Energy and the Environment: Kinder Morgan in the crosshairs
We’re now getting into a zone where decisions we make in the legal process, or the political process, or the regulatory process, can no longer be relied upon by investors. — Rick Anderson Earnscliffe Strategy Group
With the drama ramping up between British Columbia and First Nations on one side and Alberta and Ottawa on the other over Kinder Morgan’s proposed Trans Mountain pipeline expansion, a Before the Bellpanel looked into what’s at stake, both in the immediate impasse and in the longer term.
Rick Anderson, principal with Earnscliffe Strategy Group, surmised that the current pipeline debate is chiefly a disaster for business and investment in Canada.
“We talk about investor confidence but we also talk about political risk,” said Anderson. “Major corporations from around the world look at countries as places to invest, and Canada has traditionally been a pretty stable place on that score. We’re now getting into a zone where decisions we make in the legal process, or the political process, or the regulatory process, can no longer be relied upon by investors.”
Anderson said that — especially when it comes to energy projects — Canada now demonstrates a high level of political risk.
“I don’t think there’s much risk for political actors,” said Rachel Curran, principal with Harper and Associates, noting that she doubts either of the two premiers or even the prime minister will necessarily pay a heavy political price for the brouhaha. The Canadian economy, however, will pay the price as we are still dependent on resource development for export, Curran asserted.
“We are one of the best countries in the world for developing resources safely and responsibly and getting them to global markets in a safe way,” said Curran.
Curran said that Canada removing itself from the resource development game is a shame, as it represents more than 50 percent of our export market. She believes that this is leading to a flight in foreign capital, with investors unwilling to take on the risk of resource development projects.
“One of the major reasons is we can’t get these projects done,” said Curran. “That’s bad for business, it’s very bad for our economy, and ultimately it will be bad for future generations.”
That prediction of capital flight was disputed by Craig Stewart, vice-president of federal affairs with the Insurance Bureau of Canada. Stewart said that foreign capital may be balking at energy projects not because of what is happening in Canada around pipelines like Trans Mountain, but rather because they are diversifying and moving away from riskier, environmentally unsound investments.
“There is a shift in capital moving away from these twentieth-century projects to new twenty-first century projects,” said Stewart. “It’s happening globally, and our members are diversifying around the world.”
Anna Johnston, a lawyer with West Coast Environmental Law, conveyed her sense is that if built, the Trans Mountain expansion would be a disaster for future generations.
“It was a preventable issue,” said Johnston. “With greater engagement with Indigenous peoples and the public in advance of the project in the very early stages, before any major design decisions were made, before any environmental approval decisions were made and even before leaders and government started to champion the project, had there really been a genuine dialogue, then we might have been able to prevent this issue from the very beginning.”
Johnston said that alternatives could have been found if they were at the table earlier, but even if the pipeline ultimately doesn’t get built, it won’t affect the country’s GDP in a significant way.
Johnston says that any investor uncertainty happening right now is because of the country’s broken environmental assessment system, which is why the proposed new system under Bill C-69 shows promise.
But would the Trans Mountain expansion be approved if it had been assessed under Bill C-69? Johnston is unsure.
“That’s one of the fundamental problems with the Act,” she said. “We don’t have that policy direction from the outset. We don’t know whether projects that are clearly contradictory to our climate obligations and are opposed by Indigenous peoples and the public, whether they would go through.”
Curran is also unsure, and doubts that a proposal would have even been made.
“I don’t think a company would frankly enter in the process at all,” Curran said.
Curran noted that the pipeline is supported by 50-plus First Nations who have signed benefit agreements with the company, and that it has the support of the majority of British Columbians.
“With this legislation, it will make it even harder to get these projects done,” said Curran.
Anderson pointed out that the pipeline industry association has also stated that there wouldn’t have been an application under the new system.
“There might be a permit if it went through the application process, but would they find themselves in the same situation with a permit that they feel they can’t proceed with?” Anderson asked.
Susan Delacourt, Anna Johnson , Lawyer at West Coast Environmental Law, Rachel Curran, Principal at Harper & Associates and Rick Anderson, Principal at Earnscliffe Strategy Group.