Ted Morton is an Executive Fellow at the School of Public Policy at the University of Calgary and a former Minister of Finance and Energy in the government of Alberta.
Prime Minister Justin Trudeau’s decision to buy out Kinder Morgan’s pipeline interest is best understood as making the best of a very bad situation, but a situation that he is responsible for creating.
Let’s be clear: a federally owned pipeline is hardly what anyone wanted. But it’s better than no pipeline at all. Almost all growth in global oil demand in the next 20 years – and its big: a 30 per cent increase – will be in Asia. New access to export markets other than the US. is critical if Canada is to stop selling our oil at huge discounts. It’s time to keep that money here – along with the private sector jobs and government revenues that it creates.
B.C. Premier John Horgan’s death-by-delay strategy was working against Kinder Morgan because for a private company, time is money – their money. But it won’t work against Ottawa. Ottawa has lots of time and lots of money – other people’s money. The Liberals’ hope is that the futility of further delaying tactics will be so obvious that the B.C. government will abandon their rope-a-dope strategy. Or if they don’t, one or two defections and/or several recall elections will force Mr. Horgan’s minority government into a non-confidence vote and a new election sooner rather than later.
But beyond that, there’s nothing positive about Tuesday’s announcement. It was an 11th hour government bailout of a privately funded pipeline project that had met all the requirements for approval. Will that inspire investor confidence going forward? Hardly.
How was the $4.5-billion purchase price arrived at? With Mr. Trudeau – or his emissary, the poor Finance Minister Bill Morneau – on his knees in Houston, begging. By April of this year, Kinder Morgan understood that Mr. Trudeau and Canada needed the Trans Mountain expansion much more than they did. The Prime Minister had single-handedly destroyed all of Canada’s other options to reach new export markets – first Northern Gateway, then Energy East. All that was left was Trans Mountain. Did Kinder Morgan price gouge on the purchase price? Of course. And why shouldn’t they, given what has happened – or rather, not happened – in the past year?
The point is that it should never have reached this stage. By January of last year, Kinder Morgan had met every requirement of both the federal National Energy Board (NEB) process and B.C.’s five conditions. So what’s been going on for the past 15 months? Some will point to the May, 2017, election of the NDP minority government in B.C. and their pledge to “use every tool in the toolbox” to block the Trans Mountain expansion.
Yes, the B.C. election was a proximate cause, but the deeper, formal cause has been Mr. Trudeau’s own public rhetoric on climate change. From Paris onward, he has aided and abetted the anti-pipeline movement by repeating the climate-change militants’ own dogmas, stigmatizing Canada’s oil and gas industry and undermining the reputation of the NEB. All of this has legitimated and emboldened the very groups that are now trying to block the Trans Mountain expansion.
Perhaps the one positive to come out of all of this is that we won’t have to listen to any more nonsense about social license. The proposition that imposing carbon taxes, closing down coal-fired electricity and subsidizing renewables would turn pipeline opponents into pipeline supporters has failed completely. Try to name one convert. Or listen to U.S. environmentalist Bill McKibben of 350.org or our own climate-change wizard, David Suzuki. Both are adamant that all oil sands oil must stay in the ground.
Mr. Trudeau has been speaking out of both sides of his mouth since he was elected, and now it has caught up with him. In Paris, he paraded as the Prince of Climate Change. When he was in Houston, he was a champion for export pipelines. He wanted it both ways, but now he can’t: He owns a pipeline and has promised to complete it.
To do this, he will have to go to battle with the very groups that supported him in the 2015 election – urban climate-change activists, Indigenous communities and maybe Quebec.
Meanwhile Mr. Trudeau’s new, erstwhile allies in this battle – Alberta, Saskatchewan, the energy sector and other business interests – did not support him in 2015 and, for the reasons discussed above, are no more likely to support him in 2019.
With the next election only 17 months away, the Liberals are in trouble and they know it. Justin Trudeau is the architect of his party’s demise. But the rest of us will have to pay for it.