Trudeau Government Spends Billions to Acquire Tar Sands Pipeline in Canada
Adam Scott of Oil Change International says Trudeau’s Transmountain acquisition makes no economic or environmental sense, it is “Incredibly Stupid”
DIMITRI LASCARIS: This is Dimitri Lascaris, reporting for The Real News from Toronto, Canada.
Yesterday, Canada’s Prime Minister Justin Trudeau announced that Canada would spend a whopping $4.5 billion to purchase Kinder Morgan’s Trans Mountain tar sands pipeline. Kinder Morgan, with the Trudeau government’s approval, has been attempting to expand the capacity of this pipeline system in order to triple the flow of diluted bitumen from northern Alberta to Canada’s west coast. From there, the plan was for it to be shipped by oil tankers to Asian markets. But the pipeline expansion has met with fierce resistance from indigenous groups and civil society on the west coast. Even members of Canada’s parliament, including Green Party of Canada leader Elizabeth May, were arrested in acts of peaceful civil disobedience against the Trans Mountain expansion. As a result, Kinder Morgan recently announced the suspension of non-essential work on the expansion, and threatened to abandon the project if its demands could not be satisfied by the end of May. Yesterday’s announcement by Justin Trudeau was the Canadian government’s response, or, some would say, capitulation to Kinder Morgan’s demands.
Now here to discuss these developments with us is Adam Scott. Adam is a frequent guest on The Real News Network, and is a senior campaigner at Oil Change International. He joins us today from Durham in the United Kingdom. Thanks for coming back on The Real News, Adam.
ADAM SCOTT: Great to be here. Thanks.
DIMITRI LASCARIS: So, Adam, apparently Kinder Morgan purchased the Trans Mountain pipeline in 2007 for $550 million, a fraction of what the Trudeau government has now committed to pay. Putting aside for the moment the environmental issues raised by this acquisition, this seems like a lousy investment of taxpayer funds. What do you say about the economics of this pipeline acquisition?
ADAM SCOTT: Well, I think it’s been pretty clear for the last while that Kinder Morgan had realized this was not an economic project. This was not a project that was going to make anybody money. The costs have been going up and up and up, and the difficulty in moving forward, getting the project built, got to the point where the investors, you know, knew that they had to walk away from the project. The market didn’t step in. No other companies stepped up to say we’d like to take a stake in it, because it’s clearly a loser of a project. But we have the federal government coming in and paying off this Texas oil pipeline company far more than the project’s worth for the existing assets, and for an unbuilt expansion project. It’s just an unbelievable waste of tax money that could be used for so many other things, and it’s a real signal that the candidate doesn’t take the energy transition that needs to happen seriously.
DIMITRI LASCARIS: And before we get to the energy transition, I just want-. One other aspect of the economics of this. The $4.5 billion, as I understand it, is what the government is going to pay to Kinder Morgan for the existing asset, which is an uncompleted expansion. So presumably a considerably larger amount of money would have to be invested by the Trudeau government over and above the $4.5 billion in order for this expansion to be completed. Isn’t that correct?
ADAM SCOTT: That’s right. The latest estimate, which is now considered out of date, was $7.4 billion additional dollars, on top of the $4.5 [billion], to complete the Trans Mountain expansion project, for which construction hasn’t even started yet. But the latest estimates are actually estimating that could be closer to $9 billion. And that’s if the project isn’t further delayed, or if there aren’t any other issues. So that’s just a liability in terms of trying to build this expansion project. And you know, that that money would have to be repaid somehow.
So you know, the extra cost of building that would be put back partly on the potential shippers on the pipeline, who would have to pay substantially more to move their oil over the system. So it’s very unlikely that the system would pay itself off at that price, which is why Kinder Morgan walked away in the first place.
DIMITRI LASCARIS: So now let’s, let’s turn to the environmental aspects. As you well know, the Trudeau government championed the threshold at 1.5 degrees Celsius at COP21 in Paris, and this ceiling in the global temperature increase was adopted as an aspirational goal in the Paris climate accord. Is there any way to reconcile this pipeline acquisition, in your view, with the Trudeau government’s commitments under the Paris climate accord?
ADAM SCOTT: Absolutely not. This is a clear signal as I’ve ever seen one from the Canadian government that they do not care about meeting international climate targets. They have been warned repeatedly throughout this entire process, since they were elected, that building new fossil fuel infrastructure of this kind which is designed to facilitate the expansion of tar sands production would be contributing to putting those climate goals out of reach. They were told that real climate leaders cannot build pipelines like this to do that.
And over and over and over again they’ve been given a clear opportunity to walk away, and to say you’re right, this is, this is not in line with our climate commitments. And instead we see the Canadian government doubling down. So Trudeau has absolutely destroyed his international reputation as a climate leader that he built in Paris. And in Paris, you know, there was a lot of hope and optimism that Trudeau was bringing forward a new Canada that was actually going to do its part on climate change. But we’ve seen the Canadian government is clearly captured by the oil and gas industry, and is really doing their bidding, and not doing what’s best for Canadians, or for, for people around the world trying to fight climate change.
DIMITRI LASCARIS: Trudeau’s response to the drumbeat of criticism has often been that this project is in the national interest. How do you respond to that claim?
ADAM SCOTT: The ‘national interest’ has been defined incredibly narrowly, mostly by oil industry spokespeople themselves, as whatever helps a small number of private oil interests in Alberta get their oil to a broader range of markets. That has not been well defined to say with the broader interests of all Canadians, who face a very uncertain future as the climate crisis around the world gets worse, who are facing, you know, substantial risks from the pipeline itself along its route. So there are a number of First Nations, for example, who, who their very livelihoods and cultural practices depend on harvesting things like salmon from rivers that this project could directly impact, as well as the entire coast around the BC, southern BC. You know, fishing industry, tourism, you know, just goes on and on. The economy and livelihoods of Canadians across its route also indirectly in harm’s way. So the best interest of Canadians is so narrowly and poorly defined by Trudeau. He doesn’t actually know what’s in the best interests of Canadians.
DIMITRI LASCARIS: Finally, this has now changed in an interesting way the political dynamic on the ground, because previously the resistance was facing off against a private American fossil fuels company, a very profitable one. But now they’re going to be facing off against their own government. You know, and I realize I’m asking you to sort of speculate here, but what do you anticipate the Trudeau government is now going to do against this resistance? Do you anticipate it’s going to adopt tactics that are even more aggressive in terms of trying to stop the resistance to the expansion?
ADAM SCOTT: Oh, I sure hope not. But yeah, the opposition has been very clear. You know, we’re talking about thousands and thousands of citizens and Canadians from across the country, not just from BC, are strongly opposed to this project. We’re talking about indigenous leaders and First Nations governments, specifically, who have said this is clearly something we are we are saying no to on our territory. That’s who you’re opposing. We’ve seen municipalities and municipal governments, as well as the provincial government of BC, all say forcefully, no, we’re not going to allow this to go through, and just huge overwhelming opposition on the ground. So I think we can expect stronger and stronger on the ground opposition. We have a taste of sort of what that opposition can look like on the ground from other projects that have been trying to be forced through.
And it’s not going to be easy, or possible, likely, to push this project through that level of resistance. And I think Kinder Morgan recognizes that. At a certain point they realized this was never gonna happen and had to walk away from the project. It’s an incredibly stupid thing for the Trudeau government to put themselves in this position, where they’re pitting their own citizens against the government. As you said, it’s not like they’re fighting a company anymore. They’re actually fighting their own government over a project of this kind. And history, you know, it doesn’t, doesn’t show that you do very well when you go up against large social movements. So you know, Trudeau’s really put himself in a position where he’s unlikely to win, in any case.
DIMITRI LASCARIS: Well, we’ve been speaking to Adam Scott of Oil Change International about the Trudeau government’s announcement yesterday that it’s going to invest $4.5 billion to acquire Kinder Morgan’s Trans Mountain pipeline project. Thank you very much for joining us today, Adam.
ADAM SCOTT: Thanks.
DIMITRI LASCARIS: And this has been Dimitri Lascaris, reporting for The Real News.