Trudeau approves Trans Mountain project second time

Photo courtesy of: TransCanada Corp.

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Canada’s Liberal Government has launched the sales pitch for its approach to balancing energy initiatives such as a $7.4 billion expansion of the Trans Mountain Pipeline with initiatives aimed at protecting the environment.

The move comes after the June 18, 2019 announcement that the Trudeau government has re-approved what is expected to be a large expansion of the existing Trans Mountain Pipeline.

During a press conference on Tuesday June 18, Prime Minister Justin Trudeau said the expansion would create “thousands of middle class jobs” and would give Canada access to markets beyond the United States. He said revenues from the project would go to support Canada’s clean energy transition.

Ottawa’s decision to approve the project drew predictable reactions from political leaders in the regions that will be most affected by the expansion. Pipeline work is expected to get underway during the current construction season. Alberta Premier Jason Kenney applauded the decision but added that it is just another step in a process that he said has taken too long.

B.C. Premier John Horgan said he was disappointed by the decision and vowed that his government would continue to challenge the project in the Supreme Court of Canada.

On Wednesday, two senior federal cabinet ministers made appearances in Alberta. National Resources Minister Amarjeet Sohi paid a visit to the Trans Mountain Corp. terminal in Edmonton, while Finance Minister Bill Morneau delivered a speech to the Economic Club of Canada in Calgary.

Morneau estimated that the federal government will receive up to $500 million per year over the first 10 years of the pipeline being in operation. He said that money would be invested in developing green technologies.

However, Morneau also spoke about the challenge of balancing concerns about the environment and impact of global warming with the need to transition to a low carbon environment.

“The challenge is exacerbated in Alberta, where when we talk about a shift to a low-carbon future, it equals a real challenge to the sector that has created so much prosperity here, it seems like a direct challenge to that sector,” he said.

Ottawa’s decision to re-approve the Trans Mountain Pipeline expansion came as no real surprise.

The Canadian government became an owner of the Trans Mountain pipeline in May, 2018, following a $4.5 billion purchase agreement with former owner Kinder Morgan Canada [KML-TSX].

On the day that shareholders of Kinder Morgan Canada voted overwhelmingly to approve the sale, the Federal Court of Appeal quashed the approval of the $7.4 billion Trans Mountain expansion on the basis that Canada’s efforts to meaningfully consult with Indigenous people fell short.

When the ruling was announced, the court also criticized the lack of attention given to how increased tanker traffic off the cost of British Columbia would affect the resident killer whale population.

Earlier this week, a number of political commentators said it remains to be seen what other road blocks will emerge follow the government’s decision to approve the project.

Federal Conservative Party Leader Andrew Scheer has dismissed the idea that the pipeline will ever get built. He also attempted to cast doubts on Trudeau’s sincerity in relation to supporting the energy industry.

“He hasn’t done anything,” Scheer said. “Show me the pipeline. Where is it?”

The original Trans Mountain Pipeline was built in 1953 and continues to operate today. The proposed expansion is essentially a twinning of the existing 1,150-kilometre pipeline between Edmonton, Alberta and Burnaby, British Columbia.

Expected to cost approximately $7.4 billion, it will create a pipeline system with a nominal capacity rising from 300,000 barrels per day to 890,000 barrels per day.

After purchasing the pipeline from Kinder Morgan, the Canadian government elected not to challenge a court decision that put the brakes on the expansion.

Instead, Ottawa said it would resume consultations with Indigenous groups that will be affected by the project.

This week, Morneau is expected to send letters to 129 Indigenous communities to launch discussions around offering First Nations a financial stake in the project.

Alberta-based senator Doug Black introduced Bill S-245 the Trans Mountain Pipeline Project Act in the Senate last year. His aim was to declare that the pipeline expansion project is in the national interest and should proceed for that reason.

Not having access to energy markets is costing Canada billions of dollars and the expansion of the Trans Mountain pipeline system between Edmonton, and Burnaby, B.C.,  is a critical solution to this problem, Black said.


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