Economic Impacts of Energy East on Ontario “Likely Inflated,” Report Says

The economic benefits for Ontario of TransCanada’s proposed Energy East pipeline are “likely inflated” according to a study commissioned by the province’s energy regulator.

“The economic impact of the project in Ontario should not be treated as a significant factor when considering the merits of Energy East,” the study states.

The authors of the study, the Mowat Centre, a public policy think tank at the University of Toronto, found the modeling system TransCanada used to predict the economic benefits of the project assumes past and present economic conditions will remain unchanged for the entire operational life of the Energy East project and inflates the project’s indirect benefits on Ontario’s economy.

“Due to the uncertainty around many broader policy questions that will materially impact the economics of the project, any estimates of possible economic impacts in Ontario should be treated with a high degree of caution,” the study concludes.

Carbon pricing in Canada or a decrease in the global demand for oil were not assessed by TransCanada when looking into the economic impacts of the 1.1 million barrels-a-day oil pipeline from Alberta to New Brunswick.

Direct jobs creation in the construction of the pipeline is marginal according to the study. In northern and eastern Ontario, where Energy East will operate, the construction phase of the project will only account for 0.7 – 1 per cent of the workforce. Most of Ontario’s section of Energy East exists already as a natural gas pipeline that will be converted to oil.

Operating the pipeline in Ontario will create two hundred annual direct jobs but it is unclear how many of these jobs will be assumed by workers already employed by TransCanada in operating the to-be-converted natural gas pipeline.

The Mowat Centre estimates municipalities along Energy East’s proposed route will see a small bump in property tax revenue, ranging between a 1% – 3.7 per cent increase, because of the pipeline project.

Differing Reports on Carbon Emissions from Pipeline

The Mowat Centre’s study was released today by the Ontario Energy Board – the provincial energy regulator – along with three other studies covering the pipeline’s safety, impacts on the natural environment and climate change. The Board’s investigation is part of a public forum on Energy East the Ontario government initiated in November of 2013.

On climate change, the study completed by Navius Research Inc. acknowledges the overall greenhouse gases emissions (GHG) in Canada will increase if Energy East is approved, but it states “the impact is likely to be relatively modest.”

“The increase in Canadian GHG emissions from “well-to-tank” [operations of Energy East] are mostly offset by a decline in the rest of the world,” the report concludes.

Comparison between Navius (see OILTRANS) and Pembina findings on Energy East GHG emissions

Navius Research estimates Energy East will produce in Canada an extra 1 to 10.2 megatonnes of carbon in extracting the bitumen from the western Canadian oilsands (also called tar sands) and refining it in New Brunswick and Quebec. These findings are in direct contradiction with a report by the Pembina Institute, which projects in extraction alone Energy East will create thirty to thirty-two megatonnes of carbon, the equivalent GHG production of all Ontario’s now closed coal-plants.

Image Credit: TransCanada, Government of Canada, Ontario Energy Board