Fraser Forum

Morneau’s rhetoric on pipelines doesn’t match government’s record

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In a recent CTV interview, Finance Minister Bill Morneau rightly acknowledged the significant challenges facing the energy industry in Alberta and Saskatchewan. “We need to think about the long-term,” he said, “that’s why we’ve looked at getting access to international markets through pipelines.” While building new pipelines is what’s needed to harness the potential of the country’s energy sector, it’s hard to believe Minister Morneau’s statement, given the Trudeau government’s recent policy actions.

Consider the government’s pipeline decisions to date.

Earlier this year, it bought the Trans Mountain pipeline and expansion project in a last ditch effort to save it. The government’s announcement to buy the project was made after the $7.4billion Kinder Morgan project was previously approved by the federal government, after a five-year approval process that included environmental assessments and Indigenous consultations.

However, despite following the legal and regulatory process to acquire approvals, the project was essentially blocked by the British Columbia government and several court challenges. The Trudeau government repeatedly promised the project would be built, yet failed to take concrete and timely action while sending mixed signals regarding its support.

And this was not the first time the actions (or inaction) of the Trudeau government impeded pipeline projects in Canada.

For example, the government cancelled the previously approved $7.9 billion Northern Gateway pipeline in 2016—a project expected to expand market access off the west coast and ultimately allow oil producers to “capture stronger prices available in global markets.” The government’s cancellation of Northern Gateway contradicts the finance minister’s concern over market access. The federal government also imposed new regulatory hurdles on TransCanada’s proposed Energy East project, which included consideration of downstream emissions that were never part of prior assessments. Consequently, TransCanada deemed the pipeline uneconomical and scuttled the project.

As previously stated, Canada’s lack of adequate export pipeline capacity and restricted market access remains an ongoing concern. The elevated price differential is costing the energy industry and the economy more broadly billions of dollars annually.

While the energy sector is suffering from the staggering price differential, there are likely to be more obstacles ahead if Bill C-69, which is currently under Senate review, becomes law.  Earlier this year, the federal government proposed the bill, which would overhaul the entire assessment process of major energy projects including pipelines by replacing the National Energy Board (NEB) with a new energy regulator and establishing an Impact Assessment Agency for new projects with additional review requirements.

Specifically, the bill includes a large number of new and highly-subjective criteria including the “social impact” of energy investment and its “gender implications.” Despite good intentions to streamline the regulatory process, the bill will only make the system more subjective, complex and uncertain.

In response, Hal Kvisle, former CEO of TransCanada Corp., called the bill a “devastating piece of legislation” adding that he doesn’t “think any competent pipeline company would submit an application if Bill C-69 comes into force.”

In short, the federal government has repeatedly expressed support for building pipelines and expanding market access for Western Canada’s landlocked energy sector. However, the government’s policy actions have resulted in cancelled projects and increased regulatory uncertainty. As a result, the Minister Morneau and his government’s commitment to the long-term future of Canada’s energy industry remains questionable.

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