Ontario needs to take a more aggressive stand on new oil pipeline proposals to ensure the province’s interests are being addressed, says a former deputy minister.
In a paper to be released Monday, Matthew Mendelsohn – who served as deputy minister of intergovernmental affairs under former premier Dalton McGuinty – said Ontario is seeing its efforts to reduce greenhouse gas emissions swamped by the booming oil sands while getting little benefit from the economic growth.
“So long as the federal government – and the government of Alberta – support a climate change policy that asks Ontarians – and other Canadians – to carry the largest burden and pay the biggest financial cost for reducing emissions, there are good reasons for Ontario to oppose pipeline development that will only exacerbate climate change,” said the paper co-authored by Mr. Mendelsohn and Richard Carlson, of the University of Toronto’s Mowat Centre for Policy Innovation.
Calgary-based companies are proceeding with two pipelines projects that would transport western crude through Ontario to markets in Quebec, New Brunswick and foreign countries. Premier Kathleen Wynne has been generally supportive of the projects, though Energy Minister Bob Chiarelli has said the province will want to ensure they provide some benefit for Ontarians.
In an interview, Mr. Mendelsohn said the provincial government should not leave the reviews to the federal National Energy Board but should establish its own process to ensure Ontario’s interests are protected.
“So far, little attention has been paid to what new oil pipeline development might mean for Ontario,” he said.
One area of concern is climate policy.
Ontario is in the final stages of phasing out coal-fired electricity and has provided generous subsidies for renewable power in order to reduce greenhouse gas emissions from the power sector, a policy that has come at some cost to the province’s citizens. As a result of that policy and the province’s long-term loss of manufacturing capacity, emissions are forecast to decline by some 30-million tonnes between 2005 and 2020.
However, Alberta’s emissions are expected to grow by some 65-million tonnes over that 15-year period, fuelled mainly by the growth in oil-sands production. Ottawa and Alberta have been negotiating over long-delayed emissions regulations for the oil industry, but the two governments appear unlikely to impose anything that would require significant, industry-wide reductions.
The federal government recently released a report that suggests Canada is not on track to meet Ottawa’s commitment to reduce carbon emissions by 17 per cent from 2005 levels by 2020. As a result, the federal government may look to other sector - including manufacturers - to carry more of the burden of emission reductions, Mr. Mendelsohn said.
The former provincial official acknowledged that the growing resources production benefits the national economy, including higher federal tax revenues. But he said 94 per cent of the economic benefits from oil sands growth remains in Alberta, even as other regions deal with issues like higher GHG emissions, pipeline risks and a stronger Canadian dollar fuelled by rising crude exports.
At the same time, Ontario consumers could end up paying a higher energy costs if TransCanada Corp.’s proceeds with its Energy east pipeline, which would transform portions of its mainline natural gas line to carry crude from western Canada to refineries and export terminals in Quebec and New Brunswick.
TransCanada says it will ensure natural gas customers receive service if its $13-billion Energy east project goes ahead, but only if they are willing to pay significantly higher tolls.
“It’s likely that Ontario consumers will be asked to pay higher energy costs in order to facilitate new oil pipelines,” Mr. Mendelsohn said. “To us, that makes no sense.”