor of Alberta Oil Magazine, is arguing for Canada's plan to fail on climate. Hopelessly irresponsible. Future generations will look back on this insanity and weep.
Agreed Geoffrey, I wonder if Max did any research before he wrote this. I looked into TMX back in 2020 - the hype behind the differential (claims we could get more in Asia), lack of pipeline capacity etc. and found the claims faulty when you look at the data. At that time the revised cost of the pipeline was $12.6 billion - the shippers that signed onto the project did so at the original cost of around $7 billion. In the private sector, pipeline tolls are set based on the cost of building the pipeline and shippers have the right to opt out if the tolls go up substantially. With this latest cost increase, tolls would now be prohibitive, making this money losing proposition even worse for shippers should they choose to use it and not to opt-out. If the government does not increase tolls to recover the cost of building the pipeline you and I as taxpayers will likely be eating these cost overruns - yum-yum. You can download my analysis here https://www.policyalternatives.ca/newsroom/updates/reassessment-need-tr…
Thank you for your exemplary work over the years, David.
I urge the National Observer managing editors to request a feature rebuttal to Max Fawcett's piece by David Hughes, an analyst who has clearly done the math and one who really should be pursued by the Observer as a regular guest writer and critic.
The only way that I can imagine an expanded TMX could be worse for life on the planet is if it carried high-sulfur dirty coal instead of bitumen.
Fortunately, as far as I know, this is not yet technically feasible.
Instead the feds ahould pledge to contribute 2bn a year for the next 5 years to Peter Lougheed’s depleted but stlill existing heritage trust fund under the condition that funds only be used "to save for the future, to diversify the economy, and to improve the quality of life of Albertans."
Assessing the risks of Kinder Morgan’s proposed new Trans Mountain pipeline
http://credbc.ca/assessing-the-risks/
"An oil spill would put at risk industries that together employ over 200,000 people locally including tourism, film and TV, real estate, high tech, agriculture and coastal industries.
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In 15 years of operations, Kinder Morgan has accrued a significant number of spills, largely the result of human error. This includes four along the Trans Mountain route since 2005.
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In the case of a major spill, taxpayers would likely be responsible for the burden of costs, as a company’s liability is limited to $1.3 billion and a major spill could easily cost ten times this amount."
Max... Blink twice if you're being held hostage, we'll send help.
Agreeing with Mark and the others here - what's happened at the National Observer?
Less oil = higher oil prices, meaning faster transition to renewables. This is part of why pipeline projects are assessed as having climate impacts; they increase oil supply, lower prices, and increase demand. That's not even controversial.
This article echoes the political maneuvering of both Mr. Trudeau and Ms. Notley as they tried to justify the purchase of TMX in 2018. The arguments were not credible then, and they sound equally as superficial and incredible now.
Though perhaps the author has simply made up his mind, he may want to defer to the wisdom of the International Energy Agency which has set out a critical path to addressing climate change:
No investment in new fossil fuel supply projects!
And he may find the well-researched detail he would do well to consider in Barry Saxifrage's article in this same issue of the National Observer and Andrew Nikiforuk's article in The Tyee today. For the author's convenience, they are here:
Saxifrage: https://www.nationalobserver.com/2022/02/23/analysis/climate-snapshot-b…
Nikiforuk: https://thetyee.ca/Analysis/2022/02/23/Why-TMX-Will-Endlessly-Spill-Tax…
Why are we paying for CAPP propaganda? Why must Observer readers turn to the Tyee for climate-rational analysis of TMX and Canada's climate policy?
Incidentally, CAPP's current president and CEO, Tim McMillan, is retiring this spring. Maybe The Observer can add him to its roster.
Tim McMillan's latest piece: "Here's why the world should get natural gas and oil from Canada"
https://calgaryherald.com/opinion/columnists/opinion-heres-why-the-worl…
Notice any difference between Tim McMillan and Max Fawcett's positions?
No, I don't either.
Whither the Observer?
Indeed. More slipshod pieces like Max Fawcett's "well, it's partially built, let's just do it to fight climate through questionable oil pipeline revenue" coupled with the Observer's managing editorial hypocritical penchant to fly a dozen staff to a climate conference located in a pandemic hotspot will probably push me off the subscriber roll soon enough.
Just wait until Max does his next apology for blue hydrogen, an item right off the front page of the CAPP playbook.
Thank you for that link to the Tyee article.
This observation by economist Robyn Allan in the Tyee is a good closer to Fawcett's economically shaky assertions:
“If the government doesn’t cancel the project right away, the pipeline will be a $30-billion boondoggle by the time they close the books.”
There are other convenient omissions in Fawcett's article. Here's a list of some of them:
- The oil industry is overjoyed that the price of oil is climbing again. Meanwhile, consumers are lamenting the higher prices at the pump. This inflationary spiral is now the focus of media pundits and economists. Once prices break through a ceiling, they cause recessions in consuming jurisdictions, resulting in lower demand and a shift toward efficiency and substitutes. In 2008 prices hit nearly $US150 / barrel which was the pin that popped a worldwide credit bubble. Once prices fall below a floor, they cause recessions in producing jurisdictions. Boom and bust are the attributes of state dependency on raw natural resources where commodity prices outweigh the concept of added value.
- Economist Robyn Allan discussed the effect of “air barrels” on overly rosy projections of the economic benefits of TMX. Suppliers pre-book space in the pipe, often just as a placeholder, and thus there are periods where no oil is pumped even though the space is reserved.
- Likewise, the volumetric space occupied by diluted bitumen is 1/3 non-marketable condensate diluent, which further restricts the available space in the pipe.
- Two years ago the feds were rumoured to be offering significant billion dollar subsidies on pipeline tolls to sweeten the pot for any prospective private sector buyer of the project. To date, the feds still own the project. This is a signal that the private sector has little confidence that TMX is economically viable. It also reinforces the idea that Trudeau et al were played by Kinder Morgan in the original deal.
- Proponents talked incessantly about the need to diversify the market price for bitumen to avoid the “discount” paid by US buyers, but they never followed up with proven buyers with Asian refineries. In fact, the few shipments of oil to Asia were at the lowest prices of the day; no Asian buyer will pay a premium price for a low quality raw product on top of trans-oceanic shipping costs.
- Trans Mountain published their expectation that 400 ships a year will traverse the Salish Sea to Asia. In effect, that adds up to 800 ships a year when their return trip is counted, and they’ll be carrying other petroleum products, like condensate. This doubles the risk to the BC coast. But the Asian receivers never materialized, and low and behold heavy oil refineries in California were begging for oil after heavy Venezuelan oil was banned by Trump. In effect, TMX tankers will be turning left once the Juan de Fuca Strait is cleared and heading down the West Coast to sell their product at the same old US discount, and likely at nowhere near 400 outbound tankers a year.
- After the world oil price tanked in 2014 no company operating in Alberta that owned a refinery ever complained about the increased very profitable differential between the lower cost of their feedstock and the much higher prices obtained by their refined fuel products. Most of the refineries were in the US and employed US workers using raw Canadian bitumen. There’s that tricky value-added thing again, which has the tendency to shred the government of Alberta’s credibility in managing its economy for the people instead of for the companies that make political donations.
Now the imperative of climate mitigation and adaptation reign over pandemic debt, all bearing down on public budgets. The feds should sell TMX for the best price it can get and write down its losses before they are insurmountable. Then get out of subsidizing sunset industries altogether.
A climate action plan shouldn’t break the bank. Half the current cost of TMX could build a centralized clean energy corridor within a smart grid across two or three provinces. The other half would build out huge additions to the transit networks in the top seven Canadian cities. Direct climate action is what’s needed more than ever.
Such propaganda! And what happens if the price of bitumen tanks again as it surely will? What has happened to the National Observer? I'll be thinking long and hard about renewing my subscription based on this editorial alone.
I generally find opinion pieces by Max Fawcett to be interesting and reasoned. I generally find comments/retorts by Geoffrey Pounder to be thorough (if verbose) and well documented. If a vote were held today, my vote would be for Mr. Pounder. Max appears to have become unhinged, which may be explained by his past association with Alberta Oil Magazine -- something I did not know and something that Max clearly should have declared within his opinion piece, if true.
National Observer should pay a little more attention to the content of its contributors (see Paul Berger's comment). Or, at least not fall prey to the game of posting provocative pieces for the sake of grabbing attention.
I agree that a variety of opinions can be good for anyone who is attempting to become "informed". But Geoffrey's detailed responses, and also David Hughes' response, indicate that Max got lazy in his thinking and presentation prowess, to be charitable. Mark Freeman wins the "nailed it" comment for succinctness. Others make valid points.
I know -- a lot of personal opinions here. But I see no need to repeat the detailed information that others have already provided in rebutting Max's opinions. Max -- up your game! I am now wary!
Hear hear! I am very relieved to read all these comments as they reflect exactly how I am reacting to this opinion piece. I see no need to repeat the detailed information either. I would just like to add an observation that 'when money is used to make a decision, the wrong decision is reached'. This is what Max has done here. Like was mentioned, the REAL cost of this white elephant lies outside the potential revenue because they are externalised and all of us, including other species on this planet, will ultimately pay the price.
On the issue of fossil fuels and what should be done about them, Mr. Fawcett is unfortunately short-sighted and wrong-headed. If it was up to him, we'd all fry. Unfortunately, it is often up to people very much like him, which is why we're still on course to all frying.
I also find his tactical argument pernicious; it undermines the longer strategic view. He's saying that, even if the pipeline was basically a stupid idea because it cost so much, maybe if we've already built most of it, the REMAINING cost taken by itself wouldn't have represented a stupid idea. But that's how this kind of nonsense always happens--proponents push for it and say it's a great idea, people who aren't going to be siphoning off any money from it say no, it's a terrible idea, but the proponents push and push and when they've got it a fair ways done and it turns out it was a terrible idea, they say "Well, too late now" and do it anyway. ENOUGH! People who push terrible ideas should not be rewarded for it. We have to make clear that these things will be STOPPED. Otherwise we'll end up doing the next stupid idea, and the next, and all the others, just so some rich bastards can skim off some cream at everyone's expense.
There's a very direct problem with Fawcett's argument: His cost/profit claims are inaccurate. He ignores that originally, the pipeline was not even supposed to cost $12 billion, let alone $21 billion. The original estimate was $5.4 billion, then $7 billion. And the tolls on the already-signed long term transport contracts allow for break-even at a cost of $7.4 billion. So when he asks "Would the remaining $11.5 billion — heck, round it up to $15 billion — deliver a positive return on investment for taxpayers?" the answer is clearly,
"No." To the contrary, even at just the remaining cost, the pipeline is clearly going to operate at a loss.
Given which, all his talk about First Nations getting benefits is a red herring. The pipeline will be operating at a loss before even giving them any money. If the government wants to give First Nations money, it can just give it to them, rather than pretending to take it from the non-existent profits of a money-losing pipeline. And that way, they won't have a pipeline leaking bitumen onto their lands and blocking movement of people and wildlife.
All this and I haven't even mentioned climate change or oil spills. The latter loom in my mind--neither the Albertans who pushed for this thing nor Mr. Fawcett will have to live with the results if Vancouver harbour gets covered in bitumen. But I'm a Vancouverite. I know there's this big deal where anything that smacks of the dreaded "NIMBY" is automatically terrible and out of bounds . . . but, what, am I supposed to WANT my home to be turned into a hell-hole? Tell me, Mr. Fawcett, are you willing to sign a contract saying that if there's a bitumen spill in BC we get to come and pour the stuff all over your house? Yeah, didn't think so.
In 2015 there was a bunker fuel spill from the MV Marathassa -- a brand new ship manufactured in Japan -- into Vancouver's English Bay. It was a small spill, just 2,800 litres, but it took two days before it was reported. By then it had spread to the stony beaches of Stanley Park where the residue still stains the gravel today.
What are we to expect if a TMX Aframax tanker broke open after a collision with another ship with a cowboy at the helm anywhere in the 270 km route from Vancouver Harbour to the open Pacific Ocean? That spill would be 35,000 times greater than the Marathassa.
This isn't just about pipes. Max Fawcett seems to be blissfully unaware that there is a marine economy and complex ecosystems surrounded by 3 1/2 million people on the south coast of BC. Not one coastal Indigenous nation supports this project, with the tiny Tsawwassen First Nation being the sole exception. Meanwhile, the Coldwater Band in the BC interior has withdrawn its support over fears its pristine underground aquifer will one day be contaminated. This makes the sum of all First Nations on the pipeline and marine route stalemated in support vs opposed.
Max doesn't do TMX any favours by omitting mention of an entire set of risks that were never professionally assessed. Even a moderate spill into the marine environment will no doubt lead to major international lawsuits in the double digit billions for damages filed by private citizens and companies, municipalities, First Nations, the BC government and potentially Washington State. The great irony is that should TMX decide to post a bond to counter this legitimate criticism, it will probably have to be valued in the double digit billions to be effective.
Environmental evaluation and professional level risk assessments in marine settings are obviously not on Fawcett's radar. Figures -- there is no ocean in Alberta, and CAPP has always been loose with numbers. That is an unacceptable omission when discussing project economics in a publication that supposedly places climate action on one of the highest rungs of the priorities ladder.
TMX is simply another of the subsidies the capitalist world is extorting from all of humanity, to the utter destruction of human and most other life forms. We are unwillingly funding our own extinction.
Sure, a lot of people will miss out on illusory immediate riches, which they are actually simply transferring from one group to themselves. Perhaps they are owed that transfer. Nevertheless it is a fools bargain.
The opinion expressed my Max Fawcett is one of a good Conservative business person - they march firmly forward while facing steadfastly to the rear. There are important variables that he has not included in the equation: the fact that a completed TMX expansion will likely be there for 50 years making it very difficult to shut down; the fact that increased oil transport through Vancouver will inevitably lead to devastating marine contamination through an accidental spill; the fact that we must drastically wind down fossil fuel use beginning immediately to deal with the climate change disaster facing us; the fact that the market for fossil fuels will disappear or substantially diminish before the TMX is paid for; and the high likelihood of leaks along the TMX route contaminating important watersheds. The feds should kill it now.
Yes, the feds should kill the project and put that money into green infrastructure across the country: high-speed train (coast to coast to coast) with adjacent bus system to link to rural and remote areas; an electric grid across the country; retrofitting buildings; building green homes and multi-unit buildings utilizing solar panels and heat pumps; investments in green technology; a sustainable economy; Lots to do.
Exactly.
One thing that occurs to me is how quickly things are changing, happily, because on this topic I'm reminded of how Trudeau was supporting Notley at the time they bought TMX, arguing for it as one of those "transitional" moves required from a governmental perspective, but it seemed more reasonable then than it does now.
It's why I'm very much wondering how Rachel will handle leadership herself this next time around, as in who will break from the pack first and have the courage to go "all in?" I think and hope that Chrystia Freeland embodies that shift for the Liberals as the next leader of the party, and the next PM, a brilliant, accomplished woman groomed for the position by Justin Trudeau. And I suspect that another heat dome this summer and/or more drought might clinch the change; apparently dangerous heat is THE most affecting for people's perception of being in real danger.
I'm also curious as to why there is such piling on when it comes to Max Fawcett; I assume it has to do with his past liason with an oil publication, but he does live in Alberta, a bona fide "petro-state" as Kevin Taft describes it; we keep hearing about how "different" Alberta is, a solid outlier, but that is also changing; we're all somewhat in transition right now, it's unprecedented, so give him some room. He's also young, and is still evolving, but WILL, is the thing, is CAPABLE of it. Conservative types are not, which is the most damning trait of all. He has good innate perceptions and takes on the most contentious topics so I think he's worthy.
And many are threatening to cut subscription to the National Observer. What are you talking about?! Like the Liberal Party, they're as good as it gets, along with the Tyee, and I for one appreciate that reality, which is based on their fundamental open-mindedness and adaptability.
It's one thing to report and add one's honest and well-referenced opinion based on genuine research and evidence. It's entirely another to regurgitate long ago discredited oil industry PR and half-measure attempts at climate action legitimacy. TMX is a well-known bad player. Just ask how badly the City of Burnaby was shafted over the application process for permits, then blamed by TMX and its legions of media supporters for "delaying" them. TMX lawyers even did that in the kangaroo court of the former National Energy Board. Now there's an attempt to excuse the massive expansion of its tank farm from very basic safety features through a twisted constitutional exception. Hello? 100,000 people's lives are at risk!
So, pardon me, an ex-Albertan who knows Alberta BS when he sees it, for "piling on" a paid Observer writer from Alberta who just doesn't seem get there are other provinces whose populations will bear the brunt of this project's many potentially huge liabilities, such as a major spill on land or in the ocean, or an uncontrollable tank farm fire that has the Burnaby Fire Dept. more than concerned.
Regarding subscriptions, I can't speak for others, but I am on the cusp of pulling out, not because I don't believe in well-rounded diverse discourse (far from it -- a good debate is always beneficial and counters the creation of silos), but because of the hypocrisy of the managing editors regarding subscriber and taxpayer-funded climate fighting frequent flyer staff and for not upholding basic editorial standards regarding requiring writers on the payroll to do basic research, or to clearly state the sources of their information for readers.
In Max Fawcett's case, nearly every commenter so far has identified the sources for the benefit of all readers -- CAPP and other Alberta oil industry outfits. Moreover, they named and linked to exemplary previous project rebuttals, with Robyn Allan and David Hughes standing out as individuals with deep knowledge of TMX and other fossil fuel subjects.
My respect for the Observer would soar if they offered professional economists and geoscientists like them space as guest columnists.
Like everyone else who has responded to this article, I am disturbed at the intrusion of CAPP propaganda into a space that I thought was more interested in truth. As I don't know Mr Fawcett, I want to give him the benefit of the doubt by assuming that he is sincere in absorbing that propaganda - as it does require some swimming against the tide to actually do the necessary research and analysis when you live in a petrostate where the media have been parroting the propaganda for decades.
But if he is to be a credible journalist he does need to do that analysis and critique. So, Max, I hope that - after the overwhelming negative reaction that you have received to your piece - you will do some serious reading. A good place to start is the UN Environment Programme's latest Production Gap report, which you can find at https://productiongap.org/2021report/. (And be serious in your research - don't just look at the summary, read the whole report.) You could look at some of the work done over many years by Oil Change International, exposing the flaws in CAPP's self-serving claims. And then you could look at the work of the Fossil Fuel Non-Proliferation Treaty initiative, for which the best introduction is perhaps the letter from a couple of thousand scientists at https://fossilfueltreaty.org/open-letter. Or if you only feel safe with the thinking of the energy industry establishment, you could read the two substantial reports which the IEA put out last year. When even the IEA is saying that a substantial decrease in production is necessary, surely even a journalist raised on bitumen needs to pay attention and do some rethinking.
Well said.
There are two related subjects not yet addressed in this long comment thread.
First, BC is one of the largest customers for Alberta oil. That oil is shipped via the existing Trans Mountain pipe, which is probably well past its design lifespan. Should TMX be cancelled, we still have the serious issue of deep dependency on existing TM oil in BC and Washington state where a branch pipe leads. BC Hydro is in no position to substitute electricity straight across for the fossil energy consumed mainly in land transportation. Hydro will have to triple its generation capacity.
This is a big problem because it will take more than a decade for even a multi-billion dollar crash program to decarbonize and electrify the economy to lower demand for Alberta oil if planned as a 1:1 replacement of ICE cars with EVs. Something has to give, and that will have be in a program to reduce demand. Attempting an exceedingly costly increase in the supply of electricity without reducing demand is, in my view, infeasible. This should specifically involve the elimination of a proportionate chunk of the car population and a rethink of our accepted models of urbanism.
A very large build out of urban transit and intercity rail along with a mandated significant shift in zoning toward smart growth principles will be required, not dissimilar to the current shift in the building code toward a major stepped increase in the energy efficiency of new buildings. Provincial governments have control over their cities. A change in respective municipal zoning acts by provinces could be inspired by the major financial participation of the feds, for example to assume 60%-80% of the costs of building transit projects instead of the traditional 33%-40%.
The car-dependent single family home on a large lot is obsolete. This sprawling, car dependent suburban model from last century is already economically unsustainable over the long range (Strong Towns has lots of studies on that), so it’s only a matter of following principles of urban efficacy by modestly urbanizing the suburbs with an electrified network of decent passenger rail services and transit-oriented development. Human-scaled projects featuring ground-oriented family housing, low rises and continuous sidewalk retail will be very important town planning features that could also dramatically lower our per capita energy consumption under the Step Code and result in healthier residents due to a dominance of walking over driving.
Second, a national smart grid and stand alone clean electricity transmission corridors will certainly help spread out the costs of climate mitigation. BC Hydro can be a part of it, but doubling or tripling the electrical generation capacity in BC will require federal help, especially when fossilized provinces strenuously object to clean power corridors displacing big hunks of their sunset fossil fuel economies.
A failed lawsuit against TMX ironically cleared the path for future clean energy corridors by giving high-level legal support to crossing provincial boundaries with federal projects that are “in the national interest.” The Supreme Court of Canada also gave ultimate ownership of the contents of the proposed pipeline to the feds.
With that in mind, the TMX case could be used as the guiding legal precedent to cross provincial boundaries with a national smart grid consisting of high voltage transmission corridors for zero emission power over great distances. This could result in provinces sharing the cost of the mass electrification of the Canadian economy with the feds and among other provinces and territories, and to help offset imbalances in supply and demand between these jurisdictions during decades of operation.
Clean power corridors could also house industrial-scale banks of batteries for storage (cycled over hours or days) to be draw down at the most advantageous times, and provide opportunity and choice for adjacent private wind and solar farms to sell power to the national or provincial grids. With high enough levels of stable base load power distributed nation-wide, a new industrial order for operations like green steel and low emission cement could be clustered anywhere along the corridor, or connected to it remotely.
The hip bone is connected to the knee bone …
The other aspect of TMX that has not been touched upon in this long series of welcome comments is the role of the federal government in justifying the project. Its environmental analysis at the time (2016) claimed that TMX would not add to GHG emissions because it was designed to transport the current level of oil production -- presumably in replacement of shipment by rail. It has always puzzled me why this deception has not been more widely exposed. Geoffrey Pounder has fully documented that the oil industry had no qualms stating the truth.