Changing the rules for pipelines
On the cancellation of the Energy East pipeline from Alberta to Saint John, who’s missing the obvious?
Prime Minister Justin Trudeau says it’s critics of his government’s regulation of the proposal. In a Facebook post last weekend, Mr. Trudeau says those critics are “stoking national divisions” and “using a private corporation’s business move as a pretext” for their attacks.
“To attribute the cancellation of Energy East to federal regulation — good, bad or indifferent — ignores the obvious,” he says. And the obvious is what?
That market forces turned against the project, says Mr. Trudeau. Oil prices fell; tight supply turned to glut and more practical ways to export Canadian crude opened up.
On regulation, he adds his government “has approved two major oil export pipelines that are under construction as we speak. A third is expected to move forward soon. That is precisely three major pipeline projects more than the previous government managed to initiate in a decade.” Fair enough, in respect to those pipelines. But Mr. Trudeau is himself ducking a very obvious flaw in his fair-regulation argument — a dodge the size of an elephant in the case of Energy East.
The approved Trans Mountain and Line 3 pipelines (to Vancouver and to the U.S.-Manitoba border) got a very different regulatory process than Energy East.
This summer, at the behest of Mr. Trudeau’s government, the National Energy Board changed greenhouse gas emissions requirements Energy East would have to meet, after TransCanada had spent $1 billion preparing for the old process. Those changes caused it to first suspend the project to evaluate “significant‚” new regulatory costs. The cost and uncertainty related to those changes also clearly played a part in the decision to cancel the project.
For the first time in a pipeline application, Energy East was to be evaluated on increases in consumer and producer GHG emissions the NEB deemed related to the project. The approved pipelines were subject to the lighter test of only offsetting emissions related to pipeline construction.
This was discriminatory treatment of the East Coast option. And if there is regional bad feeling about it, Mr. Trudeau can blame himself for applying far different regulatory standards to similar projects. It isn’t stoking anything to expect a fairer regulatory record than that.