Front Burner - Election reignites pipeline politics

Episode Date: April 8, 2025

Donald Trump’s trade war has revived calls for the building of east-west pipelines within Canada, as a way for the country to unleash its natural resources and reduce its dependence on the U.S. as its key trading partner.But do the economics of building new pipelines — or the logistics, or the environmental realities — actually make sense here? And what are the parties actually saying about them?Today we’re speaking to Andrew Leach, an energy and environmental economist and an Associate Professor at the Alberta School of Business at the University of Alberta.For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

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Hey everybody, I'm Jamie Poisson. To kick off week three of the election campaign, the conservatives drop this attack ad against Mark Carney and the Liberals. Why does Trump want a fourth liberal term? I think it's easier to deal actually with a liberal. Because Mark Carney will continue the same liberal policies that have made Canada weak. He'll keep oil in the ground. It also takes aim at the Liberals' plan to keep the controversial bill C-69 that many conservatives have dubbed the No Pipelines bill.

The idea of Canada as an energy superpower is one issue dominating the campaign. Ever since Trump started with the 51st state nonsense, there's been all sorts of talk about the need for Canada to unleash our natural resources. Dreams of pipelines lost are being resurrected. So why could this be a good idea? Why are others telling everyone to just take a breath here? And where are the major parties diverging? To answer these questions and more, I am joined by Andrew Leach.

Andrew is an energy and environmental economist at the University of Alberta. Andrew Leach, University of Alberta University of Alberta University of Alberta University of Alberta Andrew Leach, University of Alberta Andrew, hey, thank you so much for coming on the show.

Thanks for having me back. So how has the whole Trump situation changed the conversation around energy and pipelines in this country, would you say? Well, I think it's done a couple of things. One, it's, it's brought up this risk that we face, particularly in Eastern Canada, that our domestic oils or Alberta oil and Saskatchewan oil moving East moves through the U S and then back in through southern Ontario. And that historically, I think we've kind of taken for granted as the shortest route to get from west to east. But it's now one that probably has more risks tied to it that having a permit on those pipelines that can be revoked any day at the president's behest is riskier now than probably it's ever been.

And so I think that's part of the conversation. And I think the other part of the conversation is, you know, we're losing, at least we're losing, seem to be losing preferential access to a massive market and to the key market for our energy and all of our other commodities. So this push to say, well, maybe we need, uh, sort of new sources of economic growth and we to say, well, maybe we need new sources of economic growth and we need different diversity

of markets for our energy products. That's all contributing to this push that we're seeing for more energy infrastructure. Could you just give me in broad, simple strokes, the lay of the land of what we already have in place, the pipelines that we already have in place. Sure. So we have one pipeline system that goes west, the original Trans Mountain Pipeline recently

expanded now owned by the federal government. So that's essentially the only pipeline in North America that moves significant volumes from the mid-cont continent to the West Coast. The rest of our pipelines from an oil perspective move towards the US Midwest, so towards Chicago, because historically that's where there's been the most attractive market for crude. We talk a lot about discounts, but there used to be a premium in that part of the market. So most of our oil pipeline infrastructure is really aimed at the middle of the U.S. And then some of it's been sort of rerouted to allow shipment through the Gulf Coast.

And you mentioned the Trans Mountain extension. Kinder Morgan wants to expand the existing 60-year-old Trans Mountain pipeline from just outside Edmonton to the Vancouver area. It's a $7 billion project that would ultimately allow Alberta to sell more oil to Asian markets. People will remember probably that the liberals ended up buying this when it was half built back in 2018. They paid $4.5 billion for it. And so what's the general feeling about how that's going now? Is there a sense that it was a decent investment, that it was the right thing to do?

I think absolutely. It costs more than anybody would have liked to build it, but the overall advantage of having access for that much oil moving to at least a coastal port, if not a perfect deep water port, just adds value that's larger than that overall expenditure. So the fact that the government had to buy it and build it versus the alternative of having it sit unbuilt still looks very positive, I would argue. So you've gone through all the pipelines that we have built, but of course, many have failed over time. And if we could just go down memory lane briefly here, I wonder if you could tell

me about the most significant ones that, uh, that, uh, have kind of died. Uh, sure. Sure. So the three big ones, I think Northern gateway, which would have, uh, shipped oil from the Edmonton area to Kitimat BC was an Enbridge project joint with some other equity partners So that was approved initially by the Harper Conservative government Then that approval was rescinded in a court decision that said they hadn't adequately Fulfilled their duty to consult with indigenous peoples as required under the Constitution

We conclude that Canada offered only a brief, hurried, and inadequate opportunity that left entire subjects of central interest to the affected First Nations entirely ignored. And then when that permit came back to, I guess, pushed it back into the hands of the government again, and Prime Minister Trudeau announced that that pipeline would not be granted approval and also put in a tanker oil tanker ban for that region. Second one is, is Keystone XL, which was a twinning of, or largely a twinning of the now South bow oil pipeline system, but famously was rejected twice by president Obama, then resurrected by president Trump, and was rejected twice by President Obama, then resurrected by President

Trump and then rejected again by President Biden after Alberta Premier Jason Kenney spent a lot of money to have it built on this side of the border. This is a gut punch for the Canadian and Alberta economies. Sadly, it is an insult directed at the United States most important ally and trading partner on day one of a new administration. So it still remains, I mean, maybe it can rise from the ashes again if we say its name three times fast or something, but it would have been, you know,

on the order of 800,000 barrels a day to the US Gulf Coast. So it's, it's ghost still haunts us, I think. And we saw President Trump even recently talking about bringing it back. Writing this ghost still haunts us, I think. And we saw president Trump even recently talking about bringing it back. Yeah. Writing this on truth social quote, the company building the Keystone XL pipeline that was viciously jettisoned by the incompetent Biden administration should come back to America and get it built now.

The Trump administration is very different, easy approvals, almost immediate start, if not them, perhaps. And then the third one that that's resurrected again is the energy East pipeline and it's connected in a way to Keystone XL. So energy East was essentially a product of uncertainty over other pipelines. So Northern Gateway getting rejected, Keystone XL initially being rejected by the Obama administration and Shippers looking for an alternative. So this presented an opportunity to repurpose one of the gas lines on that TransCanada system through to Ontario, build new pipeline all the way to St.

John, New Brunswick, where the Irving refinery is. And that pipeline had a lot of commercial support in that environment, high prices, no other pipelines feasible. But then once President Trump brought Keystone XL back, I think the overall outcome was shippers and TransCanada itself moving their support towards Keystone XL, which as we know, eventually ended up not getting built. In the last several weeks, I've been hearing way more talk about energy ease. If the energy ease pipeline were approved today, there would be a million barrels of oil going from St. John to Europe.

It's pretty simple really. A project like Energy East is possible. It's a fact. Every elected PC government stands ready to support Energy East. We talk about EnerG S or GNL. I think that we need to have social acceptability. And if Daniel Smith or whoever table projects will look at them, but we need to have social... Is that something that could feasibly happen? I think these... So commercially, if you had the same circumstances

arise as we saw in 2014, you could have the same market for it. So, you know, today we're down in the fifties again, I think, but, uh, if you had that long run bullishness over oil prices that would lead people to want to build a lot more new oil sands investment. You have no other route to market. So your alternative would be rail or tariff to access to the United States. Uh, then I think that pipeline would have a chance of coming back, but at the same time, you know, it has, it's a long pipeline. It would be an expensive option for shipping oil.

Oil is expensive to ship over land. So it's certainly not the preferred option. If you went and talked to anyone in the oil patch and said, if you had your choice of where a pipeline would go, it would be the shortest route to a deep water port on the west coast. Yeah. So just, without question. And just explain to me then why, why people are talking about that more. Well, partly because it's a harder project to build that sort of national notion around.

So we see Mr. Poliev's ad leads with building the railway and the national kind of that national identity around the railway. If you want to figure out how far back we've gone since John A's national railway, consider this to transport Alberta oil to Quebec. It needs to go through the United States pipeline south of the border. That gives the Americans the power to cut off Canadians from our own energy supply. Fueling Eastern Canada with Western Canadian crude is something we've talked about for, you know, really since we started exploiting oil and we had national oil policy, national energy program.

And we've talked about it in some way or another for a long, long time. And I mean, the Northwest BC coast, there's a reason why it was controversial in the first place. You have a lot of unceded indigenous territory. You have a lot of indigenousceded Indigenous territory. You have a lot of Indigenous rights that are at issue. You have coastal ecosystems that are incredibly valuable and quite precarious. You've got a pretty remote location for being able to deliver the spill response and the environmental protections that you might want. Whereas going east, at least as far as Ontario, you'd be on an existing right of way

with very easy access relative to some of the remote parts of the mountains in BC. Gotcha. But even if we go east, right? I know there are still lots of policy experts and environmentalists that have argued that there really isn't a strong case here, even a business case.

So let's break that down a bit. What about the argument that you hear from environmentalists, other policy experts, say, look, like these take a long time to build, 10 years, more than 10 years, there's all these cost overruns, like they're always late, and that the world is moving very quickly towards renewable energy, electric cars. And, you know, when you build this kind of infrastructure, you lock us into fossil fuel production for decades to come. That once they're built, you kind of just have to justify their existence by continuing to use them. And that that's an argument to just not build anymore.

But nobody is building a multi-billion dollar oil sands project because they have to keep a pipeline full, right? There's the, I think that that argument doesn't work in the way that, that you think it will, like if you don't have pipelines, of course, it's going to be harder to produce the product, but the idea that in order to fulfill, you know, to keep a pipeline full, to keep from stranding an oil pipeline, that people would do the much more expensive upfront investment to build a production. I don't think that's fair.

Now, I do think people are right to say, hey, the world is changing, we want to be careful about what infrastructure gets built, which is why I think you'll see more interest in building one on a, on a contract basis where the risk is being taken on, not by us, the collective, but by those who are in a position to use it and that they'll be the ones bearing the risk. So you mentioned the electric vehicle side of things. I mean, yes, the world is moving to electric vehicles and the world is moving quickly to electric vehicles,

but the battery technology, for example, in those vehicles is changing incredibly rapidly. So we've been willing to put big dollars behind battery manufacturers that themselves are reliant on a particular technology, a particular approach to that supply chain. And it's entirely possible that in 30 years from now, the market will have moved on dramatically from that. And we haven't seen that same view of, well, we know better than you. On the 80th anniversary of the liberation of Auschwitz comes an unprecedented exhibition about one of history's darkest moments. Auschwitz, not long ago, not far away, features more than 500 original objects,

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Do you think it's fair for me to say that perhaps this hits different than putting your money behind battery technology because it's like this physical infrastructure that crosses huge amounts of this country. It is and it does have, you know, this is part of why when we see people saying, Mr. Polly, for example, that you can make decisions on this with a snap of a finger. And it's like, it's obvious that we should do this. The question is, where are you going to do it? How are you going to do it, etc. Those are huge questions and they implicate landowners, they implicate indigenous communities across the country.

So absolutely there are different stakes than for an individual battery production facility, but in that analog I was looking at how much do we want the government saying to the business community in general, I understand your business better than you do. And climate change is the reason we're having a different conversation. Yeah.

One by one, they are carted off the mountain. Some have been calling home. This pipeline is a tar sand pipeline. And I'm going to keep lying here until they understand they are not going to be doing work in so-called British Columbia. They're not going to be able to get this pipeline to go through. So I, you know, I don't think that's wrong. And obviously I've written a lot and worked a lot on, on climate policy development, but this is one of the reasons why I was always an advocate for

carbon pricing is you want to put the carbon price on the table and say, can you make this business work with a carbon price in place? Right. And if you can, then that's part of your answer. Yeah, but it's off the table. It's off the table now. So well, not on the industry side yet. I haven't gotten all the way down that road yet. Well, okay. Since we're here, just this idea of Canada as an energy superpower, this idea of us unlocking our natural resources, supercharging them, it has become this big campaign issue. And where are we starting to see the two main parties, the conservatives and the liberals, diverge here? Well, I guess maybe I'll be a little Jason Kenny or whatever on this and reject the premise of the question.

I think we are already in many aspects, you know, an energy superpower. Could we produce more? We almost certainly could, but we would do it at costs that are greenhouse gas emissions, that are environmental impacts, et cetera. And so I think where you see some of the deviation in the campaign is number one, how do we assess those impacts and how much do we worry about those things and what's the role for federal and or provincial governments in assessing whether

or not the type of development that's proposed meets expectations. So you see, you know, I think a lot of the discussion we saw Mr. Polly, for example, talk about all of these projects that were stopped by the Liberal government. And he has an image that he shares repeatedly with us. As soon as Justin Trudeau and his economic advisor, Mark Carney, got their hands on Canada's resource policy, they began blocking projects. They blocked $178 billion of resource projects in the last decade. If you look, most of those projects were not rejected under Liberal government, sort of

C-69, No More Pipelines Act, whatever you want to call it. Most of them were languishing in the regulatory process before the Trudeau government ever got elected. Some of them were actually canceled before the Trudeau government got elected altogether. And so there is this narrative out there that, but for the Trudeau government, companies that have lost billions of dollars on oil sands mines already would have been jumping forward to build another one. I don't know that that's true, right? Companies that were pulling their operations out of Canada because of greenhouse gas emissions

would have been excited to build another oil sands project, but for the Trudeau government. I just don't, I don't think that part's true. But I do think there is something to the idea of our regulatory process has gotten longer and more bloated in such a way as to sort of separate politicians from difficult decisions, right? That everybody likes it when they don't want to make the call. Yeah. At the moment, Bill C-69 seems to be the ground zero of that debate, right?

And so just for people who might be wondering what that is, could you just take us through like the Bill C-69 debate, the conservatives are saying they're going to get rid of it, the liberals are saying, and Mark Carney is saying that he's going to keep it. Well, so C-69 was the Trudeau government's revision of basically all of our energy assessment, energy and environmental assessment legislation.

So it was three, nuclear safety, the Canadian Energy Regulator Act, which is all of the inter-provincial pipelines, power lines, export permits, et cetera, and what's called the Impact Assessment Act. And it's that latter one that I think is attracting a lot of the heat and light. That's the, the piece of legislation, the impact assessment act that was challenged to the Supreme court by the government of Alberta and it was ruled unconstitutional. That's what I think, uh, premier Kenny at the time, uh, coined the term

the no more pipelines act. Ironically, it's not the legislation about pipelines, but it's, it's the sense that this piece of legislation opens the door and or forces governments and decision-makers to consider such a broad range of potential negative impacts that there'd never be a way that a pipeline or other project could make its way through that, that approval process. And of course, it's relatively new legislation still, and the legislation allowed existing projects that were already in the regulatory process to remain being assessed under the old legislation. But it's definitely become one of the touch points for, you know, it's, I guess, coded

language to say the liberals want to say no to everything, we're going to say yes to everything, and C-69 is your litmus test. I mean, I saw on Monday, Poliev promised a single application process and single environmental review. One desk called the Rapid Resource Project Office will handle all regulatory approvals across all levels of government so businesses don't have to waste time navigating through dozens of different agencies at three different levels of government.

Carney seems to be suggesting that he can streamline the process under C-69. And the commitment is to deliver those projects, projects like those that we agree, that we agree that are national priorities, and then the federal government, using all of its power, including new legislative powers or new legislation in order to accelerate delivering those projects. What's the big difference between the two here? I mean, at the end of the day, you're going to have a political approval process. You're going to have a federal cabinet decision on any kind of a big project that says yes or no.

And so I do think there's something about Mr. Palyov is saying, which is get us there quicker. But I think what Mr. Kearney is saying is also correct, that under the current legislation, you could make decisions in a more timely way. So I'm excited to hear both of them talking about more expedited decisions. I just rather we have one that makes sure that all of the environmental impacts

are thoroughly explored, but you don't need 10 years to do that. If I'm just a person trying to decide between these two visions, right? Like where's the daylight between them? Like the big differences on this issue, like how they view Canada as in the resource extraction in Canada.

I think the key thing is that one of them, Mr. Paulio's vision seems to be as it's a theme that runs through his campaign, that these are all easy decisions to make and all we need to do is make them. And I think Mr. Carney's is that there are implications, positive and negative for all of these investments and we need a correct process to make them. Mr. Carney's is that there are implications, positive and negative for all of these investments. And we need a correct process to make them. And I think depending on where you are in Canada, depending on how you're affected by

a major project, you're going to probably share one of those visions or another. If you are someone whose key exposure to new development is employment, is government revenues, all of those sorts of things, you're probably in favor of build more immediately. If you're a landowner, if you're an indigenous community, if you're somebody that's affected by the pollution or environmental consequences of these projects, someone cares a lot about climate change,

you're going to want a system that says, hold on, make sure I have an ability to say my piece, make sure that the people who are affected by these projects are given standing and given a right to intervene on those projects and we're not just going to blankly approve them without due consultation and consideration. What Carney is saying about pipelines, for example, during the liberal leadership debate,

he said a project like Energy East is possible. He said, I think it's an opportunity for us that we should see is, how does that line up with what we've previously understood about his environmental politics? Well, I think you've seen a little bit of evolution in Mr. Carney on a number of files, so carbon pricing being one of them.

I think if you go back to Governor of the Bank of England era, Mark Carney, and say, should we be building new fossil fuel infrastructure? I think he'd have a very challenging answer to that for most resource development advocates in Canada. I think now what you're seeing is again some evolution not just from him but in the whole financial community and in our home markets about the importance of these. It's about getting things done. It's about getting yes pipelines built across this country so that we can displace

imports of foreign oil. It's about building out the energy infrastructure more broadly. It's about building energy corridors and trade corridors, including potentially up from here through to Nunavut. So we have additional deep water ports and opportunities there. I think from Mr. Poliev, you're seeing that repeated idea that everything would have been easy, and all you had to do was do the right thing. And that would have been obvious to you at every, every stretch of the, of the, of the

game. And if you just made these decisions that were obvious, things would be fine. And I think when you look back in history and you see, you know, for me, you asked about Northern gateway early on when the Harper government, I think if you imagine you asked Mr. Pauli have to say, what did it look like when the Harper government approved Gateway? And he's going to imagine, I think in his mind, a multi-minister press conference, rah rah, here we go, let's build this nationally important

project. What actually happened was they 430 in the afternoon press release that after sitting on it for six months, and then for a week after that, you couldn't get a minister from that government to talk about that pipeline to save your life. And the first minister to talk about it was Jason Kenny, who, you know, Mr.

Jobs' economy pipelines, he was later on. And his comment on Northern Gateway, when asked about it, he said, no one project is a national priority, less than a week after they approved it. And so the narrative that you hear today about these decisions are easy, they're obvious, and we just need to make them was not the history of the government of which he was a part, you know, when those, those decisions were in

the cabinet of which he was a member, that's not how they advance things. And so I think there's a little bit of a difference when you actually get to make these decisions. They're not all easy. Okay. That seems like a very good place to end this conversation. Andrew, thank you very much for this.

Okay. Thanks and sorry about the lengthy answers, but these are big questions. That is all for today. I'm Jamie Poisson. Thanks so much for listening. Talk to you tomorrow.