Energy East – the End of the Canadian Energy Strategy

TransCanada cried “Uncle” today and cancelled the Energy East pipeline from Alberta to Montreal and then on to Saint John, New Brunswick.

In a tersely worded announcement TransCanada said in part: “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 application”.

The federal government bleated that the ‘changed circumstances’ were oil prices and the KeystoneXL pipeline absorbing more production as the cause. They defended their record of approving pipelines (Line 3 and TransMountain).

But nobody is buying that story!

Certainly not the pipeline opponents:

  • Montreal Mayor Denis Coderre was thrilled and said it was a major victory for Montreal and area mayors whose opposition killed it
  • “It’s Quebec that stopped this project,” said Anne-Céline Guyon, a spokesperson for environmental organization STOP oléoduc
  • SergeOtis Simon, grand chief of the Kanesatake Mohawk Council, reacted to the announcement with “shock, surprise, jubilation.”
  • Federation of Sovereign Indigenous Nations Chief Bobby Cameron welcomed the cancellation of the pipeline.

Nor the proponents:

  • Brad Wall of Saskatchewan said: “…but make no mistake, the reasons for it fall at the feet of Prime Minister Justin Trudeau and the federal government.”

  • Rachel Notley of Alberta said: We understand that it is driven by a broad range of factors that any responsible business must consider. Nonetheless, this is an unfortunate outcome for Canadians.”

  • The Mayors of Calgary and Saint John expressed their disappointment. Nenshi took aim at Coderre “ I cannot believe frankly that anyone would take any glee in the loss of this incredibly important investment and the loss of thousands and thousands of jobs and in the continuing reliance of citizens on oil from foreign countries.

  • The candidates running to lead Alberta’s UCP were quick to denounce the federal government’s anti-oil approach and the moving goal posts. And they were quick to denounce the NDP and promote themselves as defenders of Alberta.

The decision to abandon the pipeline was a mix of two main factors

KeystoneXL is cheaper and closer to regulatory approval in the US.

But the federal government made the regulatory hurdles just too high and risky:

  • They cancelled two years’ worth of work the National Energy Board had undertaken
  • Began reviews of the NEB and the environmental review process to signal much tougher regulations
  • Tilted the NEB review process by deciding to review emissions created before the pipe and from consumption after leaving the pipe.

Even a junior government relations type can read that handwriting on the wall. The Liberals don’t want to alienate their Quebec, environmental, and indigenous political bases by risking a regulatory approval that would require a Cabinet ‘up or down’ decision.

BUT THERE ARE MORE ‘CHANGED CIRCUMSTANCES’!!!!

  • With the death of Energy East comes the death of a Canadian Energy Strategy. Premiers had once hoped that they could fashion an energy plan that would work for all regions. That is sunk now, along with a billion dollars of TransCanada’s money.
  • Also sunk is the NDP concept of acquiring “social license” through increased regulations on the energy industry. They hoped that a carbon tax, emission caps and a host of green programs would give them talking points with the rest of Canada. But it turns out the environmental and indigenous lobbyists were far more persuasive.
  • International companies will be thinking “if a Canadian company can’t do a project in Canada what are our chances?”.

But polarization is alive and well:

  • Environmental and indigenous groups are planning for their day in the Supreme Court to stop the TransMountain pipeline and failing a decision they like, more public protests.
  • Cynicism in Western Canada over the federal NEB process and the Liberal government’s trustworthiness will grow.
  • So will Western hostility grow towards Quebecers who would rather burn imported oil, all the while taking $8 billion in equalization “dole” paid for in part, by energy resource revenue.