The cancellation of TransCanada’s Energy East pipeline in early October had major consequences for a rather unexpected player: Manitoba Hydro.

The company had been counting on the energy demand from the pipeline, and now the cancellation is putting extra strain on a company already plagued by debt and in the middle of building an $8.7 billion dam.

Back in 2014, the provincial utility company anticipated that almost 40 per cent of electricity generated by its proposed 695-megawatt Keeyask dam in northern Manitoba would be allocated to “pipeline load” for the Alberta Clipper, Line 3 and Energy East pipelines.

Specifically, the electricity would be used to run pumping stations, which force crude oil through pipelines via a series of pumps and motors. Among those pumping stations were those that would move bitumen from the oilsands to New Brunswick through the Energy East pipeline.

But Energy East is now officially dead.

A recent document filed by Manitoba Hydro to the province’s public utilities board estimated that will result in a loss of 534 gigawatt-hours in annual demand, equivalent to 12 per cent of the dam’s production — which comes at an awfully bad time given the utility’s ongoing debt issues, proposed rate hikes and cost overruns, which have resulted in the utility laying off  900 staff.

Building Renewables for the Fossil Fuel Industry

The connection between the Keeyask Dam and the Energy East pipeline raises important questions about renewable energy projects that are built, at least in part, to meet the demands of the fossil fuel industry.

On the one hand, powering the industry with cleaner electricity is a step in the right direction. But on the other hand, building new electricity, even when it is renewable, has serious impacts, and hydro is no exception.

It’s not the first time a hydro dam has been proposed to meet the electricity demands of the fossil fuel industry. In British Columbia, the rationale given for the controversial $10.7 billion Site C dam has at times included powering the liquefied natural gas export industry and Alberta’s oilsands.

What has been talked about a lot less in B.C. is that the new Kinder Morgan Trans Mountain pipeline would use 1,046 gigawatt-hours of electricity per year (PDF, page 64), or the equivalent of about 20 per cent of the production of the Site C dam (about half of that power will be consumed in B.C. with the other half being consumed in Alberta).

In B.C. that power will be sold at a subsidized rate and is expected to result in a cost to BC Hydro of $27 million a year. In Alberta, the Trans Mountain pipeline will use nearly a quarter of the new generating capacity created by the newly announced wind contracts.

Shifting Justifications for New Dams

Manitoba Hydro’s game plan for the Keeyask dam became clear during two sets of hearings during late 2013 and early 2014.

Peter Kulchyski, professor of Native studies at the University of Manitoba and long-time critic of impacts of hydroelectric projects on northern Indigenous communities, said in an interview with DeSmog Canada that Manitoba Hydro presented two very different narratives.

The first presentations — made to the Clean Environment Commission, which explores social and environmental impacts — saw the energy utility boast about the potential for new hydro projects to help fight climate change by exporting electricity to other jurisdictions and displacing the use of coal and natural gas.

In 2016-17, Manitoba Hydro exported $460 million of electricity to other jurisdictions. But that number has effectively flatlined due to the shale gas boom in the United States. In its most recent annual report, Manitoba Hydro listed “loss of export market access” as one of its most significant risks, alongside “catastrophic infrastructure failure” and “extreme drought.”

Kulchyski said the review of the project then moved on to the Public Utilities Board, which looks at economic modelling. At that point, some of the early financials from the newly built and way over budget 211-megawatt Wuskwatim Dam were emerging. They weren’t good.

At the time, Kulchyski said the Wuskwatim Dam was selling power at four cents per kilowatt-hour while it was costing seven cents per kilowatt-hour to actually produce power. The dam hadn’t ever been profitable (and still hasn’t been to this day, resulting in a restructuring of the agreement with local First Nations).

That’s when the “pipeline load” first entered the picture, Kulchyski said.

“As they were scrambling for where they would sell the power, they publicly came out saying they could sell power to the pipelines that are being built,” he said. “On one hand they’re fighting climate change, on the other hand they’re quite willing to sell to the pipelines.”

The connection between the Keeyask Dam and the Energy East pipeline raises important questions about renewable energy projects that are built, at least in part, to meet the demands of the fossil fuel industry. https://t.co/zn9yyRNL9w

— DeSmog Canada (@DeSmogCanada) January 10, 2018

Manitoba Could Sell Excess Power to Saskatchewan

Despite these concerns, Keeyask is still being constructed, anticipated to be in operation by late 2021. A $5 billion transmission line, Bipole III, is also being built to transport electricity from the dam to the south of the province.

Enbridge — which owns both the Alberta Clipper and Line 3 pipelines — didn’t respond to a request for comment by DeSmog Canada.

Manitoba Hydro still expects Keeyask to have a “pipeline load” of more than 1,000 gigawatt-hours, meaning that one-quarter of the dam’s capacity (4,400 gigawatt-hours) will go to helping pump Alberta bitumen through Line 3 and Alberta Clipper.

That leaves a lot of excess electricity without a clear market though, which could require future ratepayers to cover the difference. Manitoba Hydro is already requesting significant hikes in rates — currently pushing for 7.9 per cent increases per year until 2023-24.

Electrification Will Bring New Demand: Clean Energy Analyst

But there are plenty of opportunities for Manitoba to use the excess electricity from Keeyask in positive ways, Dan Woynillowicz, policy director at Clean Energy Canada, said in an interview with DeSmog Canada. That includes moving to electric vehicles (including freight trucks and buses) and heating buildings with electricity instead of with natural gas.

“In a hydro-dominated system like Manitoba where you’ve got plentiful, affordable, clean power, the emissions benefit of applying that to transportation is particularly significant,” Woynillowicz said. “We certainly need to be capitalizing on that from a climate change perspective.”

He added there’s also the potential for increased exports to the U.S. and other Canadian provinces —especially Saskatchewan, given that it’s right next door and “still has one of the dirtiest electricity grids in Canada.”

“There’s still a lot of low-hanging fruit in terms of cleaning up Saskatchewan’s system,” he said. “Definitely one element of that could be increased imports of hydro from Manitoba.”

Canada May Need 150 More Keeyasks to Meet 2050 Climate Targets

Canada’s mid-century long-term low-greenhouse gas development strategy reported that over 100,000 megawatts of additional hydro capacity will be required by 2050 to reach greenhouse gas reduction targets.

That’s equivalent to almost 150 Keeyask dams in capacity.

Canada is the third-largest hydro producer in the world, with over 80,000 megawatts of capacity already in place. One of the benefits of large quantities of hydropower is its ‘dispatchable’ nature, meaning reservoirs essentially act as giant batteries that can be drawn from when needed.

ICYMI: What’s the Future of Hydroelectric Power in Canada?

Yet often left unaddressed by proponents of additional hydroelectric power are the devastating impacts that dams can have on local and Indigenous communities, especially the ability to hunt, fish, trap and gather on traditional lands and waters.

Opponents of hydro dams also point out the high costs of building large dams crowd out small-scale and more localized sources of energy like wind, solar and geothermal.

And Manitoba, a hydro-heavy province, hasn’t seriously explored renewable electricity sources other than hydro. In 2014, a former NDP energy minister accused the utility of making it “virtually impossible to build wind [power] here.” The province has just 260 MW of installed wind energy capacity, less than New Brunswick.

But outside of rapid innovations in battery storage, transmission lines and the emergence  of alternative low-carbon baseload power (such as geothermal), it’s unclear how Canada will dodge the conflict over hydro.

There are some obvious options to help reduce demand, such as energy efficiency retrofits for existing buildings and reducing industrial load.

Woynillowicz noted that the biggest chunks of new demand come from large industrial projects. For instance, in B.C., a single large LNG plant could consume the equivalent of all of the power created by the Site C dam.

Ultimately, the public needs to know the planned end use of new electricity projects before being able to form an educated opinion on them.

With files from Emma Gilchrist.

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Canadian pipeline company TransCanada announced today it will no longer be proceeding with its proposed Energy East Pipeline and Eastern Mainline projects.

“After careful review of changed circumstances, we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications,” said president and CEO Russ Girling in a statement released Thursday morning.

The $15.7 billion Energy East pipeline planned to transport 1.1 million barrels of oil per day from western Canada’s oilsands to refineries in Quebec and Saint John, New Brunswick, as well as an export terminal in New Brunswick.

In late August, the National Energy Board — an independent regulatory agency that oversees international and inter-provincial oil and gas pipelines —  announced it would consider upstream and downstream greenhouse gas emissions in determining whether the Energy East pipeline was in the national interest. This marked a first for the board, which had come under fire for not considering climate impacts in other pipeline hearings.

Both Enbridge’s Northern Gateway pipeline and Kinder Morgan’s Trans Mountain pipeline received regulatory approval with no consideration of their impacts on greenhouse gas emissions.

TransCanada asked the National Energy Board to put its regulatory review hearings on hold while it reviewed the decision to include an assessment of the pipeline’s impact on greenhouse gas emissions.

The decision to abandon the project comes amid low oil prices and an expected slow-down in oilsands production. Several international companies have sold off oilsands projects in the past year.

“The reason that Shell, Total and Statoil are pulling out, and the reason that Exxon has had to write down much of its Kearl Lake reserves, isn’t because of the emissions profile of the oilsands bitumen,” Jeff Rubin, senior fellow of Centre for International Governance Innovation, told DeSmog Canada in March. “It’s rather because it doesn’t make any economic sense, before we even look at emissions pricing.”

TransCanada Cancels Energy East Oilsands Pipeline. What now? https://t.co/eiNT24HaC9 #EnergyEast #cdnpoli #oilsands #climate pic.twitter.com/alGcqImBXb

— DeSmog Canada (@DeSmogCanada) October 5, 2017

In November 2015, the Alberta government announced its climate plan, which gained support from a wide range of environmentalists and the CEOs of Suncor, Canadian Natural Resource Ltd. (CNRL), Shell and Cenovus.

The plan caps oilsands emissions at 100 megatonnes per year. Environment Canada figures predicted a 2020 output of 103 megatonnes from the sector, so for production to expand beyond current projects, per barrel emissions will need to be reduced.

Pipelines have become a symbol of the larger debate about climate change, with new pipeline proposals threatening to enable increased oil production at a time when scientists and world leaders agree rapid de-carbonization is needed.

New polling released by Abacus Data in September indicates a majority of Canadians (59 per cent) are growing “more worried about climate change and it is changing my view of how long we should use oil.” That includes 48 per cent of Albertans and 35 per cent of Conservative voters.

“Energy, pipeline and climate issues have been among the most highly charged political debates in Canada for several years,” said Abacus chairman Bruce Anderson.

“What we are seeing in our numbers now is an evolution of opinion: concerns about climate change have deepened, and belief that the world is going to transition away from oil has grown.”

Three pipelines are still in the running: the Trans Mountain pipeline to the B.C. coast, the Keystone XL pipeline to the Gulf coast and Enbridge’s Line 3 export line to the U.S. All of these pipelines have received regulatory approval in Canada — but hurdles still remain.

Alberta Premier Rachel Notley said Thursday that now  Energy East is dead, there is an even greater urgency in completing the Trans Mountain project to B.C. to diversify the industry's export markets beyond the United States.

The B.C. government doesn’t share her view, however, and is currently part of a court challenge against Trans Mountain being heard this week.

The Canadian Energy Pipeline Association and others blamed TransCanada’s decision on Ottawa’s “unclear decision-making process.”

However, New Brunswick Premier Brian Gallant told the Globe and Mail he received assurances from Ottawa that the greenhouse gas assessment didn’t represent an insurmountable hurdle for TransCanada.

"Given the positive signals the federal government has sent to TransCanada over the last weeks . . . we believe it is clear that TransCanada is not proceeding with its application for the Energy East pipeline because recent changes to world market conditions and the price of oil have negatively impacted the viability of the project," Gallant said.

TransCanada had hit regulatory hurdles even before the greenhouse gas assessment was announced. In the summer of 2016, the National Energy Board’s review of Energy East was compromised after it was revealed by the National Observer that former Quebec Premier Jean Charest met the chairman and two commissioners on the National Energy Board while working for TransCanada.

The National Energy Board ended up suspending the hearings into the proposed 4,500-kilometre pipeline and selecting a new panel.

TransCanada is expected to take an estimated $1-billion charge on its pre-tax fourth-quarter earnings due to Thursday’s announcement.

Photo: shannonpatrick17 via Flickr

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It feels like an eternity since federal NDP leader Thomas Mulcair received the boot from delegates at the party convention in April 2016.

The lengthy leadership race hasn’t exactly helped that feeling.

Most candidates launched their campaigns in February. Nine debates were held between March and September. But we’re almost at the end of the tunnel. Voting for the first ballot, via both mail-in ballots and online, commenced on Sept. 18 and concludes on Oct. 1. If needed, second and third ballots will be collected by Oct. 8 and Oct. 15.

While there are only four candidates left in the race — Guy Caron, Jagmeet Singh, Charlie Angus and Niki Ashton — there are an enormous number of combined proposals related to energy, climate and environmental policies (especially compared to what was discussed during the federal Conservative leadership race).

Let’s take a look at what’s on offer from the NDP candidates.

Moving Past the Pipeline Debate

A central theme throughout the race has been the need to “move past” the pipeline debate.

Sounds easy!

In June, Ontario MP Charlie Angus — previously dubbed “the most pipeline-friendly candidate” by the Hill Times — said that “the only discussion we’ve had on the environment is ‘this pipeline versus that pipeline.’”

Similarly, Ontario MPP and deputy leader Jagmeet Singh states in his platform that “it’s no secret that there are people who would like to narrow our discussions on climate change to a debate about pipelines alone in an attempt to divide Canadians.”

It’s probably a fair point. But the pressure has, at the very least, required candidates to quickly clarify their position on the subject.

Both Manitoba MP Niki Ashton and Quebec MP Guy Caron have indicated that they’re against the country’s major projects: Kinder Morgan’s Trans Mountain and TransCanada’s Energy East. Enbridge’s controversial Line 3, which received federal approval alongside Trans Mountain, is left unaddressed.

Singh was late to the pipeline party — something Ashton publicly noted.

During a debate in St. John’s in June, Singh stated a desire to communicate with NDP leaders in Alberta and B.C. before declaring a firm decision on the matter.

Surprisingly, Singh’s climate plan dropped only a week later, fully opposing Trans Mountain and Energy East due to conflicts with emissions targets and the United Nations Declaration on the Rights of Indigenous People (UNDRIP).

Angus arguably left the most room open for future projects, often deploying the Alberta government’s language of “social license” and threat of oil-by-rail.

In addition, he suggested that “industry understands that they need social license on the ground” and that government hasn’t sufficiently been “at the table.”

Four’s Company: Where @NDP Leadership Candidates Stand on #Energy and #Climate Policy https://t.co/jDi9nVJnRC #NDPldr #cdnpoli

— DeSmog Canada (@DeSmogCanada) September 27, 2017

Emissions Targets and Carbon Pricing

Every candidate but Angus has specifically committed to accelerating Canada’s reduction of greenhouse gas emissions in order to meet international climate targets.

Specifically, the trio of Caron, Singh and Ashton have all committed to cutting the country’s emissions by 30 per cent below 2005 levels by 2025. That’s a full five years earlier than the Liberal government’s current plan — which seeks to hit that number by 2030 — and only six years after an NDP government could conceivably attain power.

That won’t be easy.

To achieve that both Ashton and Angus stated that he will create a five-year “national carbon budget.”

Emissions targets help but the country needs actual mechanisms, like regulations or carbon pricing, to get there.

So far Caron is the sole candidate to propose adjusting the national price on carbon. Currently, the Liberal government requires every province to institute a price on carbon — either via a carbon tax or cap-and-trade framework — that will reach $50/tonne by 2022.

Caron proposed upping that requirement to $50/tonne by 2020, to $100/tonne by 2025 and $150/tonne by 2030.

That’s still below what Mark Jaccard and his research team at Simon Fraser University have calculated would be required if carbon pricing was exclusively relied on to hit Paris Agreement targets: $200/tonne by 2030.

It’s still significantly more specific than anything being offered by any other candidate.

Ushering in a Green Future

Aston, Angus and Singh have each proposed the creation of new government positions or agencies to help Canada usher in a new sustainable economy.

For Ashton, that includes the co-creation of a Crown corporation called Green Canada and a public investment bank. Together, the two institutions would help fund green housing projects, public transit, renewable tech, upskilling jobs in “sunset” industries, national retrofit program and a “young green job guarantee.”

Ashton’s plan for a publicly funded infrastructure bank is a big departure from the Liberal government’s controversial support of private investment in Canada’s $35-billion Infrastructure Bank.

Ashton noted there is a potential for 700,000 clean jobs in the construction and operation of renewable energy by 2050. To foster that potential, Ashton proposed the creation of four new Green Canada Advisory Boards to focus on forestry, agriculture, fishing and energy.

Angus also proposed an alternative to Canada’s Infrastructure Bank in the form of a new Crown corporation designed to facilitate “sustainable development” in energy, transit and “municipal redesigns.”

Meanwhile, Singh pledged to establish a climate change advisory group as well as a climate change action officer to keep track of progress on emissions.

Big Spenders

Only Ashton and Caron mention specific figures when it comes to funding of green programs.

Ashton dedicated a massive $10 billion per year to build 40,000 units of green public housing, amounting to over 150,000 houses in her first mandate.

She noted that she would pay for that and other programs with increased taxation on high-income earners and corporations, as well as deficit spending given low interest rates.

Caron also threw out a $10 billion figure to spur investment into electric high-speed rail in the revered Calgary-Edmonton and Quebec City-Windsor corridors over a 10-year period.

The amount won’t be enough to cover all the expected costs of such a project, however. Estimates for the corridors come in at $6 to $10 billion and $20 billion, respectively.

Caron would also dedicate $18 billion to public transit expenditures over a decade, $4.7 billion to clean drinking water in Indigenous communities and $32 billion in renewable investments (it’s unclear if the latter would be direct investments or grants/subsidies).

Possibly the most extravagant of all, Caron pledged to rebate up to $8,000 per electric vehicle up to a value of $40,000, and a huge $50,000 when purchasing medium- and heavy-duty electric buses or trucks.

Both Angus and Singh were significantly lighter on the details.

Singh has pitched ideas like a national public transit strategy to provide “long-term and predictable funding” and providing tax rebates for zero-emission vehicle purchases. But no particular dollar figures have been assigned to these ideas.

Same goes for his proposal to implement nationwide energy efficiency measures, kick off a renewable heating program and construct a much-needed east-west supergrid to share excess low-carbon electricity to neighbouring provinces.

Meanwhile, Angus provided a mere four bullet points in his climate platform, but one, notably, aims at eliminating Canada’s estimated $3.3 billion in annual subsidies for the oil and gas industry.

The other three priorities are develop a national carbon budget, a carbon budget council and, as mentioned above, a new Crown corporation to spurn sustainable development.

Driving the Electric Car Market

There’s also a fairly consistent support of a transition to electric vehicles among all four candidates.

Ashton stated that her government will phase-out gasoline- and diesel-fueled vehicles by 2040.

That’s exactly in line with recent commitments by the U.K. and France, and well behind Norway’s pledge to phase out by 2025. Her platform also indicated support for low-income households with interest-free loans to buy electric vehicles in the push to 2040.

Singh announced he will introduce a zero-emission vehicle agenda for Canada, including a levy on high-emitting vehicles and a tax rebate for electric vehicle purchases.

Zero-emission regulations were also promised by Caron in order to help facilitate a push for half of all vehicles on roads to be electric by 2041. His platform added that a regulatory regime would be implemented two years after he reaches office, combined with investments into R&D for ensuring that rare earth minerals and lithium are secured for manufacturing the vehicles.

None of the candidates have yet mentioned a zero-emission vehicle mandate as successfully deployed in jurisdictions like California or Quebec.

Broader, More Specific Policies Needed

Once all the ballots have been counted, there will be another two years for the new leader to refine their platform and mobilize support for the next federal election.

Giving an idea of what’s to come, most candidates have a few extra policies worth mentioning.

Singh shouted out the need to accelerate methane regulations, emphasize carbon price rebates for low-income families and protect Canadian pensions, savings and RRSPs by requiring fossil fuel companies to disclose climate risk.

Ashton advocated the need to “green” data storage and invest more in the international Green Climate Fund in the form of grants rather than loans.

Caron brought up the need to address climate justice, suggesting Canada ease migration barriers for those leaving their homes due to climate impacts. In addition, Caron plans to implement a carbon tariff on imports from other countries that have lower carbon prices, diverting revenue to companies that are impacted because of lower prices.

There are certainly broader questions to be answered around the influence of the oil and gas industry, recognizing the rights of indigenous peoples, especially when it comes to the assessment and approval of major projects and Canada’s larger transition to a sustainable, renewable energy economy.

Ballot results will be announced between October 1 and 15.

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The Alberta Energy Regulator — responsible for regulating more than 430,000 kilometres of pipelines in the province — has finally started to try to clean up its image.

In the last two weeks of February, the agency launched a “pipeline performance report” that graphs recent pipeline incidents, it levelled a $172,500 fine against Murphy Oil for a 2015 spill that went undetected for 45 days and it shut down all operations by the notoriously uncooperative Lexin Resources, including 201 pipelines.*

But critics suggest there are major systemic flaws in the Alberta Energy Regulator (AER) that still need to be addressed if pipeline safety is to be taken seriously.

“It’s absolutely ridiculous,” says Mike Hudema, climate and energy campaigner for Greenpeace Canada. “You’re talking about a spill that went undetected for 45 days. And the company was fined an amount that they could likely make in less than an hour. That doesn’t send any message to the company. It definitely doesn’t send any message to the industry. And it doesn’t reform company behaviour.”

Ecojustice lawyer Fraser Thomson agrees there are major gaps in oversight.

“There are still significant, significant issues with transparency and accountability on what the AER calls ‘incidents’ within the oil and gas sector,” Thomson said.

AER Accused of Mixed Mandate, Industry-Friendly Structure

The AER was formed in late 2012 with the merging of the Energy Resources Conservation Board and some duties of the ministry of environment and sustainable development.

It’s been under fire from critics ever since.

For one, it’s often accused of having a mixed mandate. Only a month-and-a-half after forming government in 2015, Alberta Premier Rachel Notley suggested the AER can’t do the job of environmental protection and monitoring when its “overarching mandate is to promote energy development.”

Notley reported the government would review the AER’s mandate and potentially split it into two agencies: one for monitoring, another for approvals. But only six months later, the AER received a letter confirming the current organizational structure would be maintained.

“We haven’t really seen much sea change,” Hudema said. “Until that happens, unfortunately Alberta will be plagued with the pipeline problems that has plagued it for decades.”

It hasn’t helped matters that the AER’s chair Gerry Protti was a former Encana executive and founding member of the Canadian Association of Petroleum Producers, or that the AER is entirely funded by industry.

In 2013, Notley — then serving as the NDP’s environment critic — called on AER CEO Jim Ellis to resign due to his involvement in a scandal about the suppression of anti-oilsands dissent by government, describing the situation as “banana republic stuff.”

It’s a sentiment reflected by renowned ecologist Kevin Timoney, who recently reported that the AER has vastly underestimated spill volumes and recovery efforts between 1975 and 2013.

“There was some movement towards improving monitoring [in recent years] but those efforts have been undermined by senior management,” he writes in an e-mail. “Enforcement is still little more than a facade.”

Online Database An Improvement, But "Pretty Frail"

Duncan Kenyon, director of the Pembina Institute's responsible fossil fuels program, says the AER first made it a serious priority to deal with pipeline spills following the 2012 release of 461,000 litres of sour crude oil into the Red Deer River by Plains Midstream.

That same year, the provincial government ordered a pipeline safety review, which ended up being itself criticized by Notley and others for failure to consult or actually consider incidents (instead opting to simply compare regulations to other jurisdictions).

Recent spills haven’t exactly bolstered the regulator’s reputation.

The aforementioned Murphy Oil spill in 2015 resulted in 9,000 barrels of condensate spilling onto public land near Peace River. A spill at Nexen Energy’s Long Lake facility that same year released 31,000 barrels of emulsion between June 11 and July 15, despite being a brand new pipeline.

Around 1,500 barrels of oil emulsion was also spilled by Trilogy Energy near Fox Creek in October 2016.

Thomson notes that an incident first reported in 2013 involves a Canadian Natural Resources Limited in-situ project near Cold Lake in which bitumen started bubbling to the top over the period of months and years. The AER’s compliance dashboard lists the incident as “ongoing” with the “emergency phase over July 17, 2013.”

He says that he still can’t get an answer to whether the spill is happening or not.

“When it comes to the information that people want to know — what’s the risk here, is it safe, is there a safety risk to humans, wildlife environment and treaty rights — the compliance dashboard is a pretty frail tool to access it,” Thomson said.

In addition, he notes that language used by the AER often confuses things for the public: for instance, the regulator will use “produced water” in reference to “toxic water” with a high concentration of salts that are dangerous to local environments and often have oil residue in them.

Similarly, he says the AER will report “no recorded impacts” as opposed to “impacts unknown.”

“I think it would be reasonable for the public to read that and assume there weren’t impacts, when it’s really a turn of phrase,” Thomson says.

#Alberta’s Pipeline Oversight a ‘Facade’: Experts https://t.co/4942NmkdkM @james_m_wilt @HuffPostAlberta @ProgressAlberta #ableg #cdnpoli pic.twitter.com/nq8N7xd0CJ

— DeSmog Canada (@DeSmogCanada) March 23, 2017

Self-Reporting Only Works If Regulator Ensures Compliance

The AER claims that the length of pipelines in Alberta has grown by 11 per cent over the last decade, with “incidents” dropping by 44 per cent.

But Timoney’s recent report complicates the matter even further, suggesting that many spills weren’t recorded, and that many former oil spill sites that have reportedly been reclaimed are still contaminated from pipeline leaks.

“According to the data that I have received from the regulator, the number of spills has declined in recent years,” he explains in an e-mail. “However, it is important to remember that those data are based on industry self-reporting; they are not independently verified. Incidents occur that are not reported, but the frequency of unreported incidents is not known.”

Kenyon agrees: “If you don’t have a regulator who’s going out and actually seeing if people are complying — going out there and doing audits and seeing if what they said in their self-report is accurate — then none of that data is worth anything.”

Alberta’s Fines Well Below National Average

That’s why many point to the lack of enforcement as a key problem.

That starts with fine limits, which is established by the province. Alberta has fairly low caps on penalties compared to other provinces, Thomson says.

Data compiled by Ecojustice and shared with DeSmog Canada indicates a clear trend: the provisions that are most often used — Section 108(2) and 109(2) of the Environmental Protection and Enhancement Act, concerning the “release of substance causing adverse effect to environment” — has a cap of $500,000 in Alberta, compared to a cap of $1 million in B.C., Saskatchewan, New Brunswick, Nova Scotia and Newfoundland.

In Ontario and Quebec, the maximum limit for first conviction is $6 million. The only provinces that have an equal or lower cap are Manitoba ($500,000) and Prince Edward Island ($50,000).

Cheaper to Pay Fines Than Maintain Pipelines

But the “administrative penalties” issued by the AER often fall well below that $500,000 mark.

The largest fine issued yet by the regulator was $250,000 against Pengrowth Energy for the 48-day spill of 537,000 litres of oil emulsion in late 2013. The recent fine against Murphy Oil was also one of the highest penalties in the AER’s history; Thomson says it was calculated based on every day the company failed to report it, which is a “positive development.”

The strange reality is that many pipeline companies do have leak detection systems in place. It’s just that companies often don’t direct resources into maintaining them, following what Kenyon calls a standard compliance versus non-compliance cost comparison model; in other words, it’s cheaper to ignore and risk the fine than pay for annual maintenance.

In the case of the Murphy Oil spill, the company failed to check for internal corrosion and perform maintenance on the leak detection system for three straight years even though it was required to check annually.

“You can put a management system in and then have it down in paper, but not everything is operating the way it’s supposed to,” he says. “And then you can claim when there’s a foul up that it just wasn’t operating as it was supposed to. But you never turned it on the way it was supposed to.”

More Boots on the Ground Needed

An AER spokesperson emphasized in an e-mail that the agency is working on addressing data collection issues and improving reporting spill clean-up.

In addition, the spokesperson said the regulator requires operators to implement “comprehensive integrity management programs and safety and loss management systems,” conducts “pipeline inspections on a regular basis” and provides “education on pipeline integrity.”

However, changing the trajectory of the AER ultimately requires new “marching orders” from the provincial government via an expansion of mandate, pressures to prioritize compliance and an increased limit on fines. It’s something the NDP has appeared reluctant to do; Kenyon says there “might have been more pressure coming on pipelines under the previous government.”

The press secretary for energy minister Margaret McCuaig-Boyd says via e-mail there are no plans to revisit the government’s decision to keep the AER as is.

Thomson says he’s not convinced that splitting up the regulator would address some of the systemic problems, which ultimately require more boots on the ground: “Industry needs to know that if they submit data and monitoring to the AER, that there’s a good chance it will be checked.”

Meantime, the Alberta government continues to push for any and all new pipelines, from Kinder Morgan Trans Mountain to Trans Canada’s Keystone XL and Energy East.

“I really feel like the government should get its own pipeline problems in order before it’s pushing for new pipelines to new jurisdictions,” Hudema concludes.

“When you’re averaging over one spill a day, it’s not something that you should be bragging about or pushing into new communities.”

*Correction: The article originally stated that the AER had recently launched its compliance dashboard. The dashboard has in fact been available for a few years. The regulator recently launched a “pipeline performance report” that graphs recent pipeline incidents

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Access to world markets for Canadian oil has been available since 1956 when the Westridge dock was constructed in Burnaby, B.C., and linked to the Trans Mountain pipeline.

The dock’s export capacity has rarely been used to its full potential in more than 60 years — yet the oil industry and politicians continue to make the argument that Canada needs new pipelines to get oil to world markets.

Here are four reasons that argument doesn’t fly.

1) Existing Export Capacity Isn’t Being Used

In 2011, the National Energy Board (NEB) provided Kinder Morgan with a favourable and unprecedented ruling when it allocated guaranteed access to the dock under 10-year take-or-pay contracts with five crude oil shippers.

Kinder Morgan promised that 79,000 barrels a day of tidewater access would lead to the development of international markets for Alberta’s crude.

It didn’t.

Guaranteed access means the dock can service 60 crude oil tankers a year. But according to statistics compiled by Port Metro Vancouver, not even a third of that number were loaded during 2016 — and most of those tankers went to U.S. ports. The equivalent of one tanker was loaded with Alberta’s heavy oil and destined for a non-U.S. port during the entire year. Seventeen went to U.S. destinations.

If Canadian oil needs to get to world markets as desperately as some claim, why isn’t existing access being used? It’s because there is no demand for it.

2) Energy East Won’t Reduce Reliance on Foreign Oil

“The lamentable state of crude oil pipeline infrastructure makes parts of this country reliant on foreign oil and our petroleum exporters dependent on the United States, which buys Canadian product at a deep discount,” wrote Conservative Senator Michael MacDonald in the Hill Times.

Eastern Canada has a dependency on imported oil because the refineries located there are configured to process primarily light oil. Energy East is intended to facilitate the transport of diluted bitumen from Alberta’s oilsands so will not reduce eastern Canada’s reliance on imported crude to any significant degree.

But there is another source of dependency on imported oil that is rarely acknowledged. Oilsands producers are dependent on imported condensate as a diluent for bitumen blending purposes. This is because oilsands heavy does not flow down a pipeline unassisted — it’s too dense.

Canada does not produce enough condensate to meet oilsands producers’ demand. Since 2005, condensate imports from the U.S. have increased significantly. For every three barrels of increased oilsands production, a barrel of condensate is imported. Thus, as oilsands production expands, Canada’s import dependency expands with it.

So if we want to see a reduction in Canada’s reliance on foreign oil imports we must advocate for a reduction in oilsands production or an increase in upgrading and refinery capacity in Alberta. Otherwise, the minute bitumen is shipped along a pipeline, it generates a growing dependency on crude imports.

3) Canadian Oil Producers Are Not Truly Dependent on U.S. Markets

Some suggest that Canadian producers are somehow dependent on U.S. markets. The majority of Canadian producers are not “dependent” on the US. They have integrated refinery operations there. To a significant extent Canadian producers supply their own crude to themselves or their joint-venture partners as U.S. refiners.

When Suncor sells into its Commerce City, Colorado, refinery, or Cenovus supplies its facilities in Wood River, Illinois, and Borger, Texas, owned in a joint venture with Phillips 66, or Husky supplies its refinery in Toledo, Ohio, it owns in partnership with BP, or Imperial and its parent, ExxonMobile, deliver crude from their joint venture to ExxonMobile’s U.S. facilities, it is hardly accurate to suggest that they are “dependent” on the U.S. market.

4) Canadian Oil Is Not Selling at a ‘Discount’

Many argue that the U.S. “buys Canadian product at a deep discount,” but that’s incorrect. There is a natural price discount between U.S. oil and Canadian heavy oil that will always exist because of quality and transportation cost differences.

Oil is traded in U.S. currency. Canadian crude is priced against a benchmark to U.S. produced light oil; West Texas Intermediate (WTI). To examine the differential and whether there is a discount that is outside the expected natural range requires that we compare WTI to Canadian crude prices. To do this for oilsands crude is to look at the price for WTI as compared to the price for Western Canadian Select (WCS)—the highest grade of Canadian heavy.

The natural discount for WCS compared to WTI, according to the National Energy Board is about 30 per cent — or roughly $20 US per barrel. A price differential of WCS to WTI of less than $20 U.S. would therefore be considered a “premium” price for WCS. WCS has been trading at “premium” since 2014. Currently, the differential is only $14 U.S. a barrel.

Robyn Allan is an independent economist and was an expert intervenor at the National Energy Board Trans Mountain Expansion hearing.

Photo: Jon Olav Eikenes via Flickr

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On January 9, the National Energy Board (NEB) finally announced the new panel members that will review TransCanada’s proposed Energy East pipeline, replacing the trio that recused themselves in September 2016 after revelations that panel members had secretly met with a TransCanada consultant.

But within hours of news breaking about the new panel members, a notice of motion was filed by the environmental law firm Ecojustice on behalf of Transition Initiative Kenora, calling for the complete cancellation of the entire Energy East review based on an unresolved “reasonable apprehension of bias.”

“The original panel presided over the review for years,” says Charles Hatt, one of the two Ecojustice lawyers representing Transition Initiative Kenora, in an interview with DeSmog Canada.

“All of those important decisions that they made along the way occurred after the conduct that gave rise to the reasonable apprehension of bias, after those meetings with the interested stakeholders.”

Hatt says it is clear the entire proceeding had been tainted by the reasonable apprehension of bias.

“There’d be no way for this new panel to look back and try to determine which of those many decisions were tainted and which were not.”

For Hatt and representatives from Transition Initiative Kenora, it simply isn’t enough for the former panel members to recuse themselves. The original panel’s work is tainted by a the apprehension of bias which Hatt describes as “the idea that there’s been some conduct that in the eyes of a ‘reasonable person’ gives rise to the perception of bias.”

These lingering concerns have led the petitioners to request the National Energy Board void the entire proceedings, leaving TransCanada with the option of starting from scratch.

‘Tainted’ Panel Made Dozens of Preliminary Rulings and Requests

The original Energy East review panel was announced in December 2014.

Only the following month, the two review panel members and NEB chair/CEO Peter Watson met privately with former Quebec premier Jean Charest, who was then working as a consultant for TransCanada.

While the NEB denied it at first, the meeting did in fact include specific discussions about Energy East including suggestions of “using the ‘Lac Megantic example’ to show that pipelines are safer than rail.”

Other private meetings took place that Watson and the panel members didn’t publicly disclose.

At least a year-and-a-half of preliminary work was completed by the panel prior to the beginning of the formal review in June 2016. This work was completed without any acknowledgment that members of the review panel had secretly communicated with the project proponent.

The new notice of motion by Transition Initiative Kenora, submitted to the NEB on Jan. 10, reports that the previous panel decided “dozens of procedural and substantive matters that have shaped the Board’s review of Energy East,” including 27 rulings, six procedural directions and nine information requests to TransCanada.

It notes the original panel also determined when TransCanada’s project application was complete and decided who could or could not participate as intervenors in the National Energy Board’s review of Energy East.

“It’s a continuation of work that we had started earlier,” says Teika Newton, executive director of Transition Initiative Kenora.

“We filed the notice of motion back in August that resulted in the original review panel recusing themselves in September. This is a natural progression on that.”

NEB Has to Respond to Notice of Motion or Refer It to Federal Court

Newton’s organization has specific concerns about the proposed construction of Energy East, especially the impacts of a potential oil spill on water sources, wetlands and marshes.

But she emphasizes the notice of motion is something that should concern any participating group given the need to ensure a fair regulatory process and review: “I don’t think we’re any different or have any unique concerns just because of who we are or where we are.”

“I think it’s an issue that applies universally to all participants,” she says.

Transition Initiative Kenora must now wait for the new panel to formally issue a response to the motion.

Hatt says the NEB will have to hear from all interested parties, which will include TransCanada and many intervenors. It could take weeks or longer to hear from all parties, after which the panel will have to make a decision.

The National Energy Board can refer the matter to the Federal Court of Appeal or could refuse to grant relief.

Hatt says “if and when that happens we will advise our client about challenging that decision in court.”

He adds that the motion provides the federal government with the opportunity to restart the process under a renewed National Energy Board Act and Canadian Environmental Assessment Act, both of which are currently under federal review.

Strengthened environmental laws could result in “a totally different type of review of these important pipeline projects,” Hatt says.

“They’ve put bandaids on the existing legislation but it’s still the legislation that was reformed by the previous government.”

It was also announced on Jan. 9 that Ginoogaming and Aroland First Nations had filed a lawsuit and injunction against TransCanada to ensure proper consultation for pipeline maintenance and prevent “integrity digs” that some fear are actually preliminary work connected to Energy East.

Environmental Defence has also called for the NEB to “pull the plug on the Energy East review and restart it only when an overhauled review process with a credible climate test is in place.”

Newton says her group is “content to just see what happens next in this ongoing saga.”

Image: Environmental Defence poster outlining risks of TransCanada's Energy East pipeline. Photo: Environmental Defence via Flickr (CC BY-NC 2.0)

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Prime Minister Justin Trudeau’s performance at the UN Climate Summit in Paris last December wooed and amazed the international community.

Fresh off the election circuit, Trudeau proudly proclaimed, “Canada is back,” to a cheering crowd of global delegates.

Just days later Canada, along with the rest of the international community, signed the Paris Agreement, a historic treaty designed to limit global temperature rise to two degrees Celsius (or as close to 1.5 degrees as possible) that came into effect Friday, November 4.

But A LOT has happened in the interim in Canada, between signing the document and its coming into force.

Much of that does not bode well at all for climate action.

Pacific Northwest LNG Approval

Let’s start with the most obvious: In late September the Trudeau government approved the Pacific Northwest LNG export terminal on the coast of B.C.

The project is estimated to be the single greatest point source of greenhouse gas emissions in all of Canada.

The export terminal, proposed by Malaysian gas giant Petronas, will make it impossible for B.C. to keep its climate targets.

The project including upstream impacts from fracked gas is projected to emit 9.2 million tonnes of carbon dioxide equivalent every year, about the same as adding 1.9 million cars to the roads.

According to its own climate targets B.C. was supposed to emit only 13 million tonnes of carbon pollution by 2050. With this new project on the docket those targets are completely blown out of the water.

Laundry list of recent climate offences mitigate Canada's Paris Agreement integrity https://t.co/d9dIGAtkyG #bcpoli #cdnpoli #PNWLNG

— DeSmog Canada (@DeSmogCanada) November 8, 2016

About That Promise to Restore Science…

At last year’s climate summit, Trudeau promised to bring science back to decision making in Canada.

Trudeau promised specifically to make decisions “based on the best scientific information and advice.”

The Pacific Northwest LNG terminal approval infuriated the scientific community which vocally called on the federal government to reject the project’s environmental review because of inadequate or flawed science.

The environmental review excluded the research of peer-reviewed scientists and relied heavily on information provided by the proponent, Petronas.

The LNG terminal is proposed for Lelu Island near the mouth of the Skeena River in a region scientists have termed a unique salmon superhighway — something, incredibly, federal scientists have known about since the 70s when they first deemed the area inappropriate for industrial development.

The federal government’s approval of the LNG terminal has already been met with a legal challenge based on the Canadian Environmental Assessment Agency’s reliance on flawed scientific information.

The Liberal government has promised to review Canada’s environmental assessment process but so far hasn’t given any indication of what kinds of changes might be made. Consultations with the public are currently ongoing.

The federal government also promised to make the decision-making process for major projects more transparent but as the science-advocacy group Evidence for Democracy recently pointed out, that vague promise lacked discernable follow-up.

Honouring Canada’s Indigenous Peoples

In addition to recommitting to science at the Paris climate summit, Trudeau also reinforced his promise to restore relations with Canada’s indigenous peoples.

The Pacific Northwest LNG project, while violating the principles of the scientific community, is also being advanced against the wishes of local First Nations.

The federal government is currently facing two legal challenges from B.C. First Nations opposed to the LNG terminal.

Indigenous peoples in Canada were also troubled by the federal government’s approval of the controversial Site C megadam near the Peace River in B.C.

The hydro dam, which will flood 82 kilometres of river valley and prime agricultural land, has also flooded renewable energy out of the power market in the province all while violating the rights of Treaty 8 First Nations who are fighting the project in the courts.

Approvals of the Pacific Northwest LNG terminal and Site C have concerned First Nations opposed to the Kinder Morgan Trans Mountain pipeline running from Edmonton, Alberta to Burnaby, B.C.

Cabinet is expected to make a final decision on the pipeline in December and many anticipate Trudeau will approve the project despite a lack of local First Nations consent.

A recent ministerial panel report found the Trans Mountain pipeline will have significant and unavoidable impacts on climate and indigenous rights. This report could give the federal government the cover they need to refuse the project.

The same can’t be said for the TransCanada Energy East pipeline. The review of Energy East has been suspended after the National Observer revealed regulators had met in private with company representatives.

On the campaign trail, Trudeau promised to revamp the National Energy Board pipeline review process and indicated pipelines like Trans Mountain and Energy East would be put through a new process. That did not happen.

Weak Climate Targets and a Weaker Carbon Price

Many have also criticized the Trudeau government for adopting the weak and inadequate climate targets of the Harper government. Others (like DeSmog Canada’s James Wilt) have pointed out this is better than adopting more ambitious climate commitments Canada will certainly not meet.

Canada has committed to reduce emissions 30 per cent below 2005 levels by 2030. A recent analysis by the Climate Action Network anticipates Canada will overshoot that target by 91 megatonnes.

Fossil Fuel Presence Still Massive in Canada

Under the Paris Agreement Canada committed to reducing carbon pollution as soon as possible and achieving net-zero emissions by 2050. Meeting those marks will entail a major wind down of fossil fuel extraction and consumption.

Canada, clearly, has not made significant steps in that direction.

Trudeau also promised to transition fossil fuel subsidies from the fossil fuel sector to renewables, but that hasn’t happened yet.

Through incentives and tax breaks, Canadians still subsidize the fossil fuel industry to the tune of $3.3 billion every year.

Image: Justin Trudeau via Prime Minister's Photo Gallery

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The National Energy Board is fundamentally broken.

That was a point repeatedly highlighted by Prime Minister Justin Trudeau during the 2015 federal election — and one confirmed for many with recent revelations that former Quebec premier Jean Charest had privately met with senior NEB officials while on the payroll of TransCanada.

Trudeau and his federal cabinet have the chance to change that: in June, the government announced dual review panels to assess the mandates and operations of the NEB and the country’s oft-criticized post-2012 environmental assessment processes (it also announced five interim principles until those reviews are completed, including a requirement to assess upstream greenhouse gas emissions although it’s unclear how that information is being used).

But for those to serve as anything more than symbolic gestures of goodwill, the pause button must be hit on the reviews of Kinder Morgan’s Trans Mountain and TransCanada’s Energy East pipeline proposals.

Those review processes need to be completely redone once recommendations from the two review panels have been implemented.

If it sounds demanding, that’s probably because it is. But that’s the price of real change.

‘To Govern is to Choose’

If built, the Trans Mountain pipeline and Energy East pipeline would add a combined 1.79 million barrels per day of export capacity from the Alberta oilsands (690,000 and 1.1 million barrels/day, respectively).

Let’s put that in context.

The Canadian Association of Petroleum Producers has projected that heavy oil production will increase 1.45 million barrels per day by 2030, to a total of 3.99 million barrels per day. In other words, the two massive projects currently under review would lock in more than enough export capacity for the oilsands to maximize its growth to 2030.

If paired with the construction of a single LNG export facility in British Columbia, this situation would require the rest of the Canadian economy to contract by 47 per cent from 2014 levels by 2030 in order to meet the country’s Paris Agreement targets (an impossibility “barring an economic collapse” according to David Hughes, who calculated those numbers in a Canadian Centre for Policy Alternatives report).

In other words, approving the two projects would completely botch the country’s chances of meeting international climate commitments.

“When you’re in opposition, you can be strongly committed to contradictory things,” says Keith Stewart, climate and energy campaigner for Greenpeace Canada.

“But to govern is to choose. And the Liberals have been very clear they want to meet our international climate commitments, implement the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and get a pipeline built. The problem is you can have, at most, two of those.”

Why @JustinTrudeau Should Call Off the Reviews of Trans Mountain and Energy East https://t.co/TslT4Z5IbV #bcpoli #cdnpoli

— DeSmog Canada (@DeSmogCanada) August 24, 2016

Opportunity for Canada to Enact ‘Visionary Environmental Laws’

The review of the process has great potential, especially given the impacts of the gutting of environmental assessments in 2012 under former prime minister Stephen Harper.

Anna Johnston, staff counsel at West Coast Environmental Law Centre, describes the review as a “once-in-a-generation opportunity for Canada to enact really visionary new environmental laws and processes.”

Johnston says a key component is to hold projects to a higher standard — requiring companies to prove net benefits as opposed to not simply posing a “significant adverse impact” — as well as measuring total cumulative impacts. Such an approach would result in a threshold of potential greenhouse emissions, meaning some projects simply wouldn’t be considered due to impacts on meeting climate targets.

“Those are just going to a red light and won’t even need to go through an environmental assessment process as we know this huge project is going to take up way more of its fair share of greenhouse gas emission allocations,” she says.

The panel members for reviewing environmental assessment processes were announced on August 15: it will be chaired by Johanne Gélinas of consulting firm Raymond Chabot Grant Thornton, Renee Pelletier of the Aboriginal law firm Olthuis, Kleer, Townshend LLP, Rod Northey of law firm Gowling WLG and Doug Horswill, senior vice president of Teck Resources and “honorary life director” of the Mining Association of Canada. (Interestingly, Bob Rae is a senior partner at Olthuis, Kleer, Townshend and Rod Notley has donated $17,000 to the Liberals since 2004).

Erin Flanagan, director of federal policy at the Pembina Institute, says the panel has “a solid balance of perspectives and experience on the file.”

The panel members for the NEB review haven’t been announced yet. The executive summaries of the final reports will be published on January 31, 2017; Flanagan emphasizes “the clock is ticking – it’s a huge mandate to execute on by early 2017.”

There’s plenty of ground to cover.

Trans Mountain, Energy East Remain Exempt

But even if the review panels produce progressive recommendations — for instance, calling for the revamping the Canadian Environmental Assessment Act, returning the responsibility for federal environmental assessments of interprovincial and international pipelines to the Canadian Environmental Assessment Agency and treating Indigenous nations as much more than an afterthought — they wouldn’t apply to the two biggest pipeline projects in recent Canadian history.

The federal cabinet will be making a decision on the Trans Mountain pipeline before Christmas, a full month before the review panels deliver their recommendations (the NEB approved the project in May with 157 conditions). This occurs in contradiction to a promise Trudeau made during the election that the NEB review would apply to the project.

The government’s ad-hoc supplementary review panel, intended to improve public consultations, has come under serious fire for conflict-of-interest allegations and failures to offer translation services or livestreaming, in many ways pointing out the massive flaws of the existing process.

Those meetings have, by and large, been an opportunity for communities to voice their majority opposition to Trans Mountain and the review process. In the case of Vancouver and Victoria, the overwhelming number of public participants voiced opposition to the pipeline project.

The NEB’s review process for Energy East is already underway via panel sessions in communities. The bulk of the work won’t start until 2017.

But if the federal government is serious about addressing concerns about the NEB, why not hold off on the panel sessions until community members are fully aware of the stakes? Currently, intervenors are operating under the expectation that the NEB will be responsible for conducting the environmental assessment of Energy East, a reality that could very well change if the dual review panels recommend serious alterations to processes.

Canadians Still Without Restored Environmental Laws

In February, Ecojustice argued in regards to the TransCanada project that “the government missed a golden opportunity to put the entire process on hold until legislative amendments could effectively repair the damage done by the Harper government’s rollbacks.”

Green Party leader Elizabeth May has also voiced concern, stating in June 20 press release that “I vigorously opposed the idea of a drawn-out consultation without first repealing the devastating changes made to environmental assessment in omnibus budget bills of 2012” and “the government is choosing to continue with a broken system while it consults stakeholders.”

The future changes may be hugely beneficial, barring carbon-intensive LNG facilities, oilsands upgraders and other industrial emitters from ever entering the review process. But the Trans Mountain pipeline and Energy East could very well be on the path to construction and export, further jeopardizing Canada’s environmental reputation.

Government Hanging onto ‘Deeply Flawed’ Process

The Liberals have already established an unfortunate track record of blaming the previous government for politically unsavoury decisions they could have very well stopped: think the controversial sale of light-armoured vehicles to Saudi Arabia, the government’s decision to withdraw an appeal to force the Catholic Church to pay reparations for its significant role in running residential schools or the approval of permits for construction on the controversial Site C dam in B.C.

It’s a bit of a sunk costs fallacy, but one shaded by an obvious desire to keep the real political mechanisms and motives under wraps.

The same appears to be occurring with the two major pipeline approvals. The government made the powerful and convincing argument during the election that the review process was broken. Yet it has allowed the NEB to continue reviewing Trans Mountain and Energy East.

“You had Trudeau say that this process isn’t credible,” Stewart says.

“So what are you actually going to do about that? How can you approve a major controversial project based on a process that you’ve already said is deeply flawed and is proved once again that it’s deeply flawed? I just don’t understand how they think they can move that forward.”

Image: Prime Minister Justin Trudeau and B.C. Premier Christy Clark meet in Burnaby, B.C., site of the Kinder Morgan Trans Mountain export terminal. Photo: Prime Minister's Photo Gallery

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You know you’ve got the attention of the fossil fuel industry when the Financial Post’s Claudia Cattaneo pens a dismissive column about your efforts.

On Tuesday, Cattaneo — recently dubbed “everyone’s favorite oil and gas shill” by American Energy News — bestowed the honour on a new report about TransCanada’s proposed Energy East pipeline, published by the Natural Resources Defense Council and 13 other environmental organizations including 350.org, Greenpeace and the Sierra Club.

“Canadian [sic] are also right to wonder why a deep-pocketed U.S. group with an army of lawyers is meddling in an all-Canadian pipeline project,” she opined in her 820-word column, shortly after insinuating the Natural Resources Defense Council “needed to conquer and make money off a new dragon” following the presidential veto of the Keystone XL pipeline in 2015.

The idea that Energy East only concerns Canadians is a curious perspective. But it’s certainly not a unique one.

The Energy East project, requiring 1,500 kilometers of new pipeline and the conversion of 3,000 kilometers of existing natural gas infrastructure in order to transport up to 1.1 million barrels of dilbit per day, has been heralded by many as a quintessentially Canadian project, comparable to the Canadian Pacific Railway in scope and significance. Even Rick Mercer argued for its construction.

Unlike the Kinder Morgan’s proposed Trans-Mountain Expansion, however, there’s been a fair bit of obfuscation about what the desired market is for the transported product.

That’s a key problem for a big picture defence of the project.

Some have contended that Energy East will transport products for consumption in Eastern Canada, helping to foster energy security by breaking a reliance on imports from the Middle East. Such a reality would indeed seem like an “all-Canadian pipeline project” and justify Cattaneo’s confusion about why U.S. organizations are getting involved in the battle.

But as the Natural Resources Defense Council’s new 24-page report (ominously titled “Tar Sands in the Atlantic Ocean“) sketches out, the U.S. has many, many reasons for concern: threats to marine mammals, vulnerable ecosystems and progress on climate change, for starters.

“From the U.S. perspective, [Energy East] is a huge project that right now feels as if it’s being snuck in,” says Josh Axelrod, a Washington, D.C.- based policy analyst at the Natural Resources Defense Council and co-author of the report in an interview.

”We’re worried if it remains on the down-low that our regulators will basically find out about dilbit tankers the day something goes wrong and will not be prepared for it. We would like to, at the very least, have them prepared, if not express their disapproval of the idea.”

Sinking Tarballs, Whale Collisions: Potential Impacts of #EnergyEast on the U.S. Coast Detailed in New Report https://t.co/wCTtKXg8bG

— DeSmog Canada (@DeSmogCanada) July 28, 2016

Tankers Could Move 328 Million Barrels of Oil Per Year in U.S. Water

Axelrod’s quick to point out there’s “no compelling case” for the suggestion that Energy East is planned to transport oil for Canadians to use.

In TransCanada’s May 2016 consolidated application to Canada’s National Energy Board, the company estimated it would ship up to 281 tankers every year.

Axelrod says the proposed tanker configuration amounts to 900,000 barrels a day.

By the report’s estimates, tankers could move up to 328 million barrels of oil to refineries in New Jersey, Delaware, Louisiana and Texas: the U.S. Gulf Coast sports 25 refineries, 17 of which have a history of processing heavy oilsands crude.

Meanwhile, New Brunswick’s Irving refinery doesn’t have the capacity or even necessarily the desire to process dilbit (Axelrod adds the reversal of Enbridge’s Line 9B in September makes Energy East less useful to the Montreal refineries).

This matters a great deal. If TransCanada was intending to transport and sell dilbit to Canadian refineries for Canadian usage, it would indeed be odd for a report to call for a moratorium on tankers; Cattaneo strangely suggested in her column that the proposed ban is “a bit surprising given that oilsands tankers would be leaving from a Canadian port, making it harder to block by the U.S. administration.”

For at this point, the facts seem clear: tankers will be leaving a Canadian port and travelling through American waters with potentially catastrophic impacts in the case of a spill or accident.

Dilbit Spills Notoriously Difficult to Clean Up

The report points to two major incidents that have occurred in the past few years — the 2010 Enbridge spill in Michigan’s Kalamazoo River, and the 2013 ExxonMobil spill in Arkansas — as examples of the difficulties of containing and cleaning up a dilbit spill.

A 2016 report by the National Academy of Sciences emphasized that dilbit sinks in water and doesn’t biodegrade easily, making a spill far more disastrous than its conventional counterpart.

And that’s not even to speak of issues like ship strikes (when ships hit whales or other marine mammals), noise pollution or the accidental transportation of invasive species.

These are all issues that one would hope regulators would consider in their review of projects. But Axelrod says the National Energy Board (NEB) has “really flubbed this,” using a process that fails to consider cumulative impacts or acknowledge difficulties with cleaning up other dilbit spills.

“The NEB likes to make it seem like their processes are straightforward but they’ve really made it into a disaster,” he says. “There’s pro forma discussion of some of the impacts but a very limited scope.”

Energy East Exempted From Environmental Assessment Overhaul

There is still lots of time to correct such problems: the NEB’s consultation process will be continuing until 2018, while the very earliest Energy East could start transporting dilbit would be 2021.

But companies including TransCanada and Kinder Morgan have already been told by the federal government that “no project proponent will be asked to return to the starting line,” with the exception of the evaluation of their upstream greenhouse gas emissions.

“I hope it’s being used as a way to look at a project’s impacts on provincial and national climate goals and international commitments, and if that’s the case it could be a useful tool,” Axelrod says. “But it really misses a lot of the project’s climate impacts.”

And given the NEB will almost certainly approve the project — since 2012, the body has had to conduct environmental assessments and consultations, tasks that are far outside of its original mandate — that’s a problem the federal cabinet will have to confront.

Kinder Morgan’s Trans-Mountain pipeline expansion will be decided upon before Energy East. But that’s a far more complicated project due to dozens of unresolved First Nations land claims. The Alberta NDP also appears to have put more long-term hope in Energy East due to such factors.

But if Canada does end up approving Energy East — and, of course, depending on who’s elected as president of the United States — it may end up seeing a similar conclusion to what happened with the Keystone XL pipeline: pushed for by Canada and rejected by America due to potential impacts on environments and wildlife.

Maybe, by then, it will have all started to make sense for Cattaneo and her pals.

Image: NRDC

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After decades of insufficient or insincere attempts to address emissions from Canada’s fastest growing source of climate pollution, a new government-sponsored oilsands advisory group may help resolve political gridlock surrounding the nation’s most contentious natural resource by bringing together industry, environmental and indigenous stakeholders.

The Oil Sands Advisory Group (OSAG) is tasked with helping the province implement a new emissions cap for the oilsands that limits greenhouse gas output to 100 megatonnes per year and will also advise on reducing the overall environmental impacts of production, according to a government statement released Wednesday.

According to Tzeporah Berman, the group's co-chair and a well-known environmentalist, the composition of the advisory group represents a notable shift in the political landscape.

“Let's be clear: under previous governments environmental leaders had very little access and were outright ridiculed by many ministers and departments,” Berman told DeSmog Canada. “First Nations leaders were simply shut out. Climate change was denied.”

“A lot has changed in a year in Alberta and it is opening up new conversations.”

Alberta announced new climate legislation last fall that for the first time in the province’s history put an end to the notion of endless oilsands growth. Upon release of the new plan, Premier Rachel Notley, flanked by leaders of industry, prominent environmental organizations and local First Nations, said, “This is the day we stop denying this is an issue, and this is the day we do our part.”

The climate plan marked not only a new era of climate leadership (it was called a “pigs fly” situation) but a fresh approach to resolving the political gridlock that for years has pitted climate advocates and environmental groups against a seemingly entangled block of government and industry.

Berman, who stood with Notley during the climate plan announcement in November, said she’s optimistic that, working together, these strange bedfellows can make real change to a stagnant climate leadership environment and “move past the polarization of the oilsands.”

“The fact that the government just appointed people like me, who have been fierce critics shows its resolve to face and solve the hard stuff,” she said. “So instead of trading opinions through the media, those of us who have been 'adversaries' will be sitting down with a common purpose and a shared mandate.”

Dave Collyer, group co-chair and former president of Canadian Association of Petroleum Producers, echoed the sentiment: “It is the diversity of this group and its problem-solving focus on emissions leadership, local environmental performance and innovation that will help de-escalate conflict and contribute to the ongoing success of this important industry.”

According to the Conference Board of Canada, Canada ranks among the worst in the world for per capita greenhouse gas emissions, following the U.S. and Australia. Although Alberta accounts for only 11 per cent of the population, it contributed 36 per cent of national emissions in 2013.

The oilsands are Canada’s fastest growing source of greenhouse gas emissions and those emissions are projected to grow enough to nullify emissions reductions in other sectors and jurisdictions across the country.

“The simple fact is Alberta can’t let its emissions grow without limit,” energy minister Margaret McCuaig-Boyd said in a statement, “but we can grow our economy and our market by showing leadership, including reducing our carbon output per barrel.”

Simon Dyer, member of the new advisory group and director of the Pembina Institute in Alberta, said Alberta is finally treating oilsands environmental management and climate change “as they deserve to be treated: as serious public policy issues that need big change.” 

“I’ve been working on these issues for more than a decade and it was always traditionally framed as just a communications, PR air war,” Dyer told DeSmog Canada, adding the change in government engagement is “very welcome.”

There are still lots of issues in the oilsands that need to be resolved, Dyer said, “but they are only going to be resolved by a lot of people talking about them and the government making substantive changes.”

Alberta is playing catch up when it comes to environmental management and embracing renewable energy, Dyer said.

Earlier this week the government announced new incentives for enhanced oil and gas programs, something many in the environmental community were distressed to see. Equally distressing for some climate advocates is the province’s staunch support of building new oil export pipelines.

“I think what the government is trying to do is allay concerns they are anti-oil and gas and at the same time recognizing that a new economy is going to have to be based on renewables so we have to expand the clean economy,” Dyer said. “That’s the political reality in Alberta. It’s unfortunate but we’re behind and playing catch up.”

“That something like moving to 30 per cent renewables could be considered risky or out of step with the mainstream just shows how far behind Alberta has been and this government has to make big strides going forward,” Dyer added. “But they have to bring the rest of Alberta with them.”

#Alberta Brings Former Adversaries Together for New #Oilsands Advisory Group https://t.co/zzYjqLfAtJ #ableg #cdnpoli pic.twitter.com/AXGeaio0HG

— DeSmog Canada (@DeSmogCanada) July 18, 2016

For years the oilsands have faced growing civil society opposition, especially with respect to expansion, impacts on First Nations treaty rights and the construction of new or expanded oilsands export pipelines.

Adam Scott from Oil Change International said his organization is encouraged the new body  “can help start a real discussion” about Alberta’s energy resources.

Although he cautions, “there is no acceptable climate scenario where Alberta would be allowed to grow the tar sands and build new pipelines like Kinder Morgan and Energy East.”

Tim Gray, one of the 18 members of the advisory group and executive director of Environmental Defence, said Alberta — as an oil-producing jurisdiction that has an interest in building new pipelines — faces some significant challenges.

“Industry — and the Alberta government to a lesser degree — has been adamant that they want to build more pipelines and they’ve tied the completion of those to a lot of economic promises and it’s not clear if those will be achieved or not even if they did build a pipeline."

Gray said he remains unconvinced pipelines are the best strategy for Alberta and that more work needs to be done to determine if any need for new pipelines will remain once the cap put on emissions is put into place.

He said his organization remains opposed to pipeline projects like Energy East.

But, he added, he is encouraged such questions are being put to the diverse group of people that comprise the oilsands advisory group.

“I think the fact that you have organizations around the table that have very divergent views on the necessity of pipelines and what is the best way forward for an oil jurisdiction that is interesting and will make for challenging circumstances for the development of recommendations,” he told DeSmog Canada.

“But I think it shows a level of maturity by the government that they’re willing to have people with those divergent opinions and trying to work through them and bring data to bear.”

Berman said the group will begin the immediate work of creating new rules to keep oilsands emissions under the 100 megatonne cap.

“This is one of the first times in the world that an oil jurisdiction has voluntarily set a limit and we are breaking new ground,” Berman said. 

“Our goal is recommendations in the fall and then we will move on to designing reviews for cumulative impacts on water, air and biodiversity.”

“Within two years we will have made recommendations on all of those issues plus developed proposals for developing a long-term pathway on climate leadership between now and 2050.” 

For a province that has consistently failed to implement meaningful climate regulations on the oil and gas sector, the task at hand is enormous — but it's encouraging to see Alberta's willingness to bring together strange bedfellows and tackle the thorny questions head on.

Image: Suncor/Flickr

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This article originally appeared on the Dogwood Initiative website.

“Oil to tidewater.”

It’s an industry mantra happily adopted by politicians — and even some environmentalists. But ask yourself this: what happens when you pump more product into an oversupplied market? Answer: the price goes down.

Who benefits from cheaper crude oil? First, the customers — like China’s state-run heavy oil refineries. And later, competitors with lower overhead, like Saudi Arabia.

You’ve probably heard these twin arguments before:

1. Canada’s oil would fetch ‘global prices,’ if only it could access ‘tidewater.’
2. If we approve pipelines to the coast, the ensuing bonanza will make us all rich.

Let’s address each of these political talking points in turn.

What’s the ‘Global Price?’

The first thing to remember is that pipelines don’t magically add value to crude oil. What they do is reduce transportation costs from point A to point B, allowing the seller to pocket a few extra dollars per barrel.

The real problem for Canadian oilsands producers is that prices all over the world are low. If oil is selling for $45 and it costs you $46 to dig up a barrel of oil, no pipeline can fix that.

Worse, we’re talking about heavy oilsands bitumen, which is worth even less than the global “price of oil” you see quoted in the newspaper.

That’s because oilsands crude is heavy, sticky and high in sulfur, which means you need more lube to get it through pipelines and special refineries to turn it into gasoline.

Most refineries in Canada are not set up to chew through heavy oilsands bitumen. It would be like trying to fuel up your grocery getter with creosote: bad idea. So we export this low-value crude, mostly to the United States, while importing lighter crude and fuel products.

For a real comparison, we have to look at another sea-traded heavy crude. Mexico has a blend comparable to oilsands bitumen called “Maya.” The Alberta finance department tracks the average price spread between the two in a graph they update every month.

Canada is the blue line. We’re chasing the green line:

What would happen if oilsands producers hit their expansion targets, and put all that heavy crude on tankers?

The current oil price slump, which you can see started in summer 2014, was triggered by an oversupply of global markets. Oil producers were pumping out about two millionbarrels per day more than people needed.

Hang on. Enbridge Northern Gateway is designed to carry 525,000 barrels per day. Kinder Morgan’s Trans Mountain expansion would carry 890,000. And Energy East would carry a whopping 1.1 million barrels per day.

“We’re in favour of all pipelines, to be honest,” Alberta energy minister Marg McCuaig-Boyd told the Edmonton Journal in April. “We see the need for more than one pipeline, and what helps one will help another.”

If the Alberta government could wave its magic pipeline wand and build all three of these projects, 2.5 million barrels of heavy crude would flood overseas refineries. With demand growth slowing, this would put downward pressure on prices.

Who Would Benefit?

Subtract the corporate welfare our governments give to oil companies, the billions in damage caused by climate change and the public cost of oil spills. Imagine for a minute the oil companies get their way and sell a whole bunch of crude in Asia at rock-bottom prices. Who benefits?

Not British Columbians, that’s for sure. We get no royalties and not even a guarantee of temporary construction jobs.

The federal government might at least break even, by collecting more income tax from oil workers.

The Alberta government has given itself no other choice. With no sales tax and an electorate hostile to tax in general, Albertan politicians depend on whatever oil royalties they can get to pay for social services.

The real winners would be the state-owned refineries in China, which would get a reliable supply of cheap feedstock. That’s why the government in Beijing has been pushing for these pipelines for 10 long years. And sourcing that crude from Canada would come with a strategic geopolitical bonus.

Dire Straits

With 21.1 million passenger vehicles sold last year and the world’s largest active military, China goes through a lot of oil: 11 million barrels a day.

The majority of that is imported through two geographic choke points: the Strait of Hormuz and the Strait of Malacca. That makes China’s rulers nervous, which is why they’re expanding overland oil and gas pipelines — and looking to Canada as a future supplier.

U.S. Department of Defense

We could help ease China’s reliance on those contested shipping lanes, but it appears increasingly doubtful prices will climb again to the levels that had oil producers rubbing their hands at the prospect of West Coast exports.

In 2012, the pro-pipeline Fraser Institute predicted the Enbridge Northern Gateway pipeline would allow oil producers to make an extra $2.50 more per barrel  than if they sold in the U.S. Yes, that’s the pot of gold at the end of the “tidewater” rainbow: a toonie and two quarters per barrel.

Since then the pace of growth in China has slowed while global oil supply has expanded — thanks in part to fracking technology. More worrisome, from the perspective of Canadian oil companies, is the strategic shift by Saudi Arabia.

The End of the Oil Age

“The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.” That prophecy came from the Saudi oil minister, Sheikh Zaki Yamani, in 1973.

In February 2016, Yamani’s successor took the idea a step further. Ali al-Naimi told a crowd of oil executives in Texas why, despite low prices, his country refused to turn off the taps: “We’re going to let everybody compete.” Addressing investors in high-cost deposits like the oilsands, al-Naimi said “inefficient, uneconomic producers will have to get out.”

The Saudi regime slaughters its own citizens and harbours religious extremists. It is, by all metrics, repressive, brutal and corrupt. But when it comes to the realpolitik of oil markets, the Saudis have an advantage. They can pump it out of the ground cheaper than anyone else.

With climate treaties coming and electric transport set to cut into oil demand, the Kingdom is not counting on the return of $100 prices. Instead, it’s planning to crank up production even further, to wring every last drop out of the sand before the rest gets locked underground forever.

What’s becoming clear is that Canada is pursuing the same strategy, despite having a product that costs more to dig up and sells for less.

Under relentless pressure from oil lobbyists, politicians of all ideological stripes have accepted the industry’s logic: just pump more crude and pray for higher prices.

Let’s get real. These pipelines are not nation-building projects. They are catheters designed to drain a giant pool of carbon as cheaply as possible, so oilsands companies can keep the lights on for a few more years.

The irony is that flooding the market with cheap crude would make it less likely for prices to recover. That’s fine for the Saudis, who are happy to compete in a low-price environment. But it’s a poor long-term strategy for Canadians.

Approving Enbridge or Kinder Morgan’s oil tanker terminals will lay the path for a furious final expansion of the oilsands, before creditors stop lending money and the heavy-oil producers start going bankrupt.

We can’t change the end-times mindset of the global oil industry. But we can give our politicians a reality check.

For more on a provincial vote on oil tankers visit LetBCvote.ca.

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.