Alberta Premier Danielle Smith is finally getting a pipeline. But, after making concession after concession, this doesn’t feel like the pipeline win that Albertans and Canadians who support energy development have been longing for.
First of all, Smith agreed to jack up industrial carbon taxes in pursuit of a deal with Prime Minister Mark Carney, something she likely had to do to get a deal with the federal Liberals, but something that will in turn make life more expensive for Albertans.
Second, Smith also had to make concessions about the pipeline’s route. Initially, Smith had hoped to have a pipeline built to northern British Columbia and taken to Asian markets via tankers. But hours before Smith and Carney announced their pipeline deal at a press conference in Calgary, Carney announced with B.C. Premier David Eby that the federal tanker ban would remain in place, nixing a potential northern route. That meant that only a southern route would be feasible. A southern route will mean it will take days longer for oil to get to potential Asian markets, making the overall project less attractive.
As National Post commentator Rob Breakenridge put it, Carney and Smith chose “the lowest hanging fruit with the least amount of opposition.”
Third, Smith has agreed to the Pathways carbon capture and storage project in order to gain Carney’s approval, which will cost billions of dollars. Some estimates have pegged its cost at $20 billion, to be borne by both energy companies and taxpayers. These are costs that other countries are not imposing on their energy companies or taxpayers in order to develop their natural resources, yet another step in making Canada less competitive.
Finally, there’s the cost of building the pipeline. Because the federal government has so many rules and regulations in place, finding a private sector proponent was exceedingly difficult. So far, there is one private sector partner, the Pembina Pipeline Corporation. The others involved – Trans Mountain Corp. and the Alberta Petroleum Marketing Commission – are Crown entities, meaning that they’re taxpayer supported. The cost of building this pipeline is expected to cost more than $35 billion, and taxpayers will bear the brunt of the cost. In an ideal world, the private sector would be paying for this pipeline, but because of the federal government’s costly regime of regulations and taxes, taxpayers are going to be the ones footing most of the bill.
Of course, there will be all kinds of royalties and tax revenue generated should this pipeline actually be built. But this isn’t the ideal way to do it. In an ideal world, the federal government’s rules and regulations would have been streamlined, there would have been no industrial carbon tax, the tanker ban would have been lifted, and Carney wouldn’t have included the Pathways project as a requirement. But sadly, we’re not living in an ideal world. We’re 11 years into federal Liberal rule, a period in which the feds have done nearly everything possible to prevent the further expansion of Alberta’s oil and gas sector. Smith is seizing on the fact that Carney is somewhat more pragmatic than former prime minister Justin Trudeau and appears to be willing to take any win she can get. But this isn’t the win Canada truly needed.
Yes, if we’re lucky, Canada appears poised to get another pipeline. But, as Breakenridge put it, Carney and Smith settled on the lowest hanging fruit possible, despite the fact that it wasn’t the optimal route, and taxpayers have been saddled with all kinds of additional costs. This may be something to celebrate, but the celebration could have been a lot bigger had the feds done the right thing and actually created an environment in which the private sector wanted to take the lead in building new pipelines.
Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center. He previously served as the Ontario Director at the Canadian Taxpayers Federation and a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
