Trans Mountain Is No Longer Viable, Say Over a Hundred Economists and Experts

September 17, 2020

Fall of World Demand and the Price of Oil

OTTAWA – In the face of the historic worldwide fall in demand for oil and the price drop of black gold, the Trans Mountain Expansion Project (TMX) is more financially perilous than ever for Canadian taxpayers

     A group of more than one hundred economists and natural resource experts from all parts of the country are urging the Trudeau government to just abandon this project before it swallows up more taxpayers’ money. This money, according to them, should rather serve to accelerate the transition towards a greener economy, especially in Alberta, the main oil-producing province.

     In a letter they sent to Justin Trudeau and to Finance Minister Chrystia Freeland, these economists and experts insist that Ottawa at least put the project on hold and produce a study demonstrating its economic viability.

     La Presse obtained a copy of the letter, which was also sent to Environment Minister Jonathan Wilkinson and to Natural Resources Minister Seamus O’Regan on Wednesday. The letter was to be made public on Thursday.

     “We are concerned that the decline in world oil markets and the escalating construction costs have undermined the viability of TMX and put taxpayers’ money in peril.

• Extract from a letter signed by over a hundred economists and natural resources experts

     “Your government has not provided an updated evaluation to justify this investment in light of deteriorating conditions,” insisted the letter’s signatories.

      “We invite you, therefore, to put on hold all further expenditure on TMX until a new, independent evaluation of costs and benefits is completed in order to determine if TMX  is financially viable and in the public interest,” they added.

     These economists and experts have written at a time when the Trudeau government is counting on a “green economic recovery,” the bill for which could rise several billion dollars.

     The Liberal minority government must present an outline of its intentions in this matter in the Throne Speech to take place on Sept. 23.

SOME EMINENT SIGNATORIES

     Notable mong the letter’s signatories are Richard Mueller, economics professor at the University of Lethbridge in Alberta; Mike Harcourt, former British Columbia prime minister who is now president of Quality Urban Energy Systems for Tomorrow; Philippe Crabbé, University of Ottawa professor and former economist at the National Office of Energy; Justin Leroux, professor of applied economics at HEC (Hautes Études Commerciales) Montreal; Marc Eliesen, former CEO of BC Hydro, Ontario Hydro, and Manitoba Hydro, and Deputy Minister of Energy of Ontario and Manitoba; as well as David Wheeler, Principal at Sustainable Transitions and a former advisor at the World Bank and other international financial institutions.

   The Trudeau government decided in May, 2o18 to proceed with the acquisition of the Trans Mountain pipeline, which runs from Edmonton in Alberta to Burnaby in British Columbia, for the sum of $4.5 billion from the American firm of Kinder Morgan. It had expressed the intention of abandoning the pipeline expansion project due to legal battles pursued by the province of British Columbia, indigenous groups, and environmentalist groups.

     The pipeline expansion would triple its capacity to carry 300,000 barrels per day some to around 900,000 barrels. Construction work began last fall at a predicted cost of $12.6 billion. The Trudeau government intends to privatize the pipeline once it’s finished.

     But the letter’s signatories insist that since the Canadian government’s purchase of TMX, world oil markets have weakened considerably. Moreover, the International Energy Agency recently concluded that the demand for oil would shrink by 30% over the next two decades if the countries who signed the Paris Accord on Climate Change decide to honour their commitments.

     “Even before COVID-19 depressed oil markets the private sector had signaled that oil was no longer an wise long-term investment in a world force to battle climate change.”

• Extract from letter sent to the Trudeau government

     “Teck Resources has abandoned its Frontier tar sands mine project and, according to Mark Carney, former director of the Bank of Canada and of the Bank of England, up to one half of world oil reserves could become stranded assets,” they wrote.

     The economists and experts are also indignant that the expansion project’s costs have already more than doubled to reach $12.6 billion since the first estimates. “The toll fees approved by the Canadian Energy Regulator have not been adjusted to cover this increased capital cost. Taxpayers will wind up, then, by subsidizing a large part of the cost over-runs.”

     Since the government became the pipeline’s owner, Prime Minister Justin Trudeau insists that he project is “in the national interest” and that it is incumbent on all premiers to find markets for natural resources.

     For his part, Alberta Premier Jason Kenney, is keen on completing this project, which will give oxygen to his province’s economy, hard hit by falling commodity prices over the past five years.

     According to Pierre-Antoine Harvey, economist of the Quebec Labour Congress and also a signatory to the letter, the Trudeau government must use the funds intended for the construction of TMX to invest in green energies.

     “The circumstances have changed dramatically. The oil market is no long what it was. And the project’s costs are exploding… This project will not be profitable…. If we want an ecological and just transition, this is not a project of the future,” he told La Presse.

     THE FIRST $307.85 BILL IN THE WORLD….

     To convince the Trudeau government to put the emphasis on “a green recovery” in his Throne Speech, which will be read September 23, a coalition bringing together groups, organizations, and collectives of citizens, will hand out on Thursday a new green currency bill in the amount of $307.85. This action aims to point out that a $20-dollar investment in the green economy will result in at least $307.85 of economic activity. The coalition is based on a study done by Ralph Torrie of Corporate Knights on the impacts [of such investments].

• Translated by Vancouver Ecosocialists