Now that TMX is complete, the question of who should bear the brunt of the project’s cost overruns is making the rounds on Parliament Hill.
A federal committee delved into this issue on Wednesday night, with some witnesses and MPs insisting the oil and gas sector should shoulder the burden because they are the ones profiting, while others argued the pipeline benefits all Canadians.
Oil industry executives called to testify at the Oct. 9 committee meeting on Trans Mountain’s massively over-budget pipeline expansion were met with a combative NDP leader.
“The TMX pipeline was built for Canada and Canadians,” said Jon McKenzie, president and CEO of Cenovus Energy.
“No, it wasn’t,” NDP Leader Jagmeet Singh interrupted. “It was built for your sector, for your industry.”
“You're literally asking Canadians to pay you to burn the planet,” Singh said.
The TMX price tag was an estimated $7.3 billion in 2018 when the federal government purchased the pipeline from Kinder Morgan for $4.5 billion. But construction costs skyrocketed over the years, reaching $34.2 billion in Trans Mountain’s latest estimate. Now, the Canada Energy Regulator is hearing arguments about whether the tolls charged to ship oil through the pipeline should be increased and by how much, to account for a portion of the steep cost increases.
But oil shippers, including Cenovus, are fighting to keep the cost of shipping oil as low as possible in unfolding regulatory hearings.
A September report from the International Institute for Sustainable Development shows that allowing discounted tolls could amount to a $8.7 to $18.8 billion subsidy, depending on a range of factors. At the high end of the spectrum, this would amount to $1,255 per Canadian household.
“Nobody knows for sure what's going to happen over the next 24 years, and that's why we provide a range,” the report’s author, Thomas Gunton, told Canada’s National Observer in a phone interview. “But the important point is, no matter what assumptions you make, there is no likely scenario in which the government will recover their investment in Trans Mountain and there will be a significant subsidy between $8.7 and $18.8 billion,” said Gunton, who is also founding director of the Resource and Environmental Planning Program at Simon Fraser University.
In the committee meeting, Conservative and Liberal MPs largely used their facetime with oil industry executives to ask what type of economic benefits TMX will offer Canadians.
Conservative shadow minister for natural resources Shannon Stubbs asked McKenzie to “expand on the contributions that Cenovus and the oil and gas sector make for jobs, businesses, powerful paychecks for Canadians and as well, importantly, all the very, very significant revenue that is sent … to all three offices of government to provide the social programs and services that all Canadians in every region benefit from, support, expect.”
NDP MP Charlie Angus noted that neither McKenzie nor Greig Sproule, vice president of tolls and tariffs for the Canadian Association of Petroleum Producers, even uttered the word “climate” in their opening statements to the committee.
Singh asked McKenzie whether he accepts that the oil and gas sector shares responsibility for the impacts of climate change, which is known to exacerbate extreme weather events like the hurricanes battering the East Coast and the wildfire that razed Jasper.
McKenzie responded that it “highlights the complexity of the issue,” adding that he’s not a forester and knows nothing about hurricanes.
“I don't know if CO2 caused these fires,” McKenzie said.
“In short, it comes down to the question, ‘Who do you think will pay for this pipeline?’,” said another witness, Reuben George, member of the Tsleil-Waututh Nation, during the committee meeting. “Should it mostly be the oil companies who are its only customer and primary beneficiaries and who are reporting record profits? Or should it be mostly taxpayers who are struggling with the cost of living?”
Tsleil-Waututh Nation has long opposed TMX and is intervening in the toll hearings to argue oil shippers must pay. The heart of the community is in the Burrard Inlet and Tsleil-Waututh Nation has conducted several economic analyses on TMX, which it will submit to the committee as evidence at Bloc Quebecois MP Mario Simard’s request.
Travis Meguinis, Commander in Chief of Red Nation Natural Law Energy, also appeared at the meeting. Natural Law Energy is a coalition of Indigenous communities that invests in oil and gas and renewable energy projects.
Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer
Comments
How did we get this far down the path without making these serious decisions?
The debate of whether we should build TMX or nor ended years ago,
Regardless of one’s support or not, it’s not going away so we need to make the best decisions for all Canadians.
I believe that there were numerous “reasons” for the delays and added costs; many of which had little to do with the actual project and more were as a result of the interests of some who were eager to drag this project on for as long as possible, benefitting from the delays.
With respect to the question “who pays”; it’s no surprise that the OG sector believes that the taxpayer should because….? Maybe they didn’t want to mention “because after the govt spends billions cleaning up their orphaned wells!”?
Let’s face it the OG group aren’t doing Canadians any favours relieving us of this commodity, they do it for a pro; nit a bad word unless it is improperly elevated by the taxpayers’ support.
The TMX has allowed the OG producers to almost triple their previous daily volume; I suspect there are coinciding profit increases as well!
So just as homeowners pay to have water piped to their homes, pay tolls to drive on some highways, so too should OG assist in defraying the cost or our assistance in bumping up their profits. Otherwise why wouldn’t the federal govt simply drill and pump their own wells and ship it on their own pipeline.?
Enough with the corporate control!
The "tripling" in volume of oil shipped is at the high end of highly questionable TMX output estimates. I haven't seen tanker counts, but I doubt they will ever hit that number, or if they do, not for long.
The main project justification was to tap Asian markets to diversify from primarily US export destinations that, in industry's words, suffer from a "discounted" price. Asian receivers have yet to materialize in sufficient numbers to prove that narrative true.
What Asian refinery will pay a premium price for an inferior product that requires spending more on additional refining steps, let alone for the cost of transoceanic shipping? The so called discoubt is actually a fair price that refects poor product quality.
China is already getting ultra cheap oil from Russia, and is also well on its way to energy independence via a massive build out if domestic renewables. Singapore, Malaysia and Indonesia will be connected to huge Australian Outback solar farms via undersea HVDC cables. The latter two also have their own solar capability, and existing fossil fuel deposits.
The writing is on the wall for Canadian bitumen and LNG.
Yeah. And it was supposed to pay for greening Canada's economy, right? I'm old, and remember stuff from long ago. But that was in the 20-teens.
It was never going to be profitable to taxpayers: and don't forget, that $18+bn comes with interest...
Taxpayers were never consulted. The decision was made by Mr. Trudeau and perhaps his cabinet. Most of the issues around delay had to do with the pipeline company's actions: not getting appropriate approvals from the people they needed to get it from, and instead paying off individuals who were not the authorized leadership, to sign consents with an "X" in exchange for payments of ISTR about $30K. They have never, throughout the course of the build, met the requirements that came with the approval in relation to not messing up the environment, especially related to waterways and fish. They've run roughshod over archaelogical sites and sacred grounds. And they very poorly positioned the pipeline itself, such that it got caught up in mudslides, for example. The rest of it was caused by the very climate change that the oil and gas industry is largely responsible for, and disproportionately so in Canada.
OG doesn't recognize that most people pay for water: they have it given to them, and even delivered to them in conduits built by governments. Heck: dams that destroy prime agricultural land and First Nations hallowed grounds ... not to mention their sources of livelihood ... are *built* at taxpayers' expense, Just For Them.
They're like spoiled children of royalty, who have no idea what it is to have to earn a living. They were born with incomes.
Your question of "how did we get so far down this path without making these serious decisions?" is THE question for the times, but am I the only one who also recalls that at THAT time we were all seized by the idea of "transition" to a greener economy which the TMX public revenues could be part of. But it was also a "twofer" to help Rachel Notley at the time when it looked like there was an actual chance of a progressive foothold in dynastic, insular Alberta.
And no one was openly citing climate change as a threat at that time, even meteorologists. So be fair here all you tribal NDP commenters, instead of disparaging Horgan and now Eby in turn, why can't you recognize and acknowledge the obvious realities and complexities of actual GOVERNANCE when even the CEO of Cenovus give a nod to "complexity?!"
Personally, I was never "seized" by the line that TMX revenues will help pay for green initiatives. I always thought that to be a weak political justification with no economic backing to appease Alberta. Real economists like Robyn Alan did the early math and found the economic justifications for TMX to not only be lacking from the start, but outright poppycock, and she used CAPP's own data to prove it.
Then came Notley, marching right into BC's municipal council business on the threatening effects of a pipeline literally right through Metro Vancouver backyards and a massive expanded oil storage tank farm hovering above residential neighbourhoods.
This is not about any kind of tribalism. Given the reality today, it's about doing our best to keep the Conservatives from power and from blowing the oil and gas floodgates wide open, even if that means voting for the Pipeline Kid with not a small amount of irony. In my swing riding the NDP are in play, but it's a matter of if it will enough to avoid vote splitting and defeat the Poilievre appointee.
Math is easy, but it's also an ice cold antidote to political tribalism.
..."powerful paychecks for Canadians..."
Correction: "Powerful payCHEQUES for Canadian subsidiaries of foreign oil companies."
Is there a proof reader in the house?
Very recently the city of Burnaby council caved to TMX demands to stop criticizing the company, remove all critical references about TMX from its website, and to sign an agreement where any future critical comments will be met with a $20 million penalty. Burnaby is where this project terminates on the ocean.
Presumably that covers the Burnaby Fire Dept. which exposed the effort by TMX to lower fire safety standards at its expanded Burnaby Mountain tank storage facility which hovers above thousands of homes and businesses, and just below Simon Fraser University.
A previous council led by mayor Derrick Corrigan was very vocal about its opposition to TMX, but were powerless to stop it. Corrigan's strong municipal leadership on this issue stands out in stark contrast to today's council. Corrigan, a longtime NDP member, duly posted Burnaby's legal rebuttals to every false allegation on city permits made by TMX personnel and their hired guns at the National Energy Board hearings, which in essence was nothing more than a rubber stamping kangaroo court.
Corrigan would make an excellent intervenor in these hearings on the underhanded methods used by TMX to get its way. The fact that this is a taxpayer funded project built by a self promoting climate fighter prime minister that went way overboard in cost is just that much more galling.
I am in full agreement that this project should be sold to the private oil companies, even at a loss. If they continue to balk, then the Alberta government should be brought into the negotiations and urged to put its money where its mouth is.
Why? Because Canadian taxpayers, the supposed beneficiaries of TMX revenue and jobs (not many new jobs were created in BC), are on the hook for the financial losses and likely will be put into the same position on the industry's cleanup costs and other environmental liabilities.
In addition, the evidence is mounting that renewables are now eroding fossil fuel demand in Canada's overseas export markets, the very thing TMX proponents used to justify the project to begin with, obviously using magical thinking and rhetoric over sound research.
TMX was completed in 2024. I doubt it will survive to 2034.
Agreed, Canada should sell this to the producers and yes even at a loss. We need to divest ourselves and let the users be responsible for its operation and maintenance. It’s so frustrating to see our govts held hostage to these global corporations who threaten job losses unless their demands are met.
Maybe we could be so lucky as Ontario did in 1999 when Mike Harris sold highway 407 to a consortium that included SNC Lavalin, Quebec’s provincial pension fund and a Spanish company Ferrovial. ~< /s
Let the wailing Albertans buy it out at cost. Their government could finance it on a sales tax, that of all Canadians, I think at last tally only the Alberta government does not exact.
Out of all the critics of TMX, the Tsleil Waututh First Nation, Burnaby's former Corrigan led council, the Horgan provincial government (which subsequently slipped badly on LNG), and the former Robertson led Vancouver council stand out.
Many, many thanks for showing real leadership on opposing TMX.
Well that's the neoliberal model........public funds builds the pipeline, but now let's step aside and let the capitalist fossil fool industry reap the profits.......while our tax dollars pays for the cost over runs of construction.
Makes you wonder why they keep shilling on the right for lower taxes? How is the public going to be able to continue its good work of funding the entre proners, unless we continue to pay those taxes??
Given the inefficiency of the free market, shouldn't we be raising taxes? It's only fair that the richest industry on earth should get a free ride.
Sucks to be Us.
South of our border, the person likeliest to become their next president says a whole lot can be financed by making wealthy individuals and corporations pay their fair share of taxes.
Maybe we can fairly tax the O&G corporations, and their wealthy executives, to pay for the pipeline they wanted. It'd be an idea to pass on some of the cost to Trudeau, personally, and whoever else it was who got suckered into the very bad, no good, terribly rotten Deal.
The real question may be when the climate movement will stop being so polite.