Canada Energy Regulator projects there may be no need for Trans Mountain expansion

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This article was published 24/11/2020 (2137 days ago), so information in it may no longer be current.

OTTAWA – A new report from the Canada Energy Regulator projects that if Canada strengthens its climate policies to cut more greenhouse-gas emissions, it could eliminate the need for both the Trans Mountain expansion and the new Keystone XL pipeline.

The Energy Futures report, issued Tuesday, estimates energy production and consumption through 2050, based on two scenarios: one in which no more climate policies are introduced after this year and an “evolving” one where more initiatives are added to cut greenhouse-gas emissions.

Under the status quo scenario, the regulator projects the three pipelines under construction — Keystone XL, Trans Mountain and Enbridge Line 3 — will be the last ones needed to handle future growth in crude oil production. Under the evolving scenario, crude production still grows about 18 per cent before peaking in 2039, but the report says Line 3 alone is enough added capacity to handle that increase.

Cam Fenton, Canada team lead at 350.org (named for a “safe” level of carbon dioxide in the atmosphere) pointed out the regulator twice recommended the government approve the Trans Mountain expansion, but is now projecting that Prime Minister Justin “Trudeau’s own actions on climate could make the pipeline he bought unnecessary.”

However Tim McMillan, president of the Canadian Association of Petroleum Producers, said not going ahead with all three pipelines would be a mistake.

He said stopping pipeline capacity to handle total maximum annual production doesn’t take into account ebbs and flows of shipments, comparing it to only building freeways using the total number of cars travelling daily, rather than during peak periods.

“That would be an inefficient transportation system,” he said. “In Canada we have struggled with under capacity or full capacity. Neither of those are efficient systems.”

Keystone XL, from Hardisty, Alta., to Nebraska, is already in jeopardy: U.S. president-elect Joe Biden has promised to rescind Washington’s approval for the cross-border project. Trans Mountain restarted construction in 2019 after pausing in 2018 because of the court decision on federal approval.

The Trudeau cabinet had to approve the Trans Mountain expansion twice, after the Federal Court of Appeal said the first approval lacked sufficient Indigenous consultation and environmental review.

Ottawa bought the existing pipeline for $4.4 billion in 2018, after Kinder Morgan Canada was threatening to walk away from the expansion project amid political opposition that was delaying construction.

Trudeau pledged Canada would expand it, and then sell it back to the private sector.

It’s currently estimated it will cost about $12.6 billion to expand the pipeline by building a nearly parallel version that will almost triple total capacity.

“The Trans Mountain pipeline is needed more now than ever before,” said Trans Mountain spokesperson Ali Hounsell.

“Existing shippers on the Trans Mountain pipeline have been requesting additional capacity for years to serve West Coast markets. Increasingly Canadian producers are seeking pipeline access to new and growing markets in the Pacific region and Trans Mountain is the only pipeline from Canada that can provide that optionality for producers.”

She said shippers with petroleum to move have signed contracts that will “underpin” 80 per cent of the pipeline’s capacity for up to 20 years.

Tom Gunton, a resource and environmental planning professor at Simon Fraser University, said the status quo scenario in the Energy Futures report is not realistic, since the government just introduced legislation last week to make getting to net zero emissions by 2050 legally binding.

The report itself notes to get to net zero, Canada will have to be more aggressive at moving away from fossil fuels than even what its “evolving” scenario lays out. The report says Canadians will still get almost two-thirds of their energy from fossil fuels by 2050 under the evolving scenario.

Net zero means any emissions still produced are absorbed by nature or technology, rather than left in the atmosphere to contribute to global warming. Gunton said the evolving scenario is the more likely situation in the report, and that scenario makes it pretty clear “you’re not going to need these pipelines, so you should at least defer or shelve construction.”

He said if the projections change, they can be revisited but at the moment we could be spending more than $22 billion to build pipelines that aren’t needed.

Canada Energy Regulator CEO Gitane De Silva told The Canadian Press in an interview that the goal of the report isn’t to comment on existing policy but to paint a picture of where things could go using a variety of assumptions.

“Really, our hope is that this information will help inform that policy process going forward,” she said.

A spokeswoman for the regulator also later clarified that the report is not saying whether or not any specific pipelines should be built, but rather looks at potential crude production based on a number of assumptions. The spokeswoman said the chart is not a forecast, and is not an attempt to assess the optimal capacity for Canada’s pipeline system.

This report by The Canadian Press was first published Nov. 24, 2020.