Desjardins has announced the temporary suspension of lending for pipeline projects, including Kinder Morgan's Trans Mountain pipeline.

If the decision becomes permanent, Desjardins might not fund other Canadian pipeline projects such as Enbridge's Line 3 and TransCanada's Keystone XL and Energy East.

Michal Moore, senior research fellow with the University of Calgary's School of Public Policy, spoke with the Calgary Eyeopener on Monday about what the decision announced last week means for the future of the pipeline project.

Q: Why might Desjardins consider not lending money to Kinder Morgan for a project like the Trans Mountain pipeline?

A: This bank represents a number of different credit unions from across the country and as a consequence they tend to be very, very conservative in their outlook on things that they fund and the investments that they make.

So I would say they are looking at the risk that they imagine might be coming up in terms of having the project going through successfully over time and also the risk of trying to curb projects that have potentially negative environmental consequences such as the oil moving through the pipeline as opposed to the pipeline itself.

Q: Is this a victory for Aboriginal and environmental groups opposed to the pipeline?

A: It certainly seems to be a victory in the short term, that they are making their point, that they can have an influence on financial institutions and that by using the finance sector they can influence public policy.

As to whether or not it's having a positive impact in the long term, which is economic health and the vitality of the energy industry … remains to be seen.

Q: If Desjardins pulls funding does it have a real effect on the project?

A: Well not really. A company as big as Kinder Morgan, they've got a lot of other sources of finances they can turn to. And frankly, even if a number of banks … were to pull the funding or say that they were having difficulty going ahead with commitments that they've made, means they will turn to other sources of finance and the rates will go up.

So there's going to be money to lend for even very risky projects, and this one is probably not risky at the outset for what they plan to do. But at the end of the day, the banks in the wide world will come up with the funding, but at a higher risk premium.

Q: But if more major banks pull out, does it affect the viability of pipeline projects?

A: It probably does. And it says that the projects that will ultimately be successful are those that really pose the least risk to the environment, which is a good thing. 

And the ones that are likely to secure a higher market position or safer market position over time, which ultimately is probably a good thing as well.