Trans Mountain and the slow western break from Confederation
We've got Conservatives advocating an NDP plan to invest taxpayer cash in oil and gas
Dear God, it's come to this.
We've got Conservatives advocating an NDP plan to invest taxpayer cash in oil and gas.
The last decade of pipeline politics has culminated in a set of conditions so bizarre that there now seems to be no option other than threatening to nationalize the Trans Mountain pipeline. Yes, nationalizing a goddamn pipeline.
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Kinder Morgan says it's going to suspend all non-essential expenditures for Trans Mountain — and suggests the whole project could be mothballed by May 31 — if some significant progress isn't made on the political side. Alberta Premier Rachel Notley is suggesting Alberta could invest in the line to ensure it goes forward. United Conservative Party leader Jason Kenney backs the moves, and adds he wants to see Ottawa pitch in as well.
And so, we are now offering to pay a multibillion-dollar company to "bear with us" while we get our self-made political quagmire sorted out.
To be frank, I'm not even sure there's a better option at this point.
There's no real debate that the federal government maintains the jurisdiction over the Trans Mountain project. It approved the twinning of the line in 2016.
But B.C. NDP leader John Horgan has responded with announcements intended to stall the increased flow of bitumen to the coast. This tactic almost certainly has no legal merit, but may yet prove effective at introducing enough vagueness and uncertainty that Kinder Morgan will simply have to give up.
Indeed, that's what seems to be happening. It's hard to blame Kinder Morgan — although we can certainly note their political savvy. By making the threat, the company is forcing the federal government's hand.
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However, at a certain point, political uncertainty simply adds too much "unquantifiable risk," (as the company put it), to what would otherwise be a simple math equation. How many more years of deliberation were its shareholders willing to tolerate? The answer, apparently: not one more.
Given how much political capital has already been spent on on this line, Trans Mountain's potential scuttling can't be allowed to stand.
The failure of this particular project risks all kinds of unintended consequences for Alberta, and the country as a whole.
Billions in royalties
Firstly, Alberta would lose billions in royalties, but that's the least of its problems.
Trans Mountain's failure would be the clearest demonstration yet that Notley's ambitious greenhouse gas reduction policies have categorically failed to build the necessary "social licence" for the province to continue to mine and ship its primary export. She will not be able to allow this failure to pass unchallenged.
Notley would have to hold true to her promise to cancel plans to increase carbon pricing — which risks undermining Canada's carbon emissions targets. She would also be within her rights to rescind Alberta's hard emissions cap on oil sands development. She does not want to do this. This is a government that prided itself on taking a leadership role on climate change in this country. But Notley's also depending on that increase in carbon taxes to fix Alberta's budget.
For industry, the failure of Trans Mountain would be a clear indication that Canada is the equivalent of a prevaricating, Third World nation. One where approvals on major projects are subject not to objective standards or a fair, technocratic, examination of their merits — but rather by public whim and political fancy.
This risks creating a culture of institutionalized kickbacks and corruption — similar to how business is done in much of the developing world, where getting projects built is often more a matter of appeasing the right people, than serving the public good.
For the federal government, failure of the Trans Mountain pipeline would demonstrate its fundamental impotency. A province need not demonstrate jurisdictional authority at all. Opponents to federally approved projects need only be patient.
But all this, is no longer about a pipeline.
Every political actor has put too much of their own credibility on the line to allow Kinder Morgan to back out. Backing the pipeline with public funds is the least ideal option. But, because credibility is on the line, it's the only one left on the table.
Spending (even losing) a few billion to buy an equity stake to prevent these outcomes is a reasonable price for Alberta. It would give the project time to weather court rulings and other manufactured delays. (Let the protesters set up tents at a reasonable distance from dangerous construction, if they please. It's a free country.)
Setting B.C. against Alberta
In the midst of this escalating fight, let's also note the way Trans Mountain has set B.C. against Alberta while, hope against hope, the federal government mediates the dispute. What happens when the federal government reveals itself to be the null power?
If B.C. and Alberta are left to sort out their own trade disputes absent federal oversight, it's too easy to start wondering what the ultimate value of Confederation is, exactly.
Imagine, for a moment, that B.C. and Alberta didn't see themselves as two distinct people at odds, as they do under the current system — but rather one small nation, where the risks and rewards of resource royalties are shared. Would a pipeline be an easier sell, then?
Back in 2012 during the controversy over the now defunct Northern Gateway line, then Liberal B.C. Premier Christy Clark set out five conditions for her province's support of heavy oil pipelines within its borders. Among them was, "a fair share of the fiscal and economic benefits."
Critics like myself pointed out that this demand was flatly unconstitutional — royalties belong to the province in which the resource originates. B.C. had no leverage with which to rescind its approval of pipelines at all. Of course, that's only if we're talking about the Canadian constitution.
It's hard not to look at that list of demands now and wonder whether or not it was the first step in some kind of slow western break from Confederation. One that would fulfil a century-old ambition to tie the West's economy a little more closely to the U.S. and Asia — and a little less with Ontario and Quebec.
Today, these two provinces might be enemies over a pipeline. But if this issue isn't resolved, might it be too far a stretch to imagine a time in which they are allies bound by a shared belief in the uselessness of the federal government?
What if, for example, B.C. and Alberta mediated this pipeline dispute through the New West Partnership Trade Agreement's dispute resolution process? A successful outcome here would sure raise questions about whether the western provinces had the civic infrastructure to hum along without the need for Ottawa to play big brother.
That said, Clark's five conditions set the board for Horgan's current intransigence. Such plays are not always so easy to track or control. The Trans Mountain pipeline may prove to be the Bad Bishop in a much broader game.
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More from the series:
ANALYSIS | Jobs and wages: The winners and losers through 2 Alberta recessions
Q&A | 'Investors wondering who's actually in charge': Rachel Notley on Alberta-B.C. pipeline battle
OPINION | The NDP and a possible path to a second victory