A message for Trudeau’s ‘Generation Energy’ conversation: Don’t kneecap $15 billion pipelines to get re-elected

generation energyNanos polls shows many Canadians think Canada does a poor job regulating energy, providing right environment for investors

Generation Energy wrapped up this week in Winnipeg. The federal government leading a national conversation about the future of energy seems like a fine idea. But is it, really? The Trudeau Liberals already have a well-defined worldview based upon the the long-term global Energy Transition from fossil fuels to a mostly electric future underpinned with clean energy technologies. What’s missing today is a clear policy, regulatory, and political commitment to the Canadian oil and gas sector during the decades it takes the global economy to complete the transition.

Generation Energy

“The politics of division are not helpful. We must be united.” – Minister Jim Carr’s closing remarks at Oct. 11 Generation Energy Forum. Photo: Natural Resources Canada.

Last year I was given the opportunity for an extended interview with Natural Resources Minister Jim Carr. One of the first questions I asked was if the Liberals agreed with the notion of a century-long energy transition during which national governments would do two things: decarbonize their existing energy systems as quickly as possible while supporting the development and adoption of clean energy tech.

Carr responded with an enthusiastic yes, pointing to the Prime Minister’s remarks at a Vancouver conference where Trudeau said that Canada needed both wind turbines and pipelines, that the old, resources-driven economy was needed to help pay for the transition to a new economy based upon renewable energy sources, the electrification of transportation, and vastly improved energy efficiency in buildings and industry.

Carr was very clear that getting Canada’s resources to exports in a sustainable manner meant support for the Alberta-based oil and gas industry, including pipelines.

For the first 18 month, the Liberals delivered.

Trudeau approved the 525,000 b/d Trans Mountain Expansion pipeline project to the West Coast and the additional 390,000 b/d upgrading of Line 3. Sure he rejected Northern Gateway, but Enbridge’s years of horrendous consultation and communications mistakes and miscalculations in British Columbia had rendered the project impossible. And when President Donald Trump revived 890,000 b/d Keystone XL in March, the Canadian government stood behind its earlier approval under Conservative Prime Minister Stephen Harper.

Generation Energy

Prime Minister Justin Trudeau. Photo: Justin Trudeau/Facebook.

The Liberals came to power in 2015 promising to “modernize” the National Energy Board and the pipeline review process. The old guard in Calgary opposed this move, arguing the process wasn’t broken (see my interviews with Gaetan Caron, NEB head under Harper).

Liberal strategists understood something that is only now dawning on Canadian energy executives: the climate change issue, the rise in power of Canadian oil and gas opponents led by First Nations and well-organized and funded environmental groups, and increasing evidence that the global economy is well into the Energy Transition, have seriously eroded the political legitimacy of the Canadian industry.

A new poll by Positive Energy, affiliated with the University of Ottawa, confirms Canadians’ low view of the sector and government leadership on this file.

“When asked about Canada’s energy performance in terms of building public confidence in decision-making,
balancing concerns of communities, developing a long-term shared vision and providing a clear policy and
regulatory environment for investors, Canadians were more likely to say that Canada is doing a poor or very
poor job,” Nanos Research wrote in the introduction to the survey, which polled 1,000 random Canadians across the country and whose margin of error is plus or minus 3.1 percentage points, 19 times out of 20.

Generation EnergyThe perception that energy policy and regulations are not well handled, and that change is needed, is shared across the country, even outside Alberta, Saskatchewan, and BC where most of the countries oil and gas is produced.

And that perception was reinforced last week after TransCanada announced the cancellation of the $15 billion Energy East pipeline project, which would have stretched 4,600 kilometres from Alberta to New Brunswick.

Energy East opponent Montreal mayor Denis Coderre gloated, while the Alberta NDP government of Rachel Notley protested in vain that including an assessment of downstream greenhouse gas emissions – TransCanada’s public reason for withdrawing their application to the NEB – for the project was unreasonable.

Trudeau tried to blame the cancellation on “market forces,” but as I demonstrated in a series of columns over the past week, the more likely culprit was a combination of unpalatable proposed changes to the pipeline review process contained in a June 29 government discussion paper and the downstream emissions, those changes motivated by a desire to protect the 40 Quebec seats the Liberals desperately need to be re-elected the 2019.

Bottom line, the Trudeau Government was clearly signalling that it intended to make the Energy East review process as onerous as possible. TransCanada interpreted the signals to mean the chances of having the project approved were slim.

Right there is the crux of the Liberals’ energy policy dilemma.

If Trudeau plans to continue with an Energy Transition strategy – understanding that for the foreseeable future oil and gas production needs as much support as the clean energy sector and a commitment to providing balance in the energy and climate policy mix – then Ottawa cannot be kneecapping $15 billion pipeline projects to to get re-elected.

TransCanada’s decision to cancel Energy East is widely seen in Alberta as an indictment of Trudeau Government’s handling of the NEB modernization process and with good reason, as I have demonstrated.

“Never again will private capital risk this kind of money when a regulatory process is this uncertain,” said former TransCanada VP Dennis McConaghy in my Oct. 9 column.

The Nanos poll suggests 37 per cent of Canadians think Canada “does a poor or very poor job of providing a clear, predictable and competitive policy and regulatory environment for energy investors,” while only 19 per cent think it does a good or very good job.

That has to change. Balance between the old and the new energy policies must be restored.

If the Trudeau Government wants to pay for the transition to a clean energy future for Canada, then it has to do a better job of managing the NEB modernization, as well as other energy and climate regulatory reform that affects the oil and gas industry.

Canadians expect it, industry and investors need it, and voters outside Quebec should demand it.

Generation Energy

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Posted in: Markham on Energy

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