Introduction
This report explains why Prime Minister Trudeau’s federal cabinet should decide in favor of the proposed Trans Mountain Expansion Project to bring more Alberta crude oil to Canada’s west coast. The report covers the pros and cons of the case and provides reasonable proposals for the concerns being raised against the project.
Facts of the Project
Trans Mountain Expansion Project is a contentious, controversial project that requires careful assessment of facts.
Kinder Morgan intends to use the proposed Trans Mountain Expansion Project to triple the current capacity of the line by adding and operating about 1,200 kilometers of the pipe. The company expects the project to transport about 890,000 barrels of oil each day and increase tanker traffic sevenfold.
Supporting Views
Some Canadian groups, such as the Government of Alberta, other high stakes, and nonpartisan energy experts have supported the Project as the simplest solution to bolster Canada’s oil-exporting capacity and make it an energy superpower. Alberta Government favors the Project because it offers the easiest means of transporting oil to the market. It will solve issues associated with depressed oil prices and transform the entire economy of Canada amidst the ongoing drop in oil prices in the global market. As such, Canada can only cover a wider market share through the Project. The Trans Mountain project will, therefore, assist significantly by enhancing the crude oil supply to reach the country’s western port for shipping.
Concerns Raised
One First Nation that would be affected by the Project has opposed it. Specifically, the cities of Vancouver and Burnaby do not welcome the Kinder Morgan’s plan that proposes to increase the ocean oil tanker capacity sevenfold. The prospect of more tankers loaded with oil moving across the water of Vancouver has raised the possibilities of a horrible oil spill with massive environmental impacts.
At the same time, other critics have claimed that the Project would result in massive extraction of bitumen from the oil sands of Alberta and, therefore, it would significantly contribute to Canada’s carbon emission footprints and the subsequent climate change. Indeed, there is a possibility of increased carbon emission into the atmosphere by additional tens of megatons of carbon every year. Moreover, Canada also releases about 62 megatons of carbon every year from its oil sand operations (Walkom, 2016).
The Government of British Columbia is more serious about the environmental impacts of the Project. Consequently, it has withheld any approvals related to the Project until it conducts an independent environmental assessment of the Trans Mountain Expansion Project.
Canadians are equally split over the issue. In fact, others have linked the decision to delay the approval of the forthcoming 2017 provincial election. In addition, it is also expected that British Columbia would want the Federal Government to approve its liquefied natural gas project intended for construction. The Province also wishes to sell its hydroelectric power to Alberta.
Discussion of Findings
The decision to support the Trans Mountain Expansion Project is based on facts. All evidence and claims made for and against the project were considered. The Trans Mountain project involves the construction and operation of the pipeline project. Thorough consultations were undertaken with Indigenous people affected, possible effects of the proposed project, and preferred interventions were considered. This report, therefore, considers all the benefits and drawbacks related to the Project as it seeks to balance the diverse interests of stakeholders and multiple factors to determine the best interests of all parties involved and the interest of the entire country (National Energy Board, 2016).
Assessment of all information, evidence, facts, and other factors showed that the Project could provide regional, national, and local benefits. As such, the potential benefits of the project would outweigh the residual drawbacks (Johnson, 2016).
The Prime Minister should support the Project if it can meet the minimum standards expected of such projects with massive environmental impacts and economic benefits. As previously observed, the Project would lead to the increased capacity of the pipeline system in Canada. It can be constructed, run, and managed safely as it promotes the interest of the country (Stone, 2016).
The Project is considered a major economic boost for British Columbia and the entire country. The Project will result in direct jobs through construction, operations, and maintenance. In addition, there would also be other indirect jobs associated with the pipeline expansion, specifically from supporting services. In fact, the Project is most likely to impact every economic sector right across Canada. Revenues generated from the Project will fund different services, including health, education, and promote the development of new businesses while creating value to investors and pension funds (Prystupa, 2015).
A study on the economic benefits of the Project commissioned by Trans Mountain and improves on past studies demonstrate that three vital impacts would be realized directly from the Project. It is estimated that the project will create additional 678,000 jobs and an additional $18.5 billion in revenues for both the federal and provincial governments over the next 20 years after the launch (Conference Board of Canada, 2016). That translates to about $1 billion in economic activity and almost 34,000 jobs every year for the next 20 years (Conference Board of Canada, 2016).
- Fiscal and economic benefits will be realized after the project completion.
- It will assist Canada to attain the global oil prices whose benefits would be noted in higher tax revenues and increased employment.
- Alberta will generally benefit both economically and financially, and British Columbia will also derive these benefits, including 12% fiscal benefits and an additional 24% employment.
In these economic benefits, it is interesting to understand how oil producers will utilize excess after-tax cash flow realized from higher oil prices because of the Trans Mountain Expansion Project. Previously, it was estimated that the project would generate an additional $49.8 billion in profits after tax between the periods 2019 and 2038 because of increased production and profitability.
It is expected that Canada can distribute these earnings using two methods – companies can pay higher dividends, and it can accelerate investments. In this case, higher dividends would support additional 3,200 jobs annually. More investments will be realized in the oil and gas sector. In fact, about 588,000 jobs will be created (an average of 29,400 jobs every year). British Columbia will register about 13.7% while Alberta will claim 68% of these jobs (Conference Board of Canada, 2016).
The tanker traffic in Vancouver will also create more economic and financial benefits. It is estimated that about 348 more large tankers will visit Vancouver Port Metro. These visits will result in increased spending of $2.5 billion for the first 20 years and creating approximately 1,300 jobs each year majorly in British Columbia.
When all these economic and fiscal benefits are aggregated, then the Trans Mountain Expansion Project will support about 802,000 people through employment and generate an additional $46.7 billion in terms of revenues for the government between 2012 and 2038.
It will allow Canada to transport its oil to the global markets, including Asia. The Project is considered as a milestone for the country. That is, the country will set up infrastructures that would support the transportation of its resources to the international market. As such, it is in the best interest of Canada, and it will support it to exploit its vast oil resources. Most proponents of the Project have argued that it would create wealth in Canada and support global energy needs through high standards of safety and environmental protection. This approach will result in responsible resource exploitation (MacLean, 2016).
It is intended that the project will be backed with evidence-based regulatory processes. In this regard, experts’ opinions and scientific ways shall guide the entire project. On this note, it is necessary for Canada to conduct a feasibility study of the Project. Results will be used to make informed decisions.
Other notable benefits include capacity building, market diversification, competitive advantage for exporters, enhanced oil spill responses, and other community benefits, such as direct support for education, developments, and emergency management among others (Kwantlen Polytechnic University, 2015).
Despite these possible economic benefits once the project is completed, environmentalists are not convinced that it is environmentally friendly. In fact, they have urged the government to discard the Project altogether. Most critics of the Project generally assert that it is not in the best interest of the public. They have cited safety, public health, and environmental issues if the pipeline is expanded. In this case, the risks outweigh the benefits, so they argue. In fact, these individuals and groups opposing the Project expect the Prime Minister to reject it outright. They have observed that Canada cannot continue to build more pipelines and still meet global climate commitment and carbon emission reduction.
According to available evidence, over 85% of the proposed pipeline routes are currently available. As such, the Project is not likely to cause massive disturbances and environmental damages. Besides, the Project team has developed effective environmental protection procedures and mitigation. It is yet to develop procedures for protecting the endangered Southern killer whales (MacKenzie, 2016). These whales are most likely to be negatively impacted by high marine traffic. On this note, the Project proponents believe that the ongoing efforts to drive whales’ recovery by Trans Mountain, Fisheries and Oceans Canada, and other stakeholders are most likely to offset this drawback. Besides, marine traffic is most likely to increase in the future due to growing demands.
It is also expected that the Trans Mountain Expansion Project will have to meet some stringent conditions before the Project can be initiated. Specifically, the Project must demonstrate how it will offset its related construction emission of greenhouse gases into the atmosphere.
Vancouver is now a city divided because of the Project. Some unions completely support the Project. Conversely, some critics assert that the Project is a major threat to the successful economy and the environment of Vancouver (Judd & Baker, 2016). The sevenfold increment in oil tanker traffic will affect its fragile water and jeopardize the most advanced city economy in Canada. The major concern is a potentially large oil spill, which could have devastating consequences on Vancouver’s economy, water, and the shore (Judd & Baker, 2016).
In the case of spills, the Project has acknowledged that the impacts of large spills could be disastrous. However, it has been observed that the chances of such spills occurring would be minimal based on the extent of mitigation and safety precautions that would be developed for the Project. In fact, the Board has classified such risks as acceptable (National Energy Board, 2016).
For the Indigenous Aboriginal groups, the risk burden is modest. That is, the ability to use water, land, and other resources would be temporarily impacted during Project construction. However, long-term impacts will be observed during the lifetime of the Project, specifically on restricted sites. Nevertheless, it is noted that all legal requirements will be met for the affected local communities. Besides, Trans Mountain will continuously engage these communities throughout the project life to solve emerging problems. As such, there would be no glaring conflicts between Indigenous policies and Project execution.
Tsleil-Waututh Nation continues to oppose Trans Mountain Expansion Project fiercely. The Nation is majorly concerned about possible pipeline leaks and potential massive leakages from tanker traffic. It is noted that the community has invested many resources to contain damages that emanated from the Burrard Inlet. After the three decades, they were able to harvest some clams from the shores.
The Project, therefore, will not protect their fishing and harvesting rights as traditionally practiced. Tsleil-Waututh Nation considers the expansion and possible spills as impending disasters, which would disproportionately affect their lifestyles (Hoekstra, 2016). It is however expected that the Government should play a key role to lead Canada into a new energy era characterized by respect for human rights and environmental protection.
In fact, all other notable impacts on municipal development plans and landowners and land use are modest and acceptable. As such, they should not result in sustained protests against the Project.
Trudeau must recognize that he must restore Canada’s global image on environmental issues after Stephen Harper withdrew from the Kyoto Protocol. At the same time, the Prime Minister must develop favorable relationships with the Indigenous communities. The decision to support the Project should be purely based on hard science to ensure that Canada is progressive on issues related to climate change.
A recent study has rejected the idea of ‘the project is in the public interest’ (Gunton, Broadbent, Joseph, & Hoffele, 2015). The researchers have argued that some of the methodologies used to derive benefits of the Project are actually wrong. At the same time, they demonstrate that the Project would result in surplus and its costs of construction are not shown. As such, the so-called benefits are incomplete and deficient, and other critics have rejected them too (Conversations for Responsible Economic Development, 2013).
The country can deliver its oil resources to the global market. However, it must execute these efforts in a manner that actually accounts for the long-term interests of the public and future generations. The community must, therefore, grant its permission for Trans Mountain Expansion Project.
Some members of the public had claimed that they submitted hundreds of questions to Kinder Morgan, which generally concentrated on the risk and impacts of spills, the scientific basis of the oceanographic analysis applied, and the level of consultation. On this note, concerns were raised that the process did not meet minimal scientific evidence necessary for such technical projects. Besides, it did not meet all requirements of British Columbia (Burgmann, 2016).
Therefore, the Prime Minister should only endorse the Project once all issues raised have been met. The Project requires a responsible state approach to energy resources exploitation and development. The country must therefore ensure that it balances between the need to exploit its natural resources and developing stronger initiatives required to support climate change efforts and Indigenous populations. The right balance will ensure that the Project will actually deliver the identified benefits and assist the country to overcome emerging issues associated with commodity prices.
The country considers a carbon levy as a better option for containing greenhouse gases (Bennett, 2016). The Project will not hinder the plan to phase out coal and focus on renewable energy in Alberta. In fact, Project development is meant to play a critical role in sustainable activities (Bennett, 2016). Canada must, therefore, take important decisions to ensure the required transition toward a low carbon economy is met. It can move higher the value chain and diversify the energy market in order to gain optimal value from its energy resources as allowed under the climate change efforts. Hence, the Project will make the country to realize these values.
Recommendations
Prime Minister Trudeau and the Cabinet should endorse the Trans Mountain Expansion Project once it has met the following and other conditions.
- The Project meets environmental regulatory requirements;
- It meets the minimum threshold for scientific and safety requirements;
- Emergency preparedness and response plans are available;
- Environmental protection;
- Accounts for people, indigenous communities, land and land use;
- Demonstrate viable economics and financial outcomes;
- Marine shipping management;
- Continued consultation with affected individuals;
- Lifecycle regulation.
References
Bennett, D. (2016). Alberta urges NEB to OK Trans Mountain pipeline, says all of Canada benefits. Edmonton Journal. Web.
Burgmann, T. (2016). Trans Mountain pipeline project doesn’t meet B.C.’s five conditions: minister. City News.
Conference Board of Canada. (2016). Economic Benefits of Trans Mountain Pipeline go Well Beyond Construction Period. Web.
Conversations for Responsible Economic Development. (2013). Assessing the risks of Kinder Morgan’s proposed new Trans Mountain pipeline.
Gunton, T., Broadbent, S., Joseph, C., & Hoffele, J. (2015). Public Interest Evaluation of the Trans Mountain Expansion Project. Web.
Hoekstra, G. (2016). Tsleil-Waututh has a message for Trudeau: no to Trans Mountain project. Vancouver Sun.
Johnson, R. (2016). Environmentalists, First Nations Vow Summer of Action Against Trans Mountain Pipeline. Earth Island Journal.
Judd, A., & Baker, P. (2016). Report recommends conditional approval of the Trans Mountain Expansion Project. Global News.
Kwantlen Polytechnic University. (2015). KPU, Trans Mountain reach MOU to support students. Web.
MacKenzie, E. (2016). Trudeau must say ‘no’ to pipeline: Vancouver mayor . Web.
MacLean, D. (2016). Alberta Enterprise Group applauds NEB decision on Kinder Morgan Trans Mountain Expansion Project. Web.
National Energy Board. (2016). Summary of Recommendation: Trans Mountain Expansion Project.
Prystupa, M. (2015). Where the parties stand on Kinder Morgan’s pipeline expansion. Vancouver Observer.
Stone, F. (2016). NEB approves Trans Mountain pipeline expansion—with conditions. Web.
Walkom, T. (2016). With Trans Mountain, Justin Trudeau soon to face his first pipeline choice: Walkom. Toronto Star Newspapers.