Writing on the wall for Energy East, but Trudeau is making costly gamble

There's a suggestion that backing the Trans Mountain pipeline expansion from Alberta to B.C. would cost Trudeau fewer votes than Energy East

The National Energy Board’s unprecedented decision to widen its study of the Energy East pipeline to include much broader climate change impacts suggests that the fix is in to kill the proposed $15.7 billion project.

The politically savvy have been saying for a while that Prime Minister Justin Trudeau wants the Alberta-to-New Brunswick project gone because it’s too politically risky in Quebec and Ontario, where he needs votes to get re-elected.

One of them is Dan Tsubouchi, chief market strategist at Stream Asset Financial Management LP in Calgary, who said back in May that “Energy East is not likely to get done, primarily due to the social opposition to the pipeline in Ontario and more so in Quebec … We can’t see the Liberals fighting against Quebec firstly and Ontario secondly on Energy East, especially if Keystone XL and Trans Mountain expansion proceed, or even if they don’t.”

On the other hand, the narrative goes, Trudeau is expected to keep on backing the Trans Mountain pipeline expansion from Alberta to the British Columbia coast because it would cost fewer votes, regardless of the new B.C. NDP government’s multiple ploys to get it stopped.

By delivering Trans Mountain, Trudeau would be able to say that he kept his promise to get Alberta oil to tidewater.

NEB REVIEW

Ottawa set the table on Energy East Wednesday when the NEB announced it would include a review of all upstream and downstream climate change impacts that could be associated with the pipeline.

That’s “all industrial activities from the point of resource extraction to the project under review,” the NEB explained in a news release. “The specific processes included as upstream activities will vary by resource and project type, but in general they include extraction, processing, handling and transportation.”

As for downstream impacts, they are “all activities from the point of the product leaving the project to the final end-use. The processes will include further refining and processing, transportation and end-use combustion.”

The NEB also said it would consider whether the pipeline is still needed given the proliferation of climate change laws and policies that could reduce the availability of oil and gas.

Trudeau’s Liberals have created many of those laws and policies.

The new NEB rulebook effectively puts the oilsands and their future on trial.

ENVIRONMENTAL GROUPS

No wonder the environmental lobby has been giddy with excitement over the expanded NEB reach, which will give it a massive platform to further politicize energy projects.

“Apparently you can teach an old dog new tricks,” said Environmental Defence in a statement. “The National Energy Board (NEB) has finally listened to Canadians and agreed to study the climate impacts of Energy East, as well as whether the pipeline makes economic sense in a carbon-constrained world.”

But the NEB’s decision is sending shockwaves through industry, which worries about further delays, higher costs, and duplication with other agencies.

“I think a great deal of soul searching is required by the federal government,” Mark Scholz, president of the Canadian Association of Oilwell Drilling Contractors, said in a statement . “They need to look into the mirror and ask themselves if they truly want to have an oil and gas industry in this country.”

Trudeau’s game plan on Energy East — if that’s what he’s up to — is a big political and economic gamble.

B.C.’s NDP, which needs the support of the Greens to stay in power, may not play ball and could keep throwing roadblocks at Trans Mountain, which is due to start construction in September.

B.C. joined legal challenges this week against the Trans Mountain expansion by applying for intervener status.

PUSH BACK?

In addition, oil and gas producing provinces, particularly Alberta, could finally wake up and push back against Ottawa’s blatant power grab of their resources.

Alberta’s energy minister expressed disappointment in the NEB decision.

“Based on our initial analysis, we believe this would be a historic overreach and have concerns about what this means for energy development across Canada,” Margaret McCuaig-Boyd said in a statement.

In Alberta’s submission to the NEB in May, when the regulator was seeking input on whether to consider GHGs, the province warned the NEB to be “cautious as to what purpose and extent it intends to consider provincial energy and greenhouse gas strategies, policies, laws, and regulations.”

Energy East proponent TransCanada Corp. has yet to respond to the NEB’s expanded scope, which would put the company at the centre of another charged and costly national discussion.

One of Trudeau’s gravest miscalculations is that if the company backs out of Energy East, the graveyard of energy projects spiked directly or indirectly by him would get even bigger — with the $36-billion Petronas LNG project just the latest example — and Canada’s reputation as a politically and regulatory unstable place to do business would get even worse.