In April and May alone, Lone Pine Resources Inc. — the oil and gas company that’s currently suing the government of Canada for $118.9 million in alleged damages — lobbied 11 MPs, a policy advisor for the Prime Minister’s Office and the chief of staff for Natural Resources Canada.

The sole subject matter listed for the lobbying efforts was: “Claim against the Government of Canada under the North American Free Trade Agreement (NAFTA) by Lone Pine Resources Inc.”

The company is actively claiming damages for Quebec's 2011 decision to revoke oil and gas exploration licenses located beneath the St. Lawrence River that were granted to its subsidiary, Lone Pine Resources Canada Ltd., via a “farmout agreement” with Junex Inc. The $118.9 figure represents Lone Pine’s estimated sunk costs and lost future profits.

Actual case proceedings haven’t started yet: the last publically available document — a 251 page rebuttal by the Canadian government written entirely in French — is from July 2015.

These recent meetings could mean the company — which Sujata Dey, trade campaigner with the Council of Canadians, dubs “a Canadian company suing Canada through their U.S. tax haven and subsidiary” — is attempting to seek an out-of-court settlement with the government, an option that would allow Lone Pine to avoid mounting legal fees and the unpredictable nature of investment tribunals.

Investor-State Dispute Settlements Can Result In Large Payout, Rollback In Policies

Ben Beachy, senior policy advisor in the U.S. Sierra Club’s Responsible Trade Program, notes some settlements such as the Ethyl Corporation’s successful suit against Canada in the late ‘90s have resulted in weakened policy.

Even if that doesn’t occur, he says such investor-state dispute settlement procedures can create a “chilling effect” on governments: with the looming threat of lawsuits from foreign companies, officials are less likely to implement strong environmental protections.

Beachy said the threat of legal action is concrete: “It clearly is a consideration on the mind of policymakers: ‘Am I going to get sued in front of not a domestic court but three private lawyers whose rulings are unpredictable for millions or billions of dollars?’”

Lone Pine Suing Canada Over Quebec's Fracking Ban, Aggressively Lobbying in Ottawa https://t.co/YlkUqSMPTD @ccpa #NAFTA #cdnpoli

— DeSmog Canada (@DeSmogCanada) May 25, 2016

Canada Argues Claims By Lone Pine Are ‘Highly Exaggerated’

Lone Pine Resources is suing the government via the infamous Chapter 11 of NAFTA for what it describes as the “arbitrary, capricious, and illegal revocation” to frack under the St. Lawrence River “without due process, without compensation, and with no cognizable public purpose.”

The government of Canada has contended: “The measure was enacted by a fundamental democratic institution of Quebec and was preceded by numerous studies that establish that the Act seeks to achieve an important public policy objective, namely, the protection of the St. Lawrence River” and that “the damages claimed by the claimant are highly exaggerated.”

Investment Tribunals Lack Safeguards and Equal Standing, Says Investment Law Expert

Gus Van Harten, associate professor at York University’s Osgoode Hall Law School and expert in international investment law and arbitration, emphasizes that investor-state dispute settlement procedures don’t constitute an actual judicial process, lacking the usual safeguards of independence that judges have in domestic and international courts, or the ensuring of standing for all affected parties.

“It’s obvious that there are some foreign investors — not a lot — that benefit from it,” he says. “What’s usually claimed is ‘we’ll get more foreign investment and that will help the economy’ but there’s a real lack of evidence on that point.”

Over 70 Per Cent of NAFTA Claims In Past Decade Have Targeted Canada

Canada is the most sued country in the “developed” world.

A report published by the Canadian Centre for Policy Alternatives in January 2015 noted that via NAFTA, the government has been sued 35 times since 1994, losing seven cases and paying out over $170 million in damages.

Over 70 per cent of NAFTA claims since 2005 have involved Canada. Two-thirds of the total suits have been related to environmental or resource management policy.

Over 70% of #NAFTA Claims In Past Decade Have Targeted Canada https://t.co/YlkUqSMPTD @TheEnergyMix #oilandgas #fracking #cdnpoli

— DeSmog Canada (@DeSmogCanada) May 25, 2016

Nine foreign investors are currently suing Canada via NAFTA.

Beachy — who wrote and researched the Sierra Club’s recent report “Climate Roadblocks: Looming Trade Deals Threaten Efforts to Keep Fossil Fuels in the Ground” — notes that 2015 featured the largest number of investor-state dispute settlement cases launched globally, double the number from just five years before.

In 2014, half of new cases globally were challenging policies related to oil and gas extraction, mining or power generation.

Investor Suits May Increase In Number With Implementation of New Trade Deals

Beachy describes the Lone Pine case as being similar in significance to TransCanada’s $15-billion suit against the United States for blocking its proposed Keystone XL pipeline as both “serve as a wake-up call that deals like the Trans-Pacific Partnership would undermine our efforts to keep fossil fuels in the ground.”

Dey notes the ratification and implementation of the Trans-Pacific Partnership would add nine countries to the list in which companies could incorporate or set up legal vehicles in and sue Canada via investor protection clauses.

Beachy adds there are investors currently fracking in a dozen states that would gain new rights to sue the United States via proposed trade deals like the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership.

“This one is clearly not hypothetical because of Lone Pine,” Beachy says. “We are anxiously looking at the Lone Pine case given that more and more states in the United States are trying to do what Quebec and New York have already done to protect their citizens from the dangers of fracking.

“It’s a really ironic time to be handing more power to fossil fuel companies, just after the world committed to curb greenhouse gas emissions and transition to green energy in Paris,” he says.

Lone Pine Filed Notice of Arbitration Three Weeks Before Announcing Its Restructuring

Lone Pine Resources has had a rough few years. In December 2012, Moody’s Investors Service downgraded Lone Pine’s “corporate family rating” to Caa1 due to “strained liquidity and sharply declining production and reserves.”

Two-and-a-half months later, the company fired its CEO and CFO.

By January 2014, it completed financial restructuring and emerged from creditor protection, a process started in September 2013 (less than three weeks after it filed its notice of arbitration to the government).

In the process, it cut long-term debt obligations by over four times and rescinded its position as a publically traded company in Canada and the United States. As a result, it’s impossible to tell what Lone Pine’s net earnings are looking like these days and the potential significance of a $118.9 million settlement for the company.

Regardless of the outcome, Dey contends it’s a deeply troublesome example of what’s wrong with investor-state dispute settlement: “This is completely undemocratic,” she says. “It takes power from elected people and puts them into a supranational system that gives rights to corporations. It has nothing to do with democracy.”

“This is a corporate rights system that is even higher in position that our own democratically elected governments.”

Image: Mysterious foamy water collected after heavy rainfall near a fracking site. Joshua B. Pribanic/Public Herald.

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A broad coalition of organizations from across Canada wants Prime Minister Justin Trudeau to halt construction of the Site C dam by refusing to issue federal permits needed for construction of the $9-billion project that will flood 23,000 hectares of land along 107-kilometres of the Peace River Valley.   A letter to Trudeau, signed by 25 organizations ranging from Amnesty International and the Council of Canadians to the Canadian Parks and Wilderness Society and the David Suzuki Foundation, asks that the new Liberal government live up to its promises of a new relationship with First Nations.   “Our organizations are profoundly concerned that construction of the Site C dam is being pushed ahead despite the conclusion of a joint federal-provincial environmental assessment that it would severely and permanently undermine indigenous peoples’ use of the land; harm rare plants and other biodiversity; make fishing unsafe for at least a generation and submerge burial grounds and other crucial cultural and historical sites,” an open letter released by the coalition says.   The letter urges Trudeau to rescind all permits and to re-examine the previous government’s approval of the dam, which was given despite Treaty 8 claims that it violated treaty rights.   “The people of Treaty 8 have said no to Site C. Any government that is truly committed to reconciliation with indigenous peoples, to respecting human rights and to promoting truly clean energy must listen,” the letter says.

The provincial government is largely responsible for Site C permits, but the federal government must issue permits in areas of federal jurisdiction such as fisheries, transport and wildlife. 

BC Hydro did not respond to questions about outstanding permits in time for publication.   During recent climate change negotiations in Paris, most Canadians were delighted that Trudeau linked climate change with human rights, Joe Foy, from the Wilderness Committee, said.   “The Peace River is where the rubber meets the road. This is clearly against what this government and this country stands for,” Foy said.   “The federal government needs to go on record now that, at every step of the way, they will resist this.”   Candace Batycki, spokesperson for the Yellowstone to Yukon Conservation Initiative, one of the organizations that signed the letter, said Site C is not just another resource development project.   “The Site C dam is one of the largest resource development projects underway in Canada and its impact on the environment and local First Nations will be severe,” she said.   First Nations from the Peace River area have already asked the federal government to step into the controversy and AFN National Chief Perry Bellegarde is among those who have called for a second look at the project.   Chief Roland Willson of West Moberly First Nations said there has not yet been an opportunity to meet with members of the Trudeau cabinet, but letters have gone to all ministers.   “I have to believe in my heart they are seriously considering it. They have to understand the process was severely flawed,” he said.   “They can’t talk about a new enhanced relationship and start stabbing their fingers in our eyes…There’s no doubt it’s an infringement of treaty rights,” he said.   Trudeau should understand that there are ways to produce the power, such as run-of-river hydro projects, that do not destroy the valley, Willson said.   So far, an old-growth forest has been destroyed and there are minor earthworks, “but there is nothing irreversible,” he said.   Site C still faces three legal challenges and BC Hydro has applied for an injunction against First Nations members camping at historic Rocky Mountain Fort.   BC Hydro claims the protesters have been preventing contractors from completing their work on the south bank of the Peace River since January 4 and the petition will be heard in B.C. Supreme Court in Vancouver on February 22.   “We will still be at the camp, whatever courses are followed. This is Treaty 8 territory,” said Helen Knott of Prophet River First Nation, who is among the Treaty 8 Stewards of the Land women who have been taking shifts camping at the fort.   The group has asked Trudeau and Premier Christy Clark to suspend all approvals for logging, road building and land clearing in the Peace River Valley until all the court cases have been heard, there has been a federal review of the infringement of treaty rights and an independent review of the project by the B.C. Utilities Commission.   Knott said she is willing to be arrested, but hopes it will not be necessary as she is heading to Toronto and Ottawa next week to meet with federal government representatives.   No meetings have yet been organized, she said.   “But we want to make every effort to do this the right way. I do have some sort of hope that something magical will happen,” she said.

You can click here to read more about Prime Minister Justin Trudeau and climate change.

Image: Sign on the banks of the Peace River via the ECOReport.

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Natural Resources Minister Jim Carr has reiterated the federal government’s pledge to overhaul the National Energy Board in order to restore public confidence in Canada’s pipeline review process. But the promised legislative changes will not come quickly.

"You don't rush your way into decisions that affect not only today, but generationally in Canada in the new world of sustainably moving resources to market," Carr said Monday while attending the federal cabinet’s retreat in New Brunswick.

Over the last month, the Union of B.C. Indian Chiefs and Burnaby Mayor Derek Corrigan requested Carr and Prime Minister Justin Trudeau suspend the review of Kinder Morgan’s Trans Mountain pipeline to avoid a decision being pushed through a process they claim is “deeply flawed.” Trans Mountain’s final hearings began as scheduled on January 19 in Burnaby, British Columbia.

"The minister is correct, we shouldn’t rush the creation of a new process,” Andrea Harden-Donahue, energy and climate justice campaigner with the Council of Canadians, said. “But continuing with the flawed Kinder Morgan and Energy East reviews is entirely inconsistent with Liberal promises. How can a 'transition strategy' rectify the failings around public participation and Indigenous consultation for these projects. I don't see how this can happen."

“We are not saying pipeline companies have to go back to square one,” Harden-Donahue told DeSmog Canada. “All evidence submitted goes on hold and this can be supplemented with additional evidence after the changes are made.”

Trudeau’s government has been clear on several occasions pipeline projects currently under National Energy Board review will not be forced to go back to “square one,” that is, begin their application process completely from scratch.

The legislative changes during the Harper government’s 2012 omnibus bill frenzy severely weakened key pieces of environmental protection legislative like the Navigable Waters Protection Act and the Species At Risk Act. The National Energy Board Act and the Canadian Environmental Assessment Act were also altered to ensure proposed pipelines made it through the regulatory process within 15-months, no matter how complex those projects may be.

“Some pipeline reviews may fall into that time limit. On the other hand, large projects with clear risks like Energy East or Kinder Morgan may not and this is problematic,” Harden-Donahue told DeSmog Canada.

There is little doubt the massive surge of public participation in the Northern Gateway pipeline hearings in B.C. served as the impetus for the Harper government to slap time limits on project reviews. With the exception of the Mackenzie Gas Project, the Board took less than 15 months to make its decisions on project applications between 2004 and 2012.

The controversial Northern Gateway proposal to pipe oilsands (also called tar sands) bitumen to B.C.’s northern coast drew records numbers of public participants for regulatory hearings and took four years to complete. The Board approved the project, albeit with over 200 conditions, in 2014.

By allowing pipeline reviews to proceed under the previous federal government’s rules, the Liberal government may be condemning projects to go back to ‘square one’ regardless. First Nations, and environmental organizations over the last four years have not been hesitant to take pipeline reviews to court over violations of ‘aboriginal’ rights or the freedom of expression.

In some cases, pipeline opponents are winning these legal battles, particularly those launched by First Nations.

Last week, the B.C. Supreme Court ruled in favour of coastal First Nations who argued in their case against Northern Gateway that the B.C. government fail to consult them about the pipeline proposal. The provincial government is now required to meaningfully consult coastal First Nations on the project, which many believe to be dead already.

Similar scenarios could play out for other pipeline projects.

The Board’s review of Trans Mountain faces a legal challenge by Tsleil-Waututh First Nation. Energy East has not come up against a legal case yet, but Treaty 3 First Nations in Ontario have vowed not to allow the pipeline to go through their territory without their free, prior and informed consent.

Line 9 pipeline, one of the first pipelines to be approved by the Board in the post-2012 omnibus bill era, is also being challenge by Deshkaan Ziibing (Chippewas of the Thames). The Ontario First Nation plans on taking their case all the way to the Supreme Court of Canada.

Image Credit: Shannon Ramos via Flickr

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The Council of Canadians called on the federal government Tuesday to implement regulation of hydraulic fracturing, or fracking, in Canada. The process, widely used for unconventional oil and gas recovery in western Canada, is linked to numerous human and environmental health threats and currently faces bans or moratoria in Quebec, New Brunswick, Nova Scotia, as well as Newfoundland and Labrador. 

“The next Oka in Canadian history is going to be in B.C. and it’s going to be about energy,” indigenous lawyer Caleb Behn said during a press conference in Ottawa addressing the fracking boom in northern British Columbia and other parts of western Canada. 

“I guarantee it. The writing is on the wall. It is just a question of when in my view. That is why the regulators need to step up.”

Behn, who is Eh Cho Dene and Dunne-Za from Treaty 8 Territory in northeastern B.C., and Dr. Kathleen Nolan, co-founder of Concerned Health Professionals of New York, joined the Council of Canadians today in calling on the federal government to safeguard Canadians and their drinking water from the controversial method of releasing natural gas and oil trapped in rock-like shale.

“We need a national water policy that addresses threats to water such as fracking,” Emma Lui, water campaigner with the Council of Canadians, told the press conference this morning at Parliament’s Centre Block.

“With the upcoming federal election, the Council of Canadians hopes to see real federal leadership and commitments to protect our communities, health, water and our water sources from fracking,” she said.

Hydraulic fracturing, or fracking, involves drilling underground wells 200 to 3,000 metres vertically and another 1,000 metres or more horizontally to penetrate the rock-like shale. Pressurized water mixed with hundreds of toxic substances (including benzene, hydrochloric acid, mercury and formaldehyde) is shot down the well to penetrate the rock and force natural gas or oil to the surface.

A single fracked well consumes anywhere between seven to 23 million litres of water. Poorly constructed or cracked concrete wells have led to the contamination of groundwater with fracking chemicals or methane, a main component of natural gas.

“There are roughly 200 chemicals used in fracking that we know about that have not been assessed by Health Canada or Environment Canada,” Lui explained.

“There is a rapidly emerging body of evidence that shows harms from this activity (fracking) at every stage of the process. With contamination of air, water and social,” Dr. Nolan said.

“People are getting sick.”

Headaches, disorientation, rashes, seizures and asthma are some of the immediate health impacts airborne contaminants from fracking operations can have on people living nearby, Nolan said.

“With water contamination there’s a lag time between the time the contaminants enter the water and then enters the person and then the person gets ill….it could take years or decades before the contaminants reach people,” she said.

“What we are seeing is the tip of the iceberg and that the people who are sick now are basically our biomarkers.”

Behn fears his home territory, which is located in and around Fort Nelson, B.C., and which is at the centre of the Fractured Land documentary, will be destroyed if federal and provincial regulators do not take significant steps to determine the impact fracking operations have on local populations and the environment.

“Absence of proof of harm is not proof of the absence of harm,” Behn said.

A report commissioned and released by Environment Canada last year concluded the potential threat of fracking operations on groundwater “cannot be assessed because of a lack of scientific data and understanding."

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A panel of leading environmental groups expressed concern last week over findings in an Ontario Energy Board commissioned report that suggest oil tanker trains could replace TransCanada's proposed Energy East pipeline if the project isn't approved. 

“We believe the report makes a number of flawed assumptions on rail capacity, and actually goes beyond the oil industry’s own projections,” Ben Powless, a panel presenter at the province's Energy East stakeholder meeting and pipeline community organizer for Ecology Ottawa, said.

The energy board's report, written by Navius Research, estimates the greenhouse gas (GHG) impact of the pipeline — which is project to carry 1.1 million barrels of oil per day — will be "modest" since the oil could could just as easily be brought to market by rail.

“It is highly unlikely that 1.1 million barrels of oil or even half of that could be shipped by rail,” Adam Scott, climate and energy program manager at Environmental Defence Canada, countered. Scott and Powless joined panel members from the Council of Canadians and the Ottawa chapter of 350.org to argue against the report's findings at a stakeholders meeting on Energy East in Ottawa last week.

The Canadian Association of Petroleum Producers (CAPP) projects oil-by-rail in Canada will only hit 700,000 barrels per day by 2016. Even if sufficient additional rail capacity were proposed, the panel found it “overly optimistic” to assume public support in light of recent oil tank car explosions, such as the tragedy in Lac-Mégantic.

“We have trouble believing more oil-by-rail won’t cause public opposition,” Powless said.  

Climate impacts of Energy East debated

Navius’ report is one of only two studies assessing the GHG emissions from a fully operational Energy East pipeline. By assuming Energy East’s 1.1 million barrels will be extracted regardless of the pipeline's approval, the report sees only a 1.2 and 10.2 megatonnes-of-carbon increase in Canada’s carbon footprint due to Energy East. 

“Energy East will likely increase emissions from 'well-to-tank' (extraction to refineries) in the rest of Canada, but the impact is likely to be relatively modest,” the report concludes.

Navius’s findings differ greatly from the first study on Energy East’s potential GHG emissions by the Pembina Institute, an Alberta-based energy think tank:

“The crude production needed to fill the Energy East pipeline would generate an additional 30 to 32 million tonnes of carbon emissions each year — the equivalent of adding more than seven million cars to Canada’s roads.” 

The Pembina study does not assume oil-by-rail will replace Energy East if the pipeline is not constructed, leading to constraints on production in the oil patch.

Ontario’s environmental leadership on the line with Energy East

“Energy East is Premier Kathleen Wynne’s Keystone," Muthanna Subbaiah of the Ottawa chapter of 350.org said at the meeting. 

"President Obama said he will veto Keystone XL. Wynne needs to reject Energy East.” 

The province has talked much about being a climate leader and is hosting an international climate summit this summer, but attracted criticism over its position on Energy East. Ontario Premier Wynne recently stated her government will only consider the GHG emissions from Energy East that occur within Ontario, meaning the climate impacts from developing oil in the Alberta oilsands will be excluded from consideration.

Navius’ report for the Ontario Energy Board finds the pipeline will cause an 0.4 per cent increase in GHG emissions in Ontario. These emissions will be almost exclusively from pipeline pumping stations running on either natural gas or Ontario's relatively clean electricity.

“The Ontario government needs to step up and protect us,” Andrea Harden-Donahue, energy and climate justice campaigner with the Council of Canadians, told the audience attending the public meeting.

The panel also voiced concerns about TransCanada’s safety record, the effects of a oil spill on the province’s natural environment and the fact TransCanada’s application for the pipeline is incomplete.

“I don’t know of a clearer warning than the Kalamazoo spill,” Harden-Donahue stated.

The Kalamazoo spill in Michigan in 2010 remains the largest inland pipeline oil spill in U.S. history, and cost well over one billion dollars in cleanup costs. The Enbridge pipeline ruptured when the pipeline's external polyethylene tape coating became unglued, allowing moisture to corrode the pipe.

Ninety-nine kilometers of the existing natural gas pipeline TransCanada plans on converting for the Energy East project in Ontario is coated with polyethylene tape.

Image Credit: Ecology Ottawa

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Perhaps it’s the charming student activist, Gabriel Nadeau-Dubois, who donated his $25,000 Governor General’s Literary Award to the pipeline fight, or perhaps it was the scandalous documents leaked last week that showed pipeline company TransCanada has teamed up with one of the world’s most powerful PR firms, Edelman, to manipulate public opinion surrounding the Energy East pipeline.

Or maybe it’s the fact that at least two-thirds of Quebecers oppose the construction of a 4600km pipeline that will carry 1.1 million barrels of oilsands crude through their province (and five others) for export. Maybe onlookers, disturbed by the 50 arrests on Burnaby Mountain, have felt compelled to prevent a similar situation from erupting east of Alberta.

Who knows?

But what is becoming clear is the firestorm of public opposition that is committing to the fight against Energy East. Twelve hours after Nadeau-Dubois announced his $25,000 donation on the Radio-Canada talk show Tout le monde en parle on Sunday donations surpassed $140,000.

“If Quebec blocks this project, we will do a service to ourselves and future generations, but we also need to send a clear signal that we are prepared to contribute the global fight against climate change,” the Montreal Gazette reported him saying.

As of Tuesday, donations have surpassed $300,000.

Keith Stewart, climate and energy campaigner with Greenpeace Canada says the “unprecedented outpouring of support shows the breadth and depth of opposition in Quebec to this pipeline.”

He adds it also shows the level of opposition to “the broader pro-oil, anti-environmental agenda of the federal government.”

“It shows that a lot of people want to be a part of a movement that makes the world a better, fairer and greener place, and don’t accept that we have to accept the oil industry’s false choice between environment and economy,” Stewart told DeSmog.

Council of Canadians map of Energy East pipeline route.

Mark Calzavera, regional director for Ontario, Quebec and Nunavut with the Council of Canadians, says the outpouring of support “shows very clearly that people are concerned about Energy East and that opposition is growing.”

He added people are more interested in information about the pipeline and in challenging the information that is currently available.  

“In no way is [Energy East] a nation-building pipeline,” he said. “It’s an export pipeline.”

“It’s taking the product in its rawest form that it can be shipped in, which is diluted bitumen, and they are exporting it along with any the jobs that go with refining it.”

The people of Canada have for years now been saying they’re concerned about climate change and are looking for leadership on climate change from their governments and we haven’t seen it so people are taking matters into their own hands. These pipeline projects – that lead to greater emissions – they’re opposing them personally.”

Nadeau-Dubois told CBC Daybreak Monday that Quebec is in a “serious situation.”

“We have a very, very important choice to make around that very controversial Energy East TransCanada pipeline,” he said.

Stewart said the ‘nation-building pipeline’ narrative deployed by TransCanada is now turning against the company and the Energy East proposal.

“The only nation that Energy East is building is a nation of resistance. TransCanada’s attempt to trick people and buy support for their project has backfired, and now people want to be a part of the alternative,” he said.

Image Credit: Environmental Defence Canada via Flickr

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For five long years the federal government and the oil industry have lobbied against the European Union labeling oilsands (also called tar sands) bitumen as ‘dirty oil’ in its Fuel Quality Directive (FQD). A new report released yesterday reveals the recent involvement of the U.S. in the lobby offensive to keep the EU market open for bitumen exports has tipped the scales in favour of oilsands proponents.

“The sustained attacks by the U.S. and Canada on the European Union’s key legislation on transport fuel emissions seem to be paying off,” Fabian Flues of Friends of the Earth Europe, the author of the report, admits.

The report shows the EU Fuel Quality Directive, a piece of legislation designed to reduce global warming greenhouse gas (GHG) emissions in the EU’s transportation sector, is unlikely to acknowledge fuels from different sources of oil – conventional oil, oilsands, oil shale – have different carbon footprints. Instead all oils will more than likely be treated as having the same GHG emissions intensity 'value' in the Directive. This is exactly what Canada, the oil industy and now the U.S. have been pushing for.

“Europe is again failing to stand up effectively for its own climate policy,” Flues says.

Trade talks, not science, weakening the Fuel Quality Directive

The EU has not fallen for the federal government’s argument that bitumen produces only marginally more GHG emissions than conventional oil in extraction, processing, and use. A European Commission study found bitumen’s carbon footprint is between 12 – 40 per cent higher than conventional oil.

The report reveals trade, not science, is the cause of the EU backing off from implementing the Fuel Quality Directive as it was originally meant to be implemented. To reduce GHG emissions from transportation the Directive discourages transport fuel suppliers from selling fuels with high carbon footprints in the EU. Identifying which fuels have higher carbon footprints was meant to make things easier for fuel suppliers to reduce the GHG emissions output of their product.

“The delay and weakening of the European Fuel Quality Directive once again reveals that agreements like CETA (the Comprehensive Economic Trade Agreement) are less about trade and more about limiting the ability of governments to effectively regulate in the public interest,” Scott Harris, trade campaigner with the Council of Canadians, says.

Fuel Quality Directive subject of CETA talks

The report argues the U.S. and Canada are using their own ongoing trade negotiations with the EU to undermine the Fuel Quality Directive. Canada and the EU have consistently maintained their trade negotiations for the CETA and the Directive are two separate issues. The evidence indicates otherwise:

“The foreign policy think tank The Polish Insti­tute for International Affairs reported that the FQD had been raised in the CETA negotiations and there have been calls in Canada to suspend the negotiations until the high GHG value for tar sands has been resolved to Canadian satisfac­tion,” the report states.

“While other governments are trying to make communities safer, the Canadian government is using its political muscle to push things in the opposite direction so it can export high carbon tar sands oil as quickly as possible,” Mike Hudema, climate and energy campaigner with Greenpeace Canada, says.

“It’s astonishing that as we watch the fires spread in the Northwest Territories and the flood waters rise in the Prairies our government still isn’t getting the message – climate change is real and we need action immediately,” Hudema states.

The Globe and Mail reported as earlier as 2011 that anonymous sources had said Canada had threatened “to void the free trade deal” if the Fuel Quality Directive was implemented.

“Even before it is signed, CETA is being used to water down much-needed public policy. Imagine what will happen to regulations on both sides of the Atlantic if the deal is actually implemented,” Harris of the Council of Canadians says.

U.S. joins the lobby offensive

The U.S. in some ways has been more open about its lobbying against the Fuel Quality Directive. U.S. Trade Representative Michael Froman confirmed he “raised these issues [of the FQD implementation] with senior Commission officials on several occasions, including in the context of the Transatlantic Trade and Investment Partnerships (TTIP).” The TTIP is the trade agreement between the U.S. and the EU currently under negotiation.

European Commission documents obtained by Friends of the Earth Europe reveal the U.S. trade missions has “substantive concerns” with the Fuel Quality Directive singling out fuels produced from bitumen as having a higher carbon footprint than conventional oil. Like Canada and the oil industry, the U.S. wants all oil – regardless of GHG emissions – to be treated the same as conventional oil in the Directive.

It appears this new pressure from the U.S. is the straw breaking the camel’s back:

“[Media] reports claim that the system chosen by the Commission is one of averaging of all crudes – exactly what the U.S. mission had requested in its e-mail. If they are correct, the new FQD proposal will be considerably less effective in discouraging the import of highly climate damaging oil, such as tar sands. It might well be the case that the FQD is the first environmental casualty of the TTIP negotiations,” the report states.

Recently eleven members of U.S. Congress sent a letter to the US trade mission expressing their concerns “that official U.S. trade negotiations could undercut the EU’s commendable efforts to reduce carbon pollution.” 

Image Credit: OpenEuropeBlog

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The National Energy Board (NEB), the federal regulator responsible for inter-provincial pipelines, appears to have jumped the gun on TransCanada’s Energy East pipeline proposal by releasing a 'list of issues' to be considered for the project's approval, before the company submitted an official application for the project. If approved, Energy East will transport 1.1 million barrels of oil and oilsands bitumen 4,600 kilometres across the country from Hardisty, Alberta to Saint John, New Brunswick each day.

“It is highly irregular and, as far as I know, unprecedented," Jason MacLean, an assistant professor of law, and specialist in environmental law, at Lakehead University, said. "Releasing the list of issues in advance is acting impermissibly in favour of the proponent of the pipeline project.”

MacLean is also acting counsel for a legal challenge announced Thursday against the NEB as a result of the 'list of issues' release. In the past the NEB has waited for pipeline companies to apply for projects before deciding what issues are relevant to their approval.

“The NEB is acting in bad faith and demonstrating how biased it is in favour of the oil industry by tailoring the list of issues to be considered to the company’s advantage,” Andrea Harden-Donahue, Energy and Climate Justice Campaigner with the Council of Canadians, said. The Council of Canadians – one of Canada’s largest civil society organizations – is spearheading the legal challenge.

The legal challenge states the NEB rigged the list of issues to favour TransCanada and the oil industry. According to the suit, issues disadvantageous to the project, such as impacts to climate change and First Nations living downstream from the oilsands, are absent from the list.

“This raises serious concerns of how under the Harper government the NEB, a federal body with a history of ruling in favour of industry, has been given more authority to limit the public’s voice in major pipeline decisions,” Harden-Donahue told DeSmog Canada. 

The NEB claims it “does not have regulatory authority over upstream or downstream activities associated with the development of oilsands, or the end use of the oil to be transported by the Project. Therefore, the Board will not consider these issues.”

MacLean argues the NEB's position is "hypocritical" since the board will consider upstream (how it affects the oil industry) and downstream (how it affects oil refineries) economic impacts of the Energy East pipeline project.

“It is inconsistent, improper, and to a certain extent, hypocritical to consider the upstream and downstream economic and commercial impacts of a pipeline – which should definitely be considered – and then ignore the upstream and downstream environmental impacts,” MacLean told DeSmog Canada.

MacLean also points out that by not considering environmental issues connected to pipelines the Board is in contravention of its own mandate. According to the NEB, the Board exists to promote “safety and security, environmental protection and economic efficiency in the Canadian public interest within the mandate set by the Parliament of Canada.”

“It's impossible to square it – that it is not 'in the public interest' to consider the adverse effects of climate change. The relationship between increased greenhouse gas emissions and climate change is quite clear,” MacLean said from Thunder Bay, Ontario.

When polled last November 84 per cent of Canadians said they wanted action on climate change. It is estimated the greenhouse gas emissions associated with the Energy East pipeline project will be the equivalent of Ontario deciding to maintain all their coal-fired power plants instead of shutting them down. Ontario’s successful phase out of coal plants has been heralded as the single most significant GHG emissions reduction initiative in North America.

“Canadians believe the federal government and its federal pipeline regulator should act neutrally and in the public interest, not govern for special interests,” MacLean told DeSmog Canada.

The Federal Court of Appeal will decide after the NEB and federal government respond to the legal challenge whether the it will move through to appeals court. This is the second legal challenge in less than year against an NEB list of issues for a pipeline project. ForestEthics Advocacy also has an ongoing case against the Line 9 pipeline project.

ForestEthics argues limiting the Line 9 issues the public can comment on and restricting members of the public from participating in the decision making process is a violation of freedom of expression under the Canadian Charter of Rights and Freedoms. The NEB approved Line 9 last March. 

Image Credit: University of Alberta

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TransCanada’s proposed Energy East pipeline is more likely to be an export pipeline than supplier of western Canadian oil to eastern Canadian refineries. A new report released this week revealed as much as 90 per cent of Energy East’s oil and bitumen from the Alberta oilsands will be shipped out of Canada.

“Publicly available information from TransCanada, as well as sources from industry, government reports and legal documents show that most of the pipeline’s oil would be exported unrefined, with little benefit to Canadians,” reads the report, released by Environmental Defence, the Council of Canadians, Ecology Action Centre, and Equiterre.

The report finds eastern Canadian refineries – two in Quebec and one in New Brunswick – will be nearly fully supplied with oil from Atlantic Canada, rail and tanker shipments from the United States and the recently approved Line 9 pipeline by the time Energy East begins pumping in 2018. Eastern Canada can refine 672,000 barrels of oil per day (bpd). TransCanada wants to ship 1.1 million barrels via Energy East every day.

“250,000 bpd of eastern Canada’s capacity will be served by Line 9. Take away another 100,000 bpd of Canadian offshore crude from Newfoundland, and 200,000 bpd of US crude and you're left with a pretty small gap to fill, of 122,000 bpd,” says Shelley Kath, energy consultant and lead researcher of the report.

“That means the rest, some 978,000 bpd is likely export bound,” Kath told DeSmog Canada.

The report punches a major hole in claims by TransCanada and the federal government that Energy East will be a “nation building” project strengthening regional energy security with western Canadian oil. The 4,600-kilometer proposed pipeline will begin in Alberta and end in Saint John, New Brunswick, crossing through every province in between.

Valero, operator of the refinery in Quebec City, announced this week it has “no firm interest” in the Energy East project because the oil company already has made commitments to receive oil from other sources.

Energy East Will Have A Larger Carbon Footprint than an Atlantic Province

“Energy East will be the largest pipeline in North America. It will increase production in the tar sands by 40 per cent at a time when First Nations living downstream are asking industry to slow down,” says Andrea Harden-Donahue, climate and energy campaigner with the Council of Canadians.

Energy East will carry more oil than TransCanada’s controversial and stalled proposed Keystone XL pipeline (830,000 bpd) and more than the Northern Gateway and Line 9 pipelines combined (525,000 and 300,000 bpd respectively). 

“The greenhouse gas emissions associated with this project alone will be more than the emissions of any Atlantic Canadian province,” Harden-Donahue told DeSmog Canada.

Last month the Pembina Institute released a report indicating Energy East would produce thirty-two million megatons of greenhouse gas emissions, similar to the output of Ontario's recently retired fleet of coal-fired power plants.

Marine Oil Tanker Export Terminals To Play a Big Role in Energy East Project

TransCanada recently submitted its project description for Energy East with the National Energy Board noting the project could serve 3.3 million barrels of oil tanker traffic.   

TransCanada has not denied that some of Energy East’s oil and bitumen would be exported. The pipeline company publicly stated part of the $12 billion pipeline project is to construct two marine oil tanker terminals – one in Quebec and one in Saint John – for the purpose of shipping oil by sea. A proposal for a third terminal has been floated for Nova Scotia as well.

Pipeline Companies Have Little Say On What Happens to Oil at End Destination

“TransCanada has not been forthcoming on how much of Energy East’s oil will be shipped overseas. The report confirms what we have suspected for a long time – Energy East is an export pipeline,” Harden-Donahue told DeSmog from Ottawa.

“It may sound strange to say, but pipeline companies like TransCanada aren't actually in business to supply refineries – they're in business to move crude from point A to point B. Once that delivery is done, their role is over,” says Kath.

Kath says pipeline companies make 'Transportation Service Agreements' with refineries or oil producers to deliver oil to a certain destination. The contracts are about selling space on the pipeline not about what happens to the crude when it reaches its destination via the pipeline. The product could be exported, stored or refined by the shipper.

Refining Oilsands Bitumen

It is unlikely crude shipments from Energy East will displace current and soon-to-be oil suppliers to eastern Canadian refineries, especially if Energy East is shipping oilsands bitumen. As DeSmog Canada reported last October only a specialized refinery can refine bitumen. Eastern Canadian refineries lack the necessary equipment – usually a coker unit – to process large volumes of bitumen.

“Ample supplies of light crude from growing U.S. and offshore production may also dissuade refiners from making costly investments aimed at converting refineries in order to process heavy crude,” concludes the report. Retrofitting a refinery to process bitumen can cost as much as $2 billion.

Jeff Rubin, former CIBC economist, argues the price for bitumen will only increase when oilsands producers can get their product to global markets. At the moment, bitumen is sold at a discount because there is a glut in production and oilsands producers can only sell in North America. Constructing Energy East means bitumen can finally fetch higher global prices, which may be another financial disincentive for refineries in eastern Canada to start refining bitumen.

The report concludes the vast majority of Energy East’s product will be shipped to the U.S. and overseas destinations such as Europe and India.

TransCanada is expected to submit its application for the Energy East project with the National Energy Board sometime this year. The project involves converting a 3,000-kilometre natural gas pipeline in Saskatchewan, Manitoba and Ontario and building an additional 1,600 kilometers of pipeline in Quebec, along the St. Lawrence River, to the pipeline’s proposed end destination in Saint John, New Brunswick.

Image Credit: TransCanada's Energy East: Export Pipeline, Not For Domestic Gain Report

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Residents of the Northwest Territories are demanding environmental reviews be conducted before companies are permitted to ‘frack’ for oil in the NWT. Despite controversy in Canada and other countries around the effects fracking or hydraulic fracturing has on water and climate change, the NWT’s first fracking project was approved last October without an environmental assessment.

“We can’t let another fracking project dodge an environmental assessment,” says Lois Little of the Council of Canadians NWT chapter.

“There is a lot of international concern about the environmental and social impacts of fracking,” says Ben McDonald, spokesperson for Alternatives North, a social justice coalition in NWT. “The moratoriums on fracking in the U.S. and eastern Canada are in place for good reasons.”

The Council of Canadians, Alternatives North along with Ecology North have launched a petition calling on the NWT government to refer fracking projects to environmental assessments that include public hearings from now on. Signatures will be collected until March 7th when the petition will be delivered to the NWT legislative assembly. Two hundred and fifty NWT residents have signed the petition.

“A full, thorough environmental assessment would provide all levels of government with information on the possible impacts of fracking on the NWT and create a venue for all voices to be heard,” says Christine Wenman, a water management campaigner with Ecology North, an environmental organization based in Yellowknife.

NWT Canol shale oil play could rival Bakken shale

The central NWT region called the Sahtu is home to the Canol shale, a shale oil play that could rival the booming Bakken shale oil industry in North Dakota. Shale oil (not to be confused with oil shale) is oil locked in the pores of rock-like shale underground. The Sahtu itself is an area of pristine wilderness accessed by ice roads and many residents live off the land.

The Sahtu Region

The method commonly associated with shale gas development – fracking – is employed by industry to release the oil trapped in the shale. ‘Frack wells’ are drilled vertically between two hundred to two thousands meters to penetrate the shale and then horizontally through the shale up to three kilometers. Pressurized water laced with chemicals is shot down the well to break apart the shale and force the oil to the surface.

Improperly constructed or cracked frack wells have contaminated water tables with methane (natural gas is mainly methane) or fracking chemicals, some of which are toxic.

“No one has done any mapping locating the underground waterways or aquifers of the Sahtu. We are playing in the dark here,” Little told DeSmog Canada.

Many of the proposed fracking operations in the Sahtu would take place along the Mackenzie River, the main artery of the Mackenzie River Water Basin, one of the world’s largest watersheds and Canada's 'Serengeti.'

“An EA (environmental assessment) would be a sober second thought about fracking in NWT before its too late,” NWT MLA Bob Bromley told DeSmog Canada in an interview. Earlier this week Bromley expressed his suspicions that NWT government employees were being discouraged from signing the petition for environmental reviews of fracking projects.

Canadian oil and gas on pace to be No.1 contributor to climate change

“There is a fundamental problem in developing the Canol shale when we know the impact producing more greenhouse gases will have on climate change,” says Bromley.

Methane once unlocked from shale during fracking operations can escape into water tables and the atmosphere. If it makes it above ground, methane is a powerful greenhouse gas.

Over twenty year period methane has eighty-four times the global warming potential of carbon dioxide according the UN Intergovernmental Panel on Climate Change (IPCC) latest findings. This global warming potential is thirty-four times greater than carbon dioxide over one hundred years.

A DeSmog Canada exclusive revealed last year Canada is most likely already under reporting escaped methane emissions or fugitive emissions from the oil and gas sector. Even with these inaccuracies in calculating fugitive emissions Environment Canada projects the oil and gas sector will be Canada’s biggest contributor to global warming by 2030. Canada’s overall greenhouse gas emissions are expected to increase 38% by 2030 as well.

Source: Canada's 6th National Report on Climate Change 2014

“Pursuing fossil fuels projects takes us in the wrong direction. Fossils fuels belong with the dinosaurs,” Bromley told DeSmog.

The Bakken shale oil industry in North Dakota burns off or flares around 30% of the natural gas byproduct that comes with fracking on the Bakken shale. An estimated $1 billion worth of natural gas was flared in 2012 alone. This is equivalent of adding one million more carbon dioxide emitting cars on the road.

Social impacts of fracking already emerging in the Sahtu 

Divisions are already emerging in the five Sahtu communities over developing the Canol shale. Sheila Karkagie of Tulita in the Sahtu received a death threat last January for her strong stance against fracking.

“I was scared and I was hurt,” Sheila Karkagie told CBC in an interview about the threat. “I'm fighting for my dad's land, because this is his land, his trap lines, his everything; our means of living, our backyard, our everything!”

The death threat came via telephone after Karkagie publicly stated past members of the Tulita Land and Financial Board are in conflict of interest for approving ConocoPhillips fracking project – NWT’s first fracking project – and then accepting contracts with oil and gas companies afterwards.

“We are seeing divisiveness in communities where it seldom existed before,” says NWT MLA Bromley.

“The lack of a thorough public process on the issue is causing stress, anxiety and pitting people against each other in the Sahtu communities,” Lois Little of the Council of Canadians told DeSmog. The Council of Canadians, one of the Canada’s foremost water advocacy groups, released a ‘Fractivist Toolkit’ earlier this month to assist Canadians confronting fracking in their communities.

The petition for environmental assessments of fracking projects in NWT can be found on the NWT legislative assembly’s website:

http://epetition.lant.public-i.tv/epetition_core/community/petition/2614

Image Credit: Transnational Institute, Council of Canadians, Environment Canada

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.