Danielle Smith and pipelines could save Canada. No, really
Danielle Smith tours the Centre for Innovation and Manufacturing at Red Deer Polytechnic in 2023. Photo by: Government of Alberta
Even Danielle Smith should be getting the memo by now. After she and Canada’s other premiers traveled to Washington to make their case against America’s proposed tariffs, only to be publicly humiliated by a Trump administration staffer after their meeting, it should be obvious that her brand of not-so-quiet diplomacy isn’t working. As CBC Washington correspondent Alex Panetta noted on social media, citing comments made by Canadian officials, “provincial leaders are now realizing that the Trump administration is ‘a threat beyond partisanship.’”
It’s time to meet that threat with the seriousness it deserves. Canada should put its oil and gas exports — by far its most powerful negotiating tool — back on the metaphorical table. The United States and its refineries very much do need our oil exports, Trump’s repeated assertions to the contrary notwithstanding, and Canada should have the option of weaponizing them — even at the cost of some potential economic blowback. As former prime minister Stephen Harper told an invite-only gathering recently, “I would accept any level of damage to preserve the independence of the country.”
If Canada is going to go to the mattresses here, though, it needs everyone on the same side — especially Danielle Smith. That’s why Canada should present her government with an offer it can’t possibly refuse: full and unqualified federal support for a new pipeline to tidewater. The price would be her own full and unqualified support for an export tax on all energy exports, one that negates the very carveout from American tariffs that Smith has been lobbying for.
She would be sorely tempted to complain about the conditions attached here, given her previous suggestions that any export tax would spark a “national unity crisis” — one many of her Alberta-first supporters would happily amplify. She would be wise to resist that temptation. According to a new Nanos Research Group poll done for Bloomberg, 82 per cent of Canadians said they would support export taxes on oil in order to raise the price for American consumers. That includes 89 per cent support for the idea in Atlantic Canada, which has significant offshore oil operations, and 72 per cent on the petroleum-oriented prairies.
The federal government should promise to invest every dollar of revenue generated by Canadian export taxes on oil and gas into the cost of building a new pipeline to tidewater, whether that’s on the west or east coast. It would help diversify our market access and buffer the oil and gas industry from any future protectionist threats coming from the United States that may well include ongoing efforts to displace the Canadian oil that goes through American refineries with domestically-sourced barrels.
Climate-concerned Canadians shouldn’t panic. As a federally-owned project, its revenues could be directed to funding climate change efforts. It could also require that any barrels flowing through it meet a progressively lower per-barrel emission target. In theory, at least, this provision shouldn’t upset the oil and gas industry, since it has promised repeatedly to reach net-zero emissions by 2050. And more pipeline capacity doesn’t guarantee more oil production in a world where global demand is in the process of topping out. The OPEC cartel could easily switch from artificially elevating prices to deliberately crashing them by producing as many barrels as possible before the petro-state party ends. Indeed, it’s probably just a matter of when, rather than if, that will happen.
Mark Carney, the heavy favourite to become the next Liberal leader and prime minister, might want to float this grand bargain himself. It would show the sort of muscular national leadership that Canadians are clearly craving right now to unite us behind a more robust response to America’s constant provocations. It would force Pierre Poilievre to choose between the short-term needs of Alberta’s oil and gas industry and the long-term interests of his country. And it would challenge a provincial leader who has repeatedly gone into business for herself and her province to stand up for Canada instead.
If Smith and her fellow Alberta-firsters took a step back they might even see the bigger picture here. They’ve long complained that they don’t get the respect they deserve from the rest of the country, which has benefited from the wealth generated in Alberta and the federal taxes they send to Ottawa. Well, now’s their chance to really earn that respect.
Alberta’s UCP government can step up, stand shoulder to shoulder with the rest of the country, share in whatever economic pain is required to end the threat — and get another new pipeline to tidewater built by Ottawa for its troubles. Or it can surrender to Trumpism in the vain hope that if it just bends the knee deep enough its oil and gas industry will somehow escape his wrath. Either way, it’s time to find out.
February 17th 2025
Comments
Wise advice, as always.
Wise? This is the dumbest Fawcett column I've ever read, and I'm usually a fan. And it contains it's own refutation. If global demand for fossil fuels is going to continue to decline why sink tax dollars into another money loser like TMX? Far from cementing national unity, another pipeline to the west coast would certainly meet with massive resistance in BC. And one to the east would just be another stranded asset by the time it were built and the transition to renewables continues space. It's that transition we should be fostering, not investing in white elephants to placate Danielle Smith and her allies in a dying industry.
Agreed Dana
I would direct Mr. Fawcett's attention to an insightful column in Canada's National Observer three days before this one titled, "Donald Trump can't slow down the energy transition" which explains in effect why building new pipelines is pointless. It was written by a clever fellow called, oh yes, Max Fawcett.
Really, how on earth does he not see the applicability of what he said in that column to what he's saying in this one? Related question--does he think you can build a pipeline in 5 minutes? By the time a new pipeline was planned, assessed, reviewed, and built, with the inevitable delays and cost overruns and legal challenges, it would be past 2030, maybe 2035, and the transition away from oil would be further advanced. White elephant. Opportunity cost.
I spotted that about face too. Weird. Nonsensical. Not economical.
I thought paying for renewables was supposed to come from the revenue from TMX. At least that's one of the tissue paper justifications made by Trudeau for having the taxpayers to build it once the private sector threatened to cancel it. So, what exactly is the revenue? How much of it is put into debt servicing? Subsidizing pipeline space and transit leases to bring down the actual market price relative to cost?
Is an audit out of the question for the mountain of public expenditures?
After reading these pieces back to back, I will have a hard time taking anything Fawcett writes seriously. Did he have a fever dream?
The IPCC is begging world leaders not to invest in ANY new fossil fuel projects. So why are we talking about new pipelines when we could be using this opportunity to make the big switch.
Mark Carney hasn't ruled out new fossil fuel pipelines either, though if anyone can do the math he can. He immediately launches into building clean energy infrastructure in his narrative and cites world investment trends in renewables, but openness to fossil fuels is poking through the speeches here and there.
He seems to be open at first to the trade relationships that benefit oil and gas market diversification, mainly in response to Trump's idiotic crisis. Then he embraces the energy transition in the next breath.
I am uncomfortable with that, and feel he might be persuaded by status quo party hacks and pressure from CEOs of oil companies to stick with petroleum longer than we should. On the other hand, I am not aware of anyone else capable of leading the federal government talking so much about the clean energy transition and building big clean energy projects accordingly.
Mark Carney needs to demonstrate his vaunted abilities to do the math because he is bound to disappoint one or the other side of that dichotomy. Even the cold, hard money is now favouring low and zero emission economies.
Should Mark Carney become PM and the Libs attain a majority in the next election, Carney will have four years to act boldly. He could tell Canada and Alberta that the country can't afford any more fossil fuel infrastructure and has no m oral authority to increase emissions, including Scope Three emissions from Canadian petroleum burned across borders and overseas.
Liberal cabinet ministers currently singing from the CAPP hymn book should, in my view, be sent to the back bench if they can't finally, at long last, embrace the transition.
Just simply stop subsidizing oil and gas and let it stand on its own foundation. Help affected workers with training and finding new employment in the transition effort. Concurrently, Carney could start his "Build Baby Build" program on clean energy, not to mention housing, tech, knowledge, etc.
Can't say I agree with Max on this one.
While I think Climate Change has to be addressed primarily on the demand side, and less on the supply side, new pipelines only make sense if they'll pay for themselves over their lifetimes. A pipeline has a lifespan of about 40 years, and we're heading towards world peak-oil around 2035, or 10 years out. If we make that goal, or are close to it, the price of oil will drop like a stone in fairly short order. A drop in demand of only 6% during the 2008 financial melt-down caused the price of oil to drop below production cost, so it doesn't take much of a demand drop to produce severe price fluctuations, not even considering the volatile nature of oil politics. As such, I don't see a good business case for more pipelines.
A better solution might be simply to tax the oil currently going to the US, while finding alternate customers for a moderate portion of this oil that can be supplied with current infrastructure, or small infrastructure investments, so as to keep the pressure on the US through somewhat reduced supply to them while at the same time broadening our customer base a little. The revenue from the oil tax would be put towards developing Alberta's alternate energy market. This low-cost make-due solution makes sense where there is no long-term stable oil market.
Another day, another column from The Observer's lead columnist pushing pipelines.
More oilsands pipelines — fossil fuels for longer — is a long-term anti-climate solution to a short-term political/economic problem.
More oilsands pipelines enable more oilsands production. Oilsands emissions do nothing but climb year after year. Sabotaging Canada's climate targets.
Grossly under-reported O&G emissions are Canada's largest source of emissions. The oilsands are Canada's fastest-growing source of emissions.
Rising oilsands emissions cannot be reconciled with Canada's inadequate climate targets. Oilsands expansion will prevent Canada from meeting its inadequate targets for decades.
Make no mistake. Buying, building, greenlighting, and subsidizing major fossil fuel infrastructure that will require decades to recoup its capital costs is anti-climate policy.
Brought to you by Canada's "most trusted voice in climate journalism".
Fawcett: "Climate-concerned Canadians shouldn’t panic. As a federally-owned project, its revenues could be directed to funding climate change efforts. It could also require that any barrels flowing through it meet a progressively lower per-barrel emission target."
Just like Trans Mountain revenues are funding climate change efforts. The federal government is still funnelling tens of billions of dollars into the pipeline and is likely to sell it at a loss:
"In one of her last moves as finance minister Freeland loaned the Trans Mountain pipeline project $20 billion" (National Observer, January 31, 2025)
"One of the last things Chrystia Freeland did as finance minister was authorize an additional $20-billion loan to the Trans Mountain pipeline project, bringing the total disclosed federal commitment to nearly $50 billion."
Tens of billions more on the table for the Pathways Alliance's white elephant carbon capture project.
Where is Ottawa's $50 B for renewables? Federal support for the O&G industry dwarfs support for renewables and the "clean-energy" transition.
Fawcett: "a progressively lower per-barrel emission target"
The O&G industry grossly underreports its emissions (of all types).
Even if carbon intensity per barrel goes down, if production grows faster, total emissions increase. The pattern observed for decades.
Make no mistake. Under this scenario, Canada's total absolute emissions go up, not down.
A new pipeline may take a decade to build. How long will Trump be in office?
Can the federal government promise a pipeline? Circumventing the federal review process? Crushing all opposition?
Who will build it? Industry or government?
Apparently, Fawcett believes taxpayers should fund another pipeline. So much for the free market. Nationalize the costs, but the chief beneficiaries are the largely foreign oil industry shareholders.
Which direction? East or West?
Have northern BC indigenous communities given up their opposition to Northern Gateway?
Has Quebec given up its opposition to Energy East?
"an export tax on all energy exports"
What would Quebec have to say about that?
Fawcett: "The OPEC cartel could easily switch from artificially elevating prices to deliberately crashing them by producing as many barrels as possible before the petro-state party ends. Indeed, it’s probably just a matter of when, rather than if, that will happen."
So let's promise Alberta another pipeline that, per Fawcett, is likely to become a stranded asset. Likely years before the pipeline can recoup its capital costs. A net loss for taxpayers.
Has Fawcett really thought this scheme through?
"Has Fawcett really thought this scheme through?"
Nope. Or, more accurately, only part ways. Fawcett's thinking seems to arrive at impetuous conclusions before all the data is reviewed and the process is completed.
It's really hard to explain writing so well on the inevitable transition, then to hit pause in a following column supporting more pipelines. Is Suncor treating you to champaign lunches at the Sheraton Eau Claire, Max?
Well, lo and behold, Energi Media just posted an interview with Max Fawcett on this very column. He explains his rationale, essentially make the federal offer to support more pipelines to Smith publicly, not privately, to put her on the spot to accept an export tax of 15% on top of Trump's 10% tariff, making the total in the US 25% justv like all other Canadian traded goods. She will either cave, or double down and expose herself as the traitor ... or something to that effect.
Markham Hislop with EM disagrees, though he found the argument "elegant." It's interesting that Fawcett did not really present this public vs private negotiation in his column, or if he did, not clearly enough.
I'm with Hislop and EM -- a really knowledgeable site, by the way. Hislop recently did a video interview with a couple of energy analysts and promoted using oil and gas as well as electricity as much as necessary to counter Trump's craziness. Canada really does have the power send the continental US into a sudden energy crisis as a last resort, if it had to.
https://www.youtube.com/watch?v=BBPzpGH4fqQ
Both Hislop and Fawcett talk extensively about oil and alternatives to burning bitumen, but not nearly enough about the transition and building clean power grids and renewables. My concern is that there are limits to our national economy, and it should get with the clean energy program sooner rather than later.
At about 25:00 Hislop reiterates the expectation beyond Canada is that peak oil demand will hit at or even before 2030. Fawcett continues with a riding down the decline with oil. On that, no thanks! Leave my tax dollars off the table.
But in the end, both Fawcett and Hislop range all over the topic of the ongoing world progress in the transition. It's too bad Fawcett confuses his narrative with columns promoting preserving the oil industry seemingly as long as possible, perhaps more in defence of Alberta's short and medium term well being than in the well being of the nation.
I guess Danielle Smith didn't get the memo from her oil & gas friends that they are past pipelines, given the expected decline in demand in about two years. Max missed the same comment from the oil patch.
It would be foolish to spend all that money on something that is destined to decline and take longer to build than the Orange Sphincter's four-year term. On top of that, the greedy oil patch would expect tax dollars to even do so, I say no thanks.
I agree with Dana,
We have to quickly push for full electrification and a strengthened national grid and skip wasting time and money on projects that ensure our destruction. Nova Scotia's Premier wants to allow fracking and drilling for oil on our prime fishing ground, Georges Bank. He wants to ignore all those "lazy self interest groups" that are trying to save the planet. Wind and solar have already won the race and Nova Scotia has almost limitless offshore wind potential. Are we destined to be stupid until the last drop of oil or lump of coal?
No. Appeasing Alberta's current premier will further weaken federal powers by yet more devolution of those powers to provinces. It will signal appeasement to Trump too.
Further, by the time the country has a new pipeline a new level of debt will be added to the nation.
The federal government already has special powers to cross provincial boundaries with its own infrastructure. It doesn't need buy in by a lone premier.
Building clean energy corridors and renewables would signal the nation the overall objective is to address climate change and a sustainable economy instead of further delaying action for temporary benefit once again for fossil fuels.
With debt coverage, TMX has ballooned to 50 billion bucks. Can Canada afford another hit like that (Energy East would likely cost more) and afford to fight and adapt to climate change, let alone maintain our public social programs that likely come from the same federal government budget.
$50 billion would build an East-West energy corridor, together with massive storage facilities using pumped water/air to drive turbines to smooth out demand on the across Canada grid. For example, why isn't Saskatchewan thinking about repurposing the [free] holes left by potash mines to build renewable storage instead of talking about un-mined coal as if it were $free? The pollution is certainly not cost- free to the rest of humanity.
I assume you're talking about a new clean electricity transmission grid. If so, count me in.
HVDC lines coupled with mass battery storage dotted along the corridor (and yes, pumped hydro or compressed air storage too) will allow provincial public utilities, and private and First Nations wind and solar companies to send power anywhere the lines go, like right across the continent. Provinces can take advantage of the time zones to help offset each other's maintenance and operating costs by sharing power generated at low nighttime rate periods in one zone to average out the rates in another province during peak hours. The feds and provinces can also develop new industries at home, re-shored from abroad, and offer big tax credits for things like green steel and Canadian battery plants all powered by low emission Canadian electricity.
Until a month ago, prognosticators were widely promoting exporting more clean power to the US, but that has all changed with Trump. It may never be the same again. Therefore, Canada has that much more clean electricity to electrify everything in its domestic economy, and develop a closed loop materials recycling industry to further lower demand for new metals mines even as power demand grows.
Make it Hydrogen compatible, by directional.
However, the biggest problem is that Danielle is bought and paid for by the O&G sector. A cushy 6 figure job awaits her
Smith left a cushy 6-figure job in O&G to be their cushy 6-figure darling agent in government, and will retire with a cushy 6-figure public pension. Either way she comes out better in the end personally, even as she accelerates the decline of her province and sinks its reputation further into the toxic mud.
Are you out of your mind? Yes
Quite the hornet's nest in comments, as I'm sure Fawcett intended.
I applaud it as the kind of radical, out-of-box thinking we need right now. That's what I'm doing, too.
I'm still trying to push for dropping all American weapons purchases that we possibly can, certainly the F-35 and all the buying we did last month, hoping to curry favour. (Didn't! So why still spend?)
It's funny to read pro-military bloggers basically saying, "we must be strong, we must Bear any Burden, Pay any Price!" .... "so we can drop buying from America, then? " ... "Oh, no, we have to buy American weapons, they're the best".
They want everybody else to sacrifice, but not have to live with European military stuff.
What dearest values am I willing to give up?
1) Increase the military budget, if not for American purchases. Especially for poor Ukraine, about to be abandoned.
2) Suck up to the Murderous Mr. Modi of India, which gags me and is super-unfair to Sikhs. Why?
3) Buy our own nuclear weapons and never again depend on America for protection. They will take advantage of it.
That one is a really painful 180 reversal of a 50-year belief.
Accepting this, and even some loss in the fight for climate, too. Opposing the big climate enemies is the better strategy, even at cost to our own efforts.
To paraphrase the wise Chantal Hebert, one if my all time favourite journos, from an interview with Peter Mansbridge on 'The Bridge' (Sirius Radio podcast uploaded to YouTube):
"We're not even a month into Trump's second four-year term and here we are going nuclear. It would be best to keep our powder dry, our eyes wide open and our mouths shut about what big sticks we can carry."
Trump is on the verge of creating an explosive internal constitutional crisis at home. The vast majority of US military generals and admirals are honour bound to keep their oath to the US constitution, which is the overriding law of their land. There are a couple of military leaders who would violate the law, but the other leaders will be forced to act against them.
Canada doesn't need nuclear weapons, but it should build a few nuclear powered naval ships, namely very large icebreakers to fulfill our responsibility to defend the top of the continent. They don't need refueling for 20 years and don't put the Arctic at risk of oil spills. Moreover, they can patrol the Pacific and Atlantic coasts too.
Build them at home using as much Canadian steel and aluminum as possible, and outfit them with advanced gear from Europe, which is still very capable despite not being US-made. Germany, France, the UK and Sweden all make advanced submarines, some of them nuclear powered.
If we're spending billions on defence, we can do better than to concentrate 80% of it in the US, and still end up with very big capabilities.