Gwyn Morgan: Trudeau’s cynical politics caught him in his own Trans Mountain trap

Canada is endowed with the third-largest oil reserves in the world, but a lack of access to world markets means our oil is sold far below world prices. Each day, this “captive-market discount” hands a $40-million gift to Americans. Adding insult to injury, the discount also drives tens of billions of dollars in Canadian investments to American oilfields.

Now, after seven years and billions of dollars spent by proponents of three oil-export pipelines, hopes for revival of Canada’s oil industry has come down to one extremely troubled project: the Trans Mountain pipeline expansion. How could this possibly have happened?

The answer lies in politically motivated decisions that progressively narrowed those three proposals to what was always the most fraught project. Here is a precis of what I’ll call “the saga of the three pipelines.”

Enbridge filed regulatory applications for a Northern Gateway pipeline to ship Alberta oil to the North-Pacific port of Kitimat in 2010. The Harper government’s cabinet approved the project in 2014 after a thorough and intense review by the National Energy Board (NEB). However, in September 2016, Prime Minister Justin Trudeau cancelled the project. “The Great Bear Rainforest is no place for a pipeline,” said Trudeau. It mattered not that the so-called “Great Bear Rainforest” hadn’t even been given that name until after the regulatory review (in 2016, it was still called the Central and North Coast Forest).

Some First Nation bands were pleased, but not those most affected by the loss of employment and financial benefits. Just weeks ago, the Lax Kw’alaams, representing nine First Nations tribes, filed a lawsuit claiming that the Great Bear Rainforest prohibition against development on their traditional lands shouldn’t have been implemented without their consent. The tragic irony is that Northern Gateway could have been built by 2019. And it would have created jobs and economic benefits in a part of the province that desperately needs it, unlike Vancouver.

In 2014, TransCanada filed regulatory applications for the Energy East pipeline project to move Alberta oil to refineries in Montreal and New Brunswick, while providing vital access to Atlantic tidewater. The project would have replaced the hundreds of foreign-flagged oil tankers that sail up the St. Lawrence each year carrying half a million barrels per day to Montreal, and would use existing pipelines formerly carrying natural gas. The project had all the hallmarks of a win-win nation builder. But, in the face of strident opposition from politically influential Quebec, the Trudeau government imposed an “upstream emissions test” on Energy East, blatantly ignoring the emissions emanating from foreign oil suppliers and those hundreds of tankers carrying their oil. The government then required a restart of the entire NEB regulatory hearing process with newly appointed board members. Realizing that the Quebec votes were more important to the Trudeau government than their project, TransCanada abandoned the project after spending $1 billion.

The Trudeau government’s cynical and politically motivated elimination of Northern Gateway and Energy East left the Trans Mountain expansion as the lone route left to getting Alberta oil to tidewater. But it should have been perfectly clear that the project would face vastly more strident opposition than the other two projects.

Trudeau himself provided justification for that opposition during the federal election campaign. He had attacked the NEB as lacking “public trust” (a regulator that had served Liberal and Conservative governments with distinction for decades), the same words that Trans Mountain opponents, including protestors chaining themselves to construction sites, now use to support their claims that NEB approval of the project was flawed.

After investing $1 billion, Kinder Morgan suspended construction and set a firm deadline for project cancellation unless the conditions for completion are in place. Over the nine months since B.C.’s NDP government — controlled by the Green Party, thanks to a power-sharing deal — vowed to use “all the tools in the toolbox” to stop the Trans Mountain expansion, the prime minister and members of his cabinet have repeatedly stated the project “will be built.” But no action was taken to make that happen. Now the saga of the three pipelines has exploded into a national emergency. The stakes are no longer just a crucial route to tidewater, but also a test of Ottawa’s constitutional jurisdiction over nationally important projects, a destructive breakdown in relations between two provinces and very possibly a national unity crisis.

Having made the unfathomable decision to fly to South America and Europe as this crisis escalated, the PM eventually realized he must return to Ottawa to sit down with the premiers of Alberta and B.C. He arrived with the air of a white knight come to save the day, but it was already clear that there was no chance of changing B.C.’s avowed opposition. In reality, it was B.C. Green Party Leader Andrew Weaver, not Premier John Horgan, who should have been invited to the meeting with Trudeau and Notley since the very survival of B.C.’s NDP government is in his hands.

Now we await announcement of what actions the Trudeau government will take. Taxpayers should watch their wallets, as both the federal and Alberta governments are considering funding the $7.4-billion project. That would be a lamentable but unsurprising chapter in a saga in which politics killed the first two pipelines. The killers will force us all to pay for their mistakes.

Gwyn Morgan is the retired founding CEO of EnCana Corp.