Trudeau shouldn’t dither on pipeline plans

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Hopefully, Prime Minister Justin Trudeau has taken a moment to thank U.S. President Barack Obama for the thoughtful housewarming gift – his rejection of the Keystone XL pipeline.

Yes, it was an affront to Canada's oil patch. But the President's move gives Mr. Trudeau's fledgling government the ideal setting to craft a sorely needed new policy for energy exports without the tiresome debate over the project and its divisiveness between the two countries.

TransCanada Corp. may be able to rekindle Keystone XL, through the possibility of a Republican presidential victory in 2016, given the GOP's support for it, or a faint-hope challenge under the North American free-trade agreement.

But Canada should move on.

Frankly, anyone who did not see the kibosh coming down the pipe was not paying attention. Mr. Obama warned more than two years ago that he would judge TransCanada's contentious proposal on the oil sands' climate-change impact. The former Conservative government responded by not imposing new carbon-reduction rules on the industry.

Regardless of supporters' arguments that Canada's contribution to global emissions is small and that oil sands are about as carbon-intensive as California's heavy oil, the Alberta brand became just too risky for an aging U.S. administration looking to burnish its green cred as a major international climate-change summit approached.

With all that done, it is Mr. Trudeau's turn to act on pipelines. Unlike his U.S. counterpart, he should not take seven years to do it.

As Canadians have learned, nothing is more counterproductive than endless argument over pipelines. The energy sector decries its inability to attract capital and invest, which kills jobs. Oil takes to the rails, which is a riskier way to move it. The country gets more polarized with scant environmental gain to show for it. It becomes regulation by delay.

First, the government should be quick and clear about its intentions for the Northern Gateway pipeline, Enbridge Inc.'s plan to move bitumen to the Pacific Coast from Alberta. The project won its National Energy Board approval in 2013, albeit with 209 conditions that Enbridge has been working through, one by one.

The company's biggest hurdle with Northern Gateway has been opposition among First Nations along the pipeline route and B.C. coast – recall it had conscripted Jim Prentice to try to reach a breakthrough for the project with aboriginal leaders before leaving for his brief tenure as Alberta premier.

Now, the Trudeau government looks intent on rendering Enbridge's efforts moot by banning oil tanker traffic on the northern B.C. coast. It looks like a back-door way of killing the project. Is it? And what are the legal ramifications?

Whatever moves the Liberals make on Northern Gateway, they should make them without dithering and deal with the fallout fairly. Then, start the process of merging energy export and environmental policy, as per their campaign platform, so developers of future projects know the rules and are not left in limbo with investments and unfulfillable contracts to move oil and gas.

After all, Mr. Trudeau has expressed the importance of trade to the Canadian economy, including energy trade.

This week, Lorraine Mitchelmore, the outgoing head of Canadian operations for Royal Dutch Shell, told The Globe and Mail pretty much the same after her company put the brakes on an oil sands project, at a cost of $2-billion (U.S.), partly over fear it would not be able to export the eventual production.

Presumably, an updated NEB process that takes into account the impact on climate change will affect the remaining projects that are still to be vetted, Kinder Morgan's Trans Mountain Expansion through B.C. and TransCanada's Energy East proposal to move crude to the Atlantic Coast.

Kinder Morgan is now facing questions about whether it will have to start from square one again on its already delayed regulatory process.

The collapse in oil prices has forced energy companies to slam the brakes on a lot of development spending, which means the urgency of adding massive new export capacity quickly has eased. That gives the government some time to put in place a sensible new system, but not forever.

Think of the Keystone XL rejection as the starting point.