Approval of B.C. LNG project keeps Trudeau’s grand bargain together

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Justin Trudeau had two big political reasons to approve the Pacific NorthWest LNG project. The first is to show his Liberals can say yes to big resource projects. The second is that he needs provincial premiers, especially B.C.'s Christy Clark, if he's going to strike a bargain on climate change and an oil pipeline. Mr. Trudeau's big political promise on energy and the environment is that Canada can both get resources to market and tackle greenhouse-gas emissions. The flip side is that politically, he can't put together a national climate-change plan without an oil pipeline, or vice versa. That's his grand bargain.

But a lot of it depends on Ms. Clark's co-operation. Approving Pacific NorthWest is part of the bargain.

Ms. Clark won the 2013 provincial election by donning a hard hat and promising jobs, and she made the liquefied natural gas project her baby.

Mr. Trudeau needs Ms. Clark if he's going to seal a climate deal with premiers this fall. And he also needs her political co-operation if he's going to approve another pipeline, the twinning of the Kinder Morgan pipeline to carry Alberta oil to port in Burnaby, B.C. That's important, because unless an oil pipeline is on the way, Alberta Premier Rachel Notley's climate plans are going to face a political backlash. And if Alberta's climate plan falls apart, Mr. Trudeau's national effort is in jeopardy.

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All that made approving Pacific NorthWest a compelling political choice. But it didn't make it easy. This was the first big decision that really forced Mr. Trudeau and his Liberal government to alienate a group of supporters, one way or another. The $11.4-billion project promises jobs, but will emit the equivalent of 4.3 million tonnes of carbon dioxide. The green light will turn off some of the Liberals' green voters.

But the Liberals wanted an opportunity to say they will do what's best for the economy. They came to power promising to spark economic growth and Canada's economic performance remains lacklustre. Key players in Mr. Trudeau's team have been keen to send a signal that they're chasing investment and growth.

This project might never be built. Petronas, the Malaysian oil and gas company behind the plan to pipe natural gas from B.C's interior and liquefy it for shipment by tanker has yet to decide whether it will go ahead now that Asian gas prices are relatively low. But still, it was an opportunity for the Liberals to signal they can say yes.

But politically, Pacific NorthWest isn't the main event. The big question is whether the federal government will approve the Kinder Morgan oil pipeline this December. Approving Pacific NorthWest will make that easier.

Mr. Trudeau has essentially promised that he'll both approve an oil pipeline to carry Alberta bitumen to tidewater and forge a climate-change plan. But the promise of a pipeline is even more critical to a key climate-change ally, Ms. Notley.

Her plan to impose a carbon tax and curb emissions is a lynchpin to any national plan. But she has sold it as a way to ensure Alberta's resource sector gets the "social licence" to market oil – and without a pipeline, that argument will crumble. Jason Kenney, the former federal Conservative cabinet minister mounting a bid to lead a united conservative opposition in Alberta, is promising to scrap the carbon tax if he can win power.

So Mr. Trudeau needs an oil pipeline to keep his grand bargain together. He can approve the Energy East pipeline and gamble votes in Quebec, or approve Kinder Morgan and risk votes in British Columbia. But the regulatory review of Energy East could take two years. That would make it a hot potato in Quebec's 2018 provincial election, or the federal election in 2019, when Mr. Trudeau's Liberals will have 40 Quebec seats at stake.

If they choose Kinder Morgan's pipeline, the Liberals can hope the economic arguments will win them enough votes to mitigate the loss of green voters. But they would they need Ms. Clark's help.

Her government has sat on the fence on the Kinder Morgan pipeline, setting five conditions. Mr. Trudeau won't want to approve it without assurances that the B.C. Premier will agree her conditions have been satisfied. And that endorsement would probably have been harder to get without Pacific NorthWest.

Of course, Mr. Trudeau has till December to make the decision on Kinder Morgan. He'll struggle to get a climate deal with premiers in November. But he's already put one part of the bargain in place with Pacific NorthWest.