Federal Liberals, who hoped the government’s pipeline pact with Alberta was a public relations effort that would never see the light of day, should brace for its approval — including, possibly, with public money.
Three Liberals privately suggested to the Star that Prime Minister Mark Carney may put federal money behind a new pipeline to the west coast — despite the memorandum of understanding signed with the province lays only a path for the “construction of one or more private sector constructed and financed pipelines.”
Back in November, some green-minded Liberal MPs who were surprised by the MOU took comfort in the belief that the private-sector requirement meant the pipeline would never happen. “It is an impossible hill for Alberta to climb,” one MP confided at the time.
Just last month, Victoria’s Will Greaves told the Star that without a private proponent expressing interest, there was little to discuss.
“The government has been very clear that we will not be building another pipeline to tidewater with public funds. So, we won’t be seeing a redux of the TMX experience (the Trans Mountain pipeline that prime minister Justin Trudeau bought and expanded),” he said.
Last fall, when the prime minister was asked in Calgary if he was prepared to do more to de-risk the project to attract private capital, Carney said he was already “de-risking the project in several ways” through regulatory clarity and setting aside “billions” for financing Indigenous People’s equity ownership in projects.
But sources, who spoke on condition of anonymity, say Carney wants to see the pipeline built, and is realizing it may not happen without more public money behind it.
There’s been talk about Alberta coming in as a partner, and earlier this month, Enbridge CEO Greg Ebel changed his tune, saying he’s not ruling out participation.
“What I would say is the conditions don’t yet exist for that pipeline to be built,” he told Bloomberg. “When they come to a solution on emissions issues, industrial carbon tax, CO2 lines, that will determine whether our producers — my customers — get the green light to produce. If my customers get the green light to produce, Enbridge, as the largest mover of oil in North America, is going to be there.”
As Ebel noted, the MOU’s most controversial aspects aren’t yet resolved — despite an April 1 deadline.
Alberta and the federal government have yet to agree to a new industrial carbon pricing regime, one that applies to the electricity sector and replaces Ottawa’s Clear Electricity Regulations. Last fall, Carney and Smith agreed to use Alberta’s Technology Innovation and Emissions Reduction (TIER) system and “ramp up to a minimum effective credit price of $130 per tonne.” But they did not specify when or how that price would be reached, and whether it would increase over time as the federal benchmark does.
In an interview with the Star earlier this month, Environment and Climate Change Minister Julie Dabrusin referred to the government’s rising industrial carbon price as the “backbone” of the government’s climate plan, key to reducing Canada’s emissions, and providing industry the “right signals to move our economy in that direction.”
But on a briefing call with journalists hours before the MOU announcement, Alberta’s representative suggested $130 was a ceiling not a floor. While it’s higher than the province’s current headline price of $95 a tonne, and much higher than where credits effectively trade, between $20 and $40 a tonne, it’s not high enough to make projects, such as the $16.5-billion Pathways Alliance carbon capture and storage network viable — without even more public funding. (So far, the project has received tax credits worth 62 per cent of its construction costs, and the oil companies behind the massive project — a soft prerequisite for the pipeline — want more public funding.)
More concerning, perhaps, is that just as Alberta was agreeing to beef up TIER, Smith introduced regulations in December making credits easier to obtain, thereby lowering the value of those carbon credits.
The federal government didn’t criticize the move. Perhaps, Ottawa didn’t want to raise attention to the fact it’s allowed Saskatchewan to openly defy the federal backstop as well.
Carney also said nothing about Smith, who last week, after already announcing an agreement-in-principle on methane regulations with the prime minister, released draft regulations that are far weaker than what she’d just agreed to.
“I don’t see how it could be accepted as an equivalent,” Pembina Institute’s director of oil and gas Janetta McKenzie told the Star. Other provinces, she said, will be watching very closely to see if Alberta gets away with an easier benchmark.
It’s one of many questions that deserve more answers. Perhaps, those green-minded Liberal MPs will ask them.
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