All is not lost in the battle to build pipelines

Cancellation of Energy East isn’t a game-changing setback

With all the shock, frustration and anger last week — and for that matter, the gloating from some quarters — it might seem as though the effort to build new pipelines has died, and we’re simply drawing a chalk outline around the body and looking for a culprit.

TransCanada Corp.’s decision to walk away from its application to build the Energy East pipeline certainly came as a big disappointment to political boosters of the project — everyone from Mayor Naheed Nenshi to Premier Rachel Notley, to the provincial conservative opposition, to the federal Conservative opposition, to mayors and premiers in New Brunswick and, yes, even Quebec.

So why was the plug pulled? Was it, as the federal government insisted, strictly a business decision? Or was it, as many critics of the federal government insisted, a direct consequence of Liberal tinkering in the National Energy Board review process? Then again, what’s to say it can’t be both? Just over a month ago, the NEB announced that the Energy East review would — for the first time ever — include consideration of the upstream and downstream greenhouse gas emissions from the project, as opposed to merely the emissions directly associated with building and operating the pipeline itself.

Alberta’s own energy minister rightly noted the absurdity of the decision, comparing it to “judging transmission lines based on how its electricity will be used.”

Moreover, Ottawa is moving ahead with carbon pricing and Alberta is moving ahead with an emissions cap on the oilsands. One can quibble with those approaches, but they certainly make the NEB’s new criteria seem rather superfluous and redundant.

And indeed, TransCanada cited these changes a month ago when it suspended its application. This clearly added more confusion and costs to the process, and was obviously a factor in last week’s decision.

By all means, the federal government should provide clarity on what the expectations are for any future pipeline application. It’s understandable the government would want a meaningful, rigorous process that Canadians can view as credible, but it must also be fair.

On the other side of the equation, though, are the undeniable market conditions TransCanada is facing. Many observers believe Energy East was a backup plan when it appeared the company’s Keystone XL pipeline was going to be shot down by the Americans. Now that the new president has resurrected Keystone XL, and Ottawa has approved Kinder Morgan’s Trans Mountain expansion, the need for Energy East seems much less clear.

Not to mention, of course, the drop in commodity prices and the effect that’s had throughout the industry.

Frankly, we don’t know for sure that TransCanada would have continued under the previous scope of the review. Nor do we know that the new scope would have necessarily doomed the project, or what the Trudeau government would have decided in the event of NEB approval. Nor can we say with certainty where we’d be right now if voters had rejected Notley and Trudeau in 2015.

Construction is underway on the Line 3 pipeline replacement, which runs from Alberta to Wisconsin, and there’s reason for optimism regarding the prospects of both Keystone XL and Trans Mountain. If those projects proceed, it will considerably lessen the blow of last week’s decision. Those two pipelines will meet our capacity needs over the next decade or so.

There’s a case to be made for having Canadian bitumen displace imports on the East Coast, but it’s not up to private industry to facilitate such nation-building aims. Either there’s an economic case to build and operate a pipeline or there isn’t.

There is an economic case for both Keystone XL and Trans Mountain. This current federal government did approve the latter, and let’s make sure it can see it through to completion. That doesn’t preclude us from holding it accountable for what happened with the NEB.

So let’s not lose perspective here. The pipeline battle isn’t lost yet.