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Alberta Premier Danielle Smith’s pipeline proposal has put Prime Minister Mark Carney in a tough spot. Carney has carefully played on both sides when it comes to potentially building new oil and gas pipelines in Canada. He has acknowledged the need to reduce dependency on the United States as an export market, yet he maintains a tanker ban on the West Coast. He passed the One Canadian Economy Act (Bill C-5), which was to fast-track infrastructure projects, but the first five projects announced do not include any pipelines.
Smith’s pipeline proposal may never lead to a new pipeline to the West Coast, but it will force Carney to take a solid stance on one side of the issue or another.
The Liberal government has claimed that no proponents have stepped forward to initiate the process of constructing a new pipeline. While this is true, private companies have made it clear that they would be eager to build new pipelines if the government would lift the regulations currently stifling them.
Enbridge is Canada’s largest transporter of oil products. Its CEO, Greg Ebel, pulled no punches in a speech to the Empire Club of Canada on Oct. 2 when he said, “The last 10 years have been a competitiveness disaster for Canada.” Ebel followed with a statement of optimism, though, saying: “But the next 10 can be a renaissance. If we choose to lead, this is our second chance. One doesn’t often get second chances.”
Companies will need more than words from politicians before they commit to building any new pipelines. They have been burned too many times. The application process for the Mackenzie Valley pipeline took decades, and the projected cost to construct it ballooned from $7.5 billion to more than $20 billion before proponents gave up on the project. TC Energy lost nearly a billion dollars preparing for the Energy East pipeline when new regulations killed the feasibility of the project. Kinder Morgan lost years and millions of dollars trying to expand the Trans Mountain pipeline before abandoning the project. Enbridge was out for $500 million when the Trudeau government imposed a tanker ban, which effectively killed the line.
Canada is a terrible jurisdiction within which to try and get a pipeline constructed.
Carney’s creation of the Major Projects Office was ostensibly to offer assurances to industry players that projects could be fast-tracked in the national interest. The office was symbolically placed in Calgary to indicate that oil and gas project submissions would be taken into serious consideration. The office location isn’t as important to energy companies as the legislation blocking pipelines is, however.
Premier Smith is now forcing the issue. While she isn’t proposing that Ottawa build a pipeline, as happened with the Trans Mountain expansion, she is having the Alberta government take the first steps in the regulatory process. With input from pipeline players like Enbridge, Alberta will be submitting a proposal to build a pipeline to the West Coast. Prime Minister Carney can no longer pretend there are no proponents.
While the route of the proposed pipeline hasn’t been laid out yet, B.C. Premier David Eby and some indigenous groups came out in immediate opposition to the plan. It’s clear they will oppose any pipeline, no matter where it may go or who is proposing it. There is nothing to negotiate. The authority of approval lands in Carney’s lap, and he must give either a thumbs-up or thumbs-down on this.
Canada is facing a record-breaking federal budget deficit and a stagnant economy. A new pipeline would spur economic growth both in its construction and with the expansion of oilfield production in anticipation of feeding the line. It would also ease unity tensions in Western Canada. Smith implied that approval of the line is a test of whether Canada works as a country. If the project is dismissed, the independence movement in Alberta will likely grow as citizens feel their primary industry is embargoed by a distant government.
Carney will face political consequences if he approves the pipeline, however. No federal government likes to go to battle with indigenous groups, and the left wing of the prime minister’s caucus is already uncomfortable with some of his pro-business stances. With a minority government, the Liberals must try to avoid large, divisive issues if they want to avoid losing a vote of confidence.
Indecision is no longer an option. Carney can’t afford to keep ragging the puck on the issue. Smith has made a masterful political play in forcing an issue that the government preferred to defer. The consequences of the tactic could be the confirmation that no new pipelines will be built in Canada, though. If it comes to that, we will hear more voices in the West asking what the point of the federation is, and federalists will be hard-pressed to answer the question.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
