Energy & Environment Mid-Month Digest
By Bruce Carson
Volume 3, Issue 2, February 15, 2021
The major theme discussed here over the last couple of months is the fate of Canada’s pipelines that cross into the United States; pipeline discussions continue in this issue of Digest.
Another matter for review here is what was to be the new coal policy and how it has been walked back by the Kenney government. What was that all about?
Digest will also touch on a new study dealing with achieving net zero emissions in 2050, increase in crude by rail and the Moose Lake Management Plan.
Also the two day court hearing into the constitutionality of Alberta’s inquiry into funding of anti-fossil fuel groups has concluded.
KEYSTONE XL—WHAT’S NEW?
Premier Kenney announced that Alberta will seek compensation for the veto of Keystone XL (KXL) by the Biden administration through NAFTA as claims can still be made up to July, 2023. It will be seeking $1.5 billon which Alberta committed to the project. In order to do this Alberta will probably need TC Energy to join in the claim. Kenney was quoted as saying we are “going to use every legal tool at our disposal to protect our interests.” He argues that the U.S. action is a clear violation of the investor protection provisions of NAFTA.
However, Premier Kenney will not be joined by the federal government in this NAFTA challenge. International Trade Minister Mary Ng said at the end of last week “I don’t think that getting into a trade war with the U.S. is in the best interests of Canadian workers in the energy sector.” She added “what we have got to do is find that common ground where Canadian interests are viewed and seen as American interests as well.”
Also last Friday at a symposium held by the think tank Canada 2020, John Podesta, former advisor to Presidents Clinton and Obama said in relation to President Biden and the possibility of him changing his mind on KXL “he’s not going back.”
While the possibilities of reviving KXL through Canadian complaints and actions are slim, it has been often said that arguments dealing with job losses and revenue shortfalls affecting states due to cancellation may be a more compelling argument to be put to the Biden administration.
Geoffrey Morgan reports that several U.S. states are threatening lawsuits against the Biden administration in order to revive KXL. Attorneys General for 14 states are urging the President to reconsider. Also Senator Joe Manchin, chair of the Senate Energy and Natural Resources Committee has written Biden asking him to reconsider and “take into account the potential impacts of any future action on safety, jobs and energy security.”
He argues further that it is of utmost importance that the U.S. maintain energy security though relationships with allies like Canada and the development of KXL will get “energy to market in the safest and most responsible way.” The states argue cancellation of KXL cripples them economically and hurts workers and their families across the country.
Conrad Black in his National Post column argues that Canada must protest Biden’s decision, but that strategic thinking is needed in Ottawa on this matter. He believes that if Canada does not respond now it will be seen by all countries, Russia, China, as a doormat that can be cuffed around by any large country.
He proposes the reaffirmation of KXL in the context of a continental environment agreement. He sees this agreement providing full environmental protection and “generous treatment of Native people.”
Black is right about the need for strategic thinking and the movement by states directly affected economically by KXL’s
cancellation will at least show the Biden administration that ideologically driven decisions such as cancellation of KXL have an affect on real people, who vote.
ENBRIDGE LINE 5
This pipeline whose future is in doubt has found a champion in Erin O’Toole, leader of the Conservative Party of Canada. In an opinion piece in the National Post, last week he wrote “shutting down Enbridge Line 5 would be devastating for Canada.”
He went on to point out that this pipeline has been a vital supply line for decades providing 10s of thousands of good jobs. Its cancellation would increase the cost of everything from gasoline to food in Quebec and Ontario. It carries half of the oil needed in Ontario and Quebec and through refineries in Sarnia, is the main source of propane used in Ontario and Quebec.
O’Toole also brought up Line 5 in his conversation last week with U.S. Representative to Canada, Katherine Brucker. He let her know that cancellation of Line 5 would hurt the economy of both countries.
Federal Natural Resources Minister O’Regan has said that the federal government is activly ensuring the continuance of Line 5. But its future has not been raised in the three conversations that Trudeau has had with the Biden administration. One of the main reasons that there should be federal support for this pipeline is that its cancellation would mainly affect seat rich Ontario and Quebec and an election looms sometime during this year.
However, Geoffrey Morgan writes in the Calgary Herald that both Suncor and Imperial Oil are making contingency plans in case Michigan is successful and obtains a court order which cuts off Line 5 oil supply to Ontario.
More on this pipeline as the situation develops.
ALBERTA’S COAL POLICY
There will be university level public policy development classes taught for many years featuring the machinations of the Kenney government as it shifted positions on coal policy. What not to do when attempting to change a policy that most citizens support.
On May 16, this year, the Kenney government rescinded the 1976 coal policy which protected most of the Eastern slopes of the Rockies from open pit mining. This created a fire storm of opposition as detailed last week by Don Braid, but at that point Braid set out that Kenney was not backing down. He quotes Kenney as saying “modern protections are better.”
The Siksika Nation and the Blood Tribe announced they would be taking legal action. Also a number of UCP members of the Legislature were said to be opposed to the changes as well.
Last week, Brian Jean wrote an article in which he advised the Kenney government to engage in extensive consultations with Albertans on any changes to the 1976 coal policy. He also made the point that the net benefit to the government from open pit coal mining is not worth the price of setting Alberta up once again as a target for environmental and other groups opposed to this policy change.
And then the Government of Alberta changed course. Minister of Energy Sonya Savage said “Albertan’s have spoken loud and clear and we have heard them. Not only will we reinstate the full 1976 coal policy, we will fully implement further protections and consult with Albertans on a new, modern coal policy.” These public consultations will take place later this year.
Will the six companies which have exploration permits be allowed to continue their work? The Alberta Energy Regulator has been instructed not to allow any new removal mines.
Now we wait for consultations later this year which should confirm that the 1976 policy developed by the Lougheed government should stay in place or be strengthened. As Braid wrote in one of his articles on coal “open pit mines are simply not acceptable in an area as precious as the Eastern Slopes.”
COURT HEARING into the CONSTITUTIONALITY of the ANTI-ALBERTA ENERGY INQUIRY
This two day hearing before Justice Karen Horner of the Court of Queen’s Bench concluded last Friday.
Ecojustice, which brought the action, argued that the Alberta inquiry was unconstitutional on three grounds. First, the Alberta government failed to demonstrate that its decision to launch the inquiry was in the public interest. Second, it is not legitimate to launch an inquiry just because the government disagrees with views presented and this should not happen in a free and democratic society. Third, inquiries should be inquisitorial not adversarial. Ecojustice also argued that the inquiry was illegal because it deals with matters that fall within federal jurisdiction.
Ecojustice added that this exercise is “tainted by a reasonable apprehension of bias.”
The government’s response was that the inquiry is in the public interest and is not targeting a group or following a predetermined direction.
The Premier said these are organizations have been deliberately attacking the lifeblood of the Alberta economy.
Justice Horner said that she would render a “timely” ruling, hopefully before the inquiry reports on May 31, 2021.
CANADIAN INSTITUTE for CLIMATE CHOICES
This organization released a report last week entitled “Canada’s Net Zero Future.” It concluded that Canada is uniquely positioned to hit net zero emissions in 2050 if it makes the right moves now.
The report divides into ‘safe bets’ such as building smart grids and scaling up the production of electric vehicles and ‘wild cards’ such as hydrogen fuel cells which could play a key role but are significantly more uncertain. The report says Canada needs both approaches.
It argues that we need pilot projects, more research and development, public investment in biofuels, geothermal and carbon capture as well as removing carbon from the air. It also stresses that in order to accomplish all of this Canada needs the knowhow of the energy sector.
OIL and GAS WELL SITE CLEAN-UP
The next round of funding under this well site clean-up program was announced last Friday.
This phase involves $400 million to be distributed; $100 million for the clean-up of wells on First Nations and Metis territory and $300 million to oil field service companies.
Applications opened last Friday.
- Monthly survey of manufacturing for December to be released
- CPI numbers for January to be released
- Retail trade numbers for December to be released
- GDP for Q4 and December to be released