Oil Change International

Exposing the true costs of fossil fuels

Canada Set to “Lose Billions” As it Already Looks For Buyer for KM Pipeline

C: Protect the Inlet

C: Protect the Inlet

It is a year to the day since President Trump pulled out of the UN Paris climate agreement. “I was elected to represent the citizens of Pittsburgh, not Paris,” said Trump. The backlash was immediate against the climate denying President, with many accusing the US of becoming a climate change pariah.

A year on, we have another climate rogue state: Canada. The news this week that Justin Trudeau’s government was investing $4.5 billion to buy Kinder Morgan’s Trans Mountain pipeline, which will triple the amount of dirty tar sands from Alberta to British Columbia, has been met by local, national and global condemnation.

There are three main issues that the Trudeau Government have messed up on, big time. First the financial cost; second the financial viability and third the ecologist cost, including the cost to our climate.

Let’s look at cost: People were quick to point out that $4.5 billion was only the start. It just bought the existing pipeline. Then there is the cost of building the pipeline, which is no estimated to cost $7.5 to 9 billion. Then there are the pollution liabilities for both land and sea.

It is not surprising that the National Observer notes that “By the time the expansion is built, the price tag for nationalizing the existing assets and building the expansion will cost Canadians upwards of $15 – $20 billion.” That is a huge amount of tax-payer’s money to risk on a pipeline that many people believe is not viable anyway.

Trudeau admitted as much this week, when interviewed by Bloomberg this week when he said the pipeline was “too risky for a commercial entity to go forward with it; that’s what Kinder Morgan told us.”

That is an amazing admission from Trudeau. He just spent upwards of $20 billion on a risky project. “Trans Mountain’s expansion was never commercially viable and Kinder Morgan knew it”, argues the National Observer.

No wonder his Government was ridiculed in the House of Commons. Speaking on May 30th, NDP MP, Nathan Cullen said: “Only Liberals would try to force through a pipeline and tankers through traditional First Nations territory and call that reconciliation. And only this prime minister would call himself a climate change leader and then be willing to spend $15 billion on a diluted bitumen pipeline to China”.

Cullen added “If it’s too risky for an oil pipeline company to build an oil pipeline, why is it okay for the Canadian public to pick up all of that risk?”

As Trudeau walked headlong into the trap set by Kinder Morgan’s May 31 deadline to resolve all political and legal issues, the company had already isolated itself from financial risk anyway. Reuters has since reported that “documents show Kinder Morgan cut creative deals with lenders and oil producers to shield itself from massive write-downs like the ones taken recently by rivals TransCanada Corp and Enbridge Inc in canceling controversial pipeline projects.”

Whilst the Canadians’ pick up the billions in financial risk, British Colombia is also still exposed to a massive risk of an oil spill, meaning that it continues to resist the pipeline. And ironically the more its Government continues to protest against the pipeline, the more potential financial risk Canadian tax-payers’ as a whole will be exposed to, as well, due to delays, which could stretch years.

Since the Federal announcement, BC Premier, John Horgan said:  ‘It doesn’t matter who owns the Kinder Morgan pipeline, the risks remain. What matters is protecting B.C.’s coast — and our lands, rivers and streams — from the catastrophic effects of an oil spill.”

And since the announcement over 800 businesses in B.C. and across Canada have signed a petition  asking Horgan to continue resisting the pipeline

And let’s not forget about the climate risk too and Canada’s climate commitments which many people have commented on. “Mr. Trudeau has been speaking out of both sides of his mouth since he was elected, and now it has caught up with him. In Paris, he paraded as the Prince of Climate Change. When he was in Houston, he was a champion for export pipelines. He wanted it both ways, but now he can’t: He owns a pipeline and has promised to complete it,” noted the Globe and Mail.

The Guardian summed it up nicely by saying: “developing the oil sands ensures Canada will never come close to meeting its commitments to the Paris climate accord. In 2015, Trudeau promised to cut emissions dramatically: 30% from 2005 levels by 2030. But most of the oil in Alberta’s tar sands will have to stay in the ground to prevent a global warming catastrophe.”

Even those who are used to more nuanced language have been critical. Richard Kinley is the former Deputy Executive Secretary of the United Nations Climate Change Secretariat and was a key organizer of the 2015 Paris Climate Change Conference. Kinley says buying Kinder Morgan should cause some Canadians to ask “interesting questions” about the Trudeau government’s commitment to climate change.

Meanwhile Trudeau’s government is already looking to offload the pipeline, even though many experts feel they will be hard pushed to find a buyer. “Canada is already sending out marketing materials for the Trans Mountain pipeline it just acquired from Kinder Morgan Inc. to several potential buyers”, reports Bloomberg.

“The taxpayer is going to end up losing billions of dollars here,” Jeff Rubin, senior fellow at the Waterloo, Ontario-based Centre for International Governance Innovation, told Reuters. “The commercial viability of this project was very much in doubt in the private sector’s eye, and that’s unfortunately why we are now investors.”

But the task of selling, is of course, made, “much harder by its tortured political history” adds Reuters.

And that history is set to continue: The announcement has galvanized the anti-pipeline opposition. Tomorrow the Coast Protectors and others will be holding a demonstration. According to their Facebook page: “The fierce backlash to Justin Trudeau’s decision to bailout Kinder Morgan is echoing around the world! Join us Saturday at Kwekwecnewtxw, the Watch House on Burnaby Mountain at 10 am for a fun, creative, kid-friendly rally to stop the Kinder Morgan buyout. This pipeline will never be built!”

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