Contradiction in government policy stifles forward progress in Alberta
Remember the Keystone XL Pipeline? This was TransCanada’s big, new pipeline project that was supposed to carry product from the Alberta oil sands all the way to Nebraska and further on to the Gulf Coast. Barack Obama rejected the project in November of 2015 and Donald Trump brought back to life in one of his first acts as president.
After Trump revived TransCanada’s proposal, the project received a further boost last November when the Nebraska Public Service Commission approved the pipeline’s passage through that state, albeit on a different, more expensive route than the one originally proposed by the company.
After the Nebraska decision, TransCanada set out to see if it could line up enough potential customers to keep their Keystone XL dreams alive. Apparently, they had some success on this front as well.
A couple of weeks ago, TransCanada announced that it had secured a number of 20-year commitments from customers who would ship a total of 500,000 barrels per day through the pipeline. Certainly they didn’t get enough commitments to fill the pipeline’s proposed capacity of 830,000 barrels per day, but apparently the commitments received are enough for the company to announce that it now hopes to begin construction on the pipeline next year.
On the surface, this may look like just one more step in the on-again-off-again saga of the Keystone XL pipeline. What makes TransCanada’s announcement particularly interesting is the identity of one of the customers that signed on to a 20-year commitment with the pipeline.
On the same day that TransCanada made their announcement, Alberta Premier Rachel Notley announced that the Government of Alberta, through the Alberta Petroleum Marketing Commission, which it owns, had been one of the customers signing 20-year agreements with the pipeline company. In fact, the Government of Alberta committed in writing to shipping at least 50,000 barrels a day down the pipeline for the next 20 years.
Although Notley asserted to reporters that this should not be seen as a subsidy, she did make clear that part of the government’s rationale for the guaranteed shipping capacity was to ensure that the project received the commercial support needed to get it in the ground. The Government of Alberta’s 10 percent of secured commitments probably wasn’t a deal-maker in and of itself, but there is a high probability that it helped boost confidence in the project among other potential customers. The project has been all but dead on numerous occasions over the past number of years, and this commitment by the province is definitely one of the factors in its recent revival.
The other reason provided by Notley for supporting the project is the oft-repeated argument that getting Alberta product to tidewater will increase its selling price significantly. This argument has now been refuted a few times by a number of analysts and researchers, including a couple by noted Earth scientist David Hughes. Somehow, however, the higher price argument persists.
One of the subjects that Notley did not address with reporters was that of how increased shipping capacity, which in turn would facilitate and encourage further expansion of bitumen production, conflicts with the province’s 100 megatonne limit on oilsands emissions and its ongoing commitment to helping Canada meet its national and international climate commitments.
Environment Minister Shannon Phillips’ comments in response to questions about the 2016-2017 progress report on the province’s Climate Leadership Plan might shed some light on why these things were not mentioned.
When asked about the fact that current projections have the government significantly missing its share of federal government commitments through the Paris climate agreement, Phillips responded, “We are putting in policies that get results. We are less interested in theoretical targets; we are more interested in actual action.”
There can be no doubt that this government has made important progress on the environmental policy and climate change fronts, especially when one considers the complete inaction of the previous government in those areas. The government is now projecting actual emissions reductions between now and 2030, something that would have been unfathomable just three short years ago.
The problem is that the government actually appears to be working at cross purposes to itself when it comes to climate and the environment. When it speaks the language of fossil-fuel-based competitiveness and growth, it actually reinforces the message that the needs of the environment come second to the needs of the oil and gas industry.
International emissions targets are based on internationally agreed upon scientific modelling of what it will take to keep global temperature rise beneath catastrophic levels—science that the Government of Alberta has made clear it agrees with. How can that same government now be ignoring those targets and dedicating public resources for the sake of getting a pipeline built and expanding fossil fuel production? Yes, theoretical and rhetorical targets can be meaningless, but without targets and goals we will never get to where we are going, especially when it comes to environment in Alberta.