Trans Mountain impasse has significant consequences for all of Canada
by Deborah Yedlin (feat. Dennis McConaghy)
April 12, 2018
The Trudeau government was concerned enough about Kinder Morgan’s announced suspension of all non-essential spending on its Trans Mountain pipeline expansion that it recalled cabinet for an emergency meeting Wednesday.
Too bad nothing concrete came from the gathering, other than more words about how the pipeline has been approved, is in the national interest and how Ottawa is reviewing options ranging from financial to regulatory.
It’s not enough.
As someone very wise at the communications agency Edelman recently said, “the lips and the legs have to move at the same time.”
So far, we’ve only seen the lips move.
The Liberal government could invoke its declaratory powers under Section 92 (10)(c) of the Constitution, allowing it to take over projects deemed to be in the public interest. In other words, eliminate the ability of a province to block a project from being built.
The Trans Mountain expansion — as the national railway did many years ago — would fall into the category of a project being in the national interest.
These days, however, there appears to be some reticence about the message that would be sent if the federal government exercised this option.
Ottawa could also withhold transfer payments to British Columbia in the same way it intends to do with provinces that do not move to institute a carbon tax. Saskatchewan has already been served notice on this one and B.C. could be next, but for different reasons.
B.C. Premier John Horgan is unlikely to be swayed over the next six weeks.
He has already spent some political capital by approving the Site C Hydro project and gave the green light to the development of liquefied natural gas projects. To approve a third project would cost him even more.
A majority NDP government in B.C. might produce a different conversation.
But it isn’t. So other steps need to be taken.
The notion of buying the pipeline, as suggested by Premier Rachel Notley, is not realistic.
What does make sense is to agree to invest in the project in an amount that would provide the funding to move things ahead in the short term, give the government an equity stake and allow for the courts to render decisions.
In addition, it would keep Kinder Morgan in the game, with the Alberta government sharing the risk alongside the private sector.
However, Ottawa needs to be part of this, too. If it can muster loans to Bombardier, it should be prepared to do something similar with respect to Trans Mountain.
If the government truly believes Trans Mountain is in the national interest and will be built it needs to put its money where its mouth is.
There would no doubt be some outcry about governments helping out private sector companies, and from the United States no less. Yet there is precedent for such a decision.
When Atlantic Richfield said it would sell its 30 per cent interest in Syncrude back in 1973, a last-minute agreement was struck, with the federal government, Alberta and Ontario taking up that stake.
It saved Syncrude — in which Imperial Oil was one of the founding partners — and no one would argue with that decision today.
But to make this really work today, First Nations should join the federal and Alberta governments in taking a stake in the project.
Late last year, the Mikisew Cree and Fort McKay First Nations signed a $503-million agreement to buy a 49 per cent interest in a Suncor oil storage facility.
The Northeastern Alberta Aboriginal Business Association has 130 members and Trans Mountain has the support of 30 First Nations in B.C. The association’s members have seen the slowdown in oilsands activity as capital spending continues to decline to half of the $34 billion spent in 2014.
They know the successful building of a pipeline would renew both confidence and investment in the region — and support their businesses.
Moreover, to have the Alberta and federal governments partner with First Nations to support a project that’s clearly in the national interest would advance the reconciliation agenda.
Who doesn’t want that?
Meanwhile, three words describe the sentiment in Alberta today: rage, frustration and abandonment.
Rage against the B.C. government. Frustration over the federal government’s lack of action. Abandonment by corporate Canada.
Scotiabank chief executive Brian Porter used the platform of his company’s annual meeting this week — as he did three years ago in stating energy infrastructure projects should be a national priority — to warn of the economic impacts if the project doesn’t proceed.
But where are the other voices in corporate Canada outside Alberta? Where is Bay Street, which has long benefited from a strong energy sector?
There is no revenue coming from oilpatch financings, much less mergers and acquisitions and it’s pretty easy to figure out why: the lack of certainty regarding infrastructure development.
Where is Quebec — whose Caisse de depot et placement du Quebec is the largest shareholder of Kinder Morgan Canada?
“This one really matters,” said Dennis McConaghy, a retired energy executive and author of Dysfunction: Canada After Keystone XL.
McConaghy isn’t being hyperbolic.
If Kinder Morgan packs up its tent and leaves, the investment chill that will descend on this country will take a very long time — and a lot of work — to overcome.
The Trans Mountain expansion project — like Northern Gateway and Energy East before it — is more important to Canada than it is to the company’s bottom line.
What’s happening with Trans Mountain is similar to the sequence of events that led TransCanada to walk away from Energy East. It started with suspending work on the project and ended with Energy East joining Mackenzie Valley and Northern Gateway on the list of abandoned nation-building projects.
Governments, First Nations and corporate Canada need to ensure a fourth name isn’t added.