Can Kinder Morgan really meet B.C.’s conditions?

Now that the federal government has approved the Trans Mountain Pipeline expansion, the ball is in B.C.’s court.

The relevant questions are: How close is Trans Mountain to meeting B.C.’s five conditions for approval? And are the conditions stringent enough to protect B.C.’s interests? The answer to both questions is no.

The first condition is that Trans Mountain must complete the environmental review process. Receiving provincial approval is presumably contingent on the province’s other conditions being met.

The next two conditions deal with the requirement for “world leading” safety standards. There are two problems here: First, the term “world leading” is too vague a requirement. More importantly, even if the best standards are implemented, Trans Mountain forecasts that there is still a significant risk of an oil spill — 99.9 per cent for the pipeline, 77 per cent for the marine terminal, and 16 per cent for a tanker spill. Other studies place the tanker spill risk much higher at between 58 per cent and 98 per cent. Regardless of which estimates are correct, the spill risk is significant, and containing the damage is almost impossible. The fourth condition is fulfilling legal obligations to consult with First Nations. To date, some 39 of the 120 First Nations have signed agreements with Trans Mountain and many First Nations have expressed strong criticism over the lack of adequate consultation. While the legal adequacy of consultation will ultimately be decided by the courts, it is clear that this condition is far from being met.

The final condition is that B.C. gets a “fair share” of the benefits relative to the risks.

One way of defining this vague criterion more precisely is to use a “net benefit test", meaning that the benefits of a pipeline must exceed all the costs, including risks of oil spills, climate change and other environmental damage.

Our research shows that the Trans Mountain does not come close to meeting this test. B.C. bears about two-thirds of the pipeline risk and all of the marine risk, but gets only 10 per cent of the fiscal benefits. Overall, there is a net cost to B.C. of about $3 billion, even when employment benefits of the construction and just over 300 permanent jobs are included. If the costs of the inevitable political conflict are included, the costs will be significantly higher.

A particularly troubling cost is liability for oil spill costs, which could reach $1.5 billion for a pipeline spill and between $4.1 and $22 billion for a tanker spill. Trans Mountain states that it will cover the costs of a pipeline spill but not a tanker spill, which it says is the responsibility of tanker companies. The problem is that the compensation is capped at about $1.3 billion, well below potential damage costs.

B.C. needs to address this deficiency by adding a sixth condition that protects B.C. taxpayers by requiring pipeline shippers to accept full liability for damages and defines the damages that will be covered.

Instead of focusing on the seemingly impossible task of trying to make Trans Mountain acceptable, B.C. efforts might be better directed to promoting alternatives to the expanded pipeline, such as renewable energy and safer oil transportation options that do not require tankers, that can generate similar economic benefits to Canada without any risks to B.C. By advocating for alternatives that generate economic benefits with lower risk, B.C. could make us all better off.