The Brief­ing

Pipe­lines, de­car­boniza­tion and the fu­ture of cli­mate pol­icy

Alberta Venture - - Contents - – Michael Gan­ley

Key­stone and in­sti­tu­tional dys­func­tion; anatomy of a quar­an­tine; a handy guide for vet­ting in­for­ma­tion sources; Sprung Struc­tures, the global leader in “stressed mem­brane” build­ings

>>> By ap­prov­ing Key­stone XL, Pres­i­dent Don­ald Trump may have sal­vaged the $2.9-bil­lion write­down Tran­sCanada Corp. took af­ter former Pres­i­dent Barack Obama re­jected the com­pany’s ap­pli­ca­tion in 2015, but that doesn’t mean he fixed the sys­tem. The method by which pipe­lines are re­viewed and reg­u­lated re­mains dys­func­tional, sub­ject to the same forces of en­vi­ron­men­tal ob­struc­tion­ism and po­lit­i­cal whim that led to Key­stone’s re­jec­tion in the first place, to the same forces that led Prime Min­is­ter Justin Trudeau to re­ject En­bridge’s North­ern Gate­way pipe­line.

These are some of the con­clu­sions of Den­nis McCon­aghy, former ex­ec­u­tive vice-pres­i­dent with Tran­sCanada and the au­thor of Dys­func­tion: Canada af­ter Key­stone XL. McCon­aghy was in the board­room as Tran­sCanada nav­i­gated the shift­ing winds of pub­lic and po­lit­i­cal sen­ti­ment af­ter Key­stone was first pro­posed in 2008. He says Tran­sCanada played by the rules, jumped through the as­sess­ment hoops and met strin­gent con­di­tions for en­vi­ron­men­tal pro­tec­tion and na­tional in­ter­est, but it wasn’t enough. “The de­nial was un­fair,” he says bluntly. “We were more sinned against than sin­ning.”

Key­stone was ini­tially killed not be­cause it would sig­nif­i­cantly con­trib­ute to cli­mate change – the U.S. Depart­ment of State found the in­cre­men­tal in­crease to car­bon emis­sions would be neg­li­gi­ble – but be­cause it be­came a sym­bol to an en­vi­ron­men­tal move­ment that was ­frus­trated by the fail­ure of in­ter­na­tional de­car­boniza­tion agree­ments signed in Ky­oto and Copen­hagen. McCon­aghy says Bill McKib­bin and other en­vi­ron­men­tal lead­ers skill­fully latched onto Key­stone as an en­vi­ron­men­tal hill to die on and a sig­nif­i­cant con­trib­u­tor to Obama’s legacy, if not to cli­mate change.

As a sym­bol, Key­stone was an ef­fec­tive cam­paign tool. As a case study in rea­soned car­bon pol­icy, it was an ut­ter dis­ap­point­ment. With or without Key­stone the world will con­sume 100 mil­lion bar­rels of oil a day and the vast ma­jor­ity of car­bon emis­sions will come through your and my tailpipes.

McCon­aghy does see a way for­ward but it won’t be easy and, un­for­tu­nately, it re­lies on rea­son. He says a na­tional car­bon tax gives Canada cred­i­bil­ity on the cli­mate-change file and should al­low the coun­try to ex­ploit and ex­port its hy­dro­car­bon re­sources. “Car­bon taxes are the right pol­icy,” he says. “We can say to the world, ‘We have car­bon pricing and now let’s see what you do over the next five years in terms of car­bon strin­gency.’ ”

The risk Canada runs is in get­ting too far in front of other coun­tries, par­tic­u­larly the U.S., which is not only the pri­mary con­sumer of Cana­dian oil but, hav­ing vastly in­creased hy­dro­car­bon pro­duc­tion in the lower 48 states, is now a ma­jor com­peti­tor. “The is­sue is, can Canada and Al­berta main­tain the strin­gency of car­bon pricing, which fed­er­ally is set to go to $50 by 2022, in a world that still has to deal with what the Trump ad­min­is­tra­tion is go­ing to do on car­bon?” McCon­aghy asks. The Trump ad­min­is­tra­tion is al­ready bend­ing over back­wards to ac­com­mo­date the oil and gas in­dus­try, ap­prov­ing pipe­lines and loos­en­ing reg­u­la­tions. This will present a real chal­lenge for Canada, which com­petes for capital with the U.S.

In ad­di­tion, McCon­aghy says the Al­berta price of $30 per tonne is nowhere near the level of car­bon pricing needed to de­car­bonize the world. “You’d have to be to­wards $200 to trans­form our en­ergy sys­tems from fos­sil fu­els to elec­tric­ity sys­tems based on non-fos­sil fuel forms,” he says. He’s open to the price be­ing in­creased, with the caveat that Canada not get too far ahead of other ju­ris­dic­tions. He says the price could rise to $50 by 2022 and $100 by 2030, and the mar­kets can sort out where to in­vest. “There would be enor­mous mi­cro-eco­nomic ad­just­ments,” he says. “The world would get greener; whether it would get greener enough to meet the 2°C goal [set by the In­ter­gov­ern­men­tal Panel on Cli­mate Change] is de­bat­able, but that’s how we can deal with the risk.”

On Jan­uary 24, Pres­i­dent Don­ald Trump signed an ex­ec­u­tive or­der al­low­ing Tran­sCanada to reap­ply for a per­mit to build Key­stone XL

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