PM must climb off fence over pipeline expansion

The government’s exquisitely choreographed trade overture to Beijing is timely, necessary and overdue. If only the second linchpin in the strategy — new pipeline capacity to make Canada’s most important export accessible to Pacific markets — weren’t going so completely off the rails.

The debacle in Montreal — National Energy Board hearings into the Energy East pipeline proposal were suspended Tuesday because of violent protests — bodes ill for this and other resource projects.

There may yet be a way through. It’s difficult to see, absent Prime Minister Justin Trudeau’s stepping off the fence to forcefully make the case for a national pipeline.

The diplomacy on display in Beijing this week is almost too perfect. The Chinese have backed off, for the time being, on canola. Canada will seek membership in the Beijing-backed Asian Infrastructure Investment Bank. New Canadian visa offices are to open in Chinese cities, easing travel to Canada for China’s legions of newly prosperous tourists. Canadian firms have signed deals with Chinese companies worth a collective $1.2 billion, it was announced Thursday.

But no one can be under any illusion about the end game for both sides. According to 2015 estimates from the International Energy Agency (the IEA’s 2016 report is due in November), global energy investment will total $69 trillion from 2015 to 2040, 37 per cent of it in oil and gas. By 2040, the IEA projects, Asia will consume 75 per cent of the world’s regionally traded oil and 60 per cent of its natural gas. China, the IEA expects, will be the world’s largest oil importer before 2020.

These estimates take into account the worldwide shift toward renewable energy already under way. Oil and natural gas will be an important part of the energy mix for decades to come, regardless, and that means Canadian bitumen will find a market.

What’s at issue is the pace of extraction, the means of shipment (rail or pipe), the degree and nature of carbon offsets, access to markets, and consequently the price.

Here’s why this matters, particularly in light of Trudeau’s signature promise to boost prosperity for Canada’s middle class. The resource economy — mineral extraction in the north and oil and gas in the west — is the last bastion of well-paying private-sector jobs accessible to workers without advanced degrees. Consider the jobs that will accrue from the massive up-front investment — upward of $50-billion, given the various projects currently stymied — in pipeline construction, refurbishment and expansion.

Even given the continuing collapse in the price of oil, pipeline capacity in 2015 virtually matched the supply of 3,981 million barrels a day, the Canadian Association of Petroleum Producers notes in its 2016 outlook. By 2021, an additional 850,000 barrels a day will be on-stream, with nowhere to go but by rail.

Every additional month that passes without new pipeline capacity has a social cost, in the billions in lost government tax revenue, corresponding to higher deficits and, ultimately, a lower living standard.

The Liberal strategy, so far, has been to remain aloof, while imposing new layers of oversight that supposedly will yield broad public acceptance of the need for pipelines. It isn’t working; indeed the opposite is happening. And now Trudeau is in China laying the groundwork for a future bustling trade in oil for which Canada is utterly unprepared.

The PM will persuade Canadians of the need for a new pipeline, with carbon offsets introduced in tandem, and get it done, despite the caterwauling and protests. Or, he will watch the window of opportunity close, as Canadian job growth lags, and he takes the blame.