AUGUST 28, 2020
PIPELINE NEWS NORTH •
For Canadian resources, pros and cons to Biden-Harris White House, say observers
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Nelson Bennett First, Barack Obama killed it. Then Donald Trump resurrected it. Now, Joe Biden, who is favoured in polls to win the next U.S. election, is taking a kick at a perennial Canadian football: the Keystone XL pipeline project. At the invitation of Trump, Canada’s TC Energy resurrected the $10 billion project – a 1,900-kilometre 830,000-barrelper-day pipeline running from Hardisty, Alberta, to Nebraska via Montana and South Dakota. Now, there is a possibility the project could be halted again by presidential fiat. If Biden were to make good on the pledge to rescind its permit, it would be another blow to Alberta – which is backing the project with a $1 billion equity and $6 billion loan guarantee from the provincial government – and, possibly, to Canada-U.S. relations. University of Calgary economist Jack Mintz said Biden will come under pressure from unions to walk back his pledge. “Biden’s a union guy, and he’s going to be going against the unions that are quite supportive of finishing the pipeline, because it’s their jobs,” Mintz said. Alberta can also count on the American Petroleum Institute (API) going to bat for Keystone XL. Frank Macchiarola, API’s senior vicepresident of policy, economics and regulatory affairs, said it has lobbied hard in favour of Keystone XL because of its role in supplying U.S. refiners heavy oil. “It’s an important energy project,” Macchiarola said. “It’s important for Canada; it’s important for the United States. We’re going to weigh in heavily on these infrastructure [projects].” If Biden cancels the project, Mintz expects TC Energy would sue for damages and that Canadians would demand a strong response from the Justin Trudeau government. “This time around, I think Canadians … want to see if the Canadian government will take a much stronger position this time around, and they might do that,” Mintz said. “In the case of Alberta, it will be a huge loss. This is the most efficient and best way of getting oil down to the Gulf Coast.”
Keystone XL construction welding | TC Energy
It’s not the only way, however. Alberta producers would still be able to move heavy oil to refiners on the Gulf Coast by rail and via tanker through Vancouver and the Panama Canal, once the Trans Mountain pipeline expansion is complete. “It costs a few bucks more by tanker per barrel, but it’s feasible,” Mintz said. Biden has vowed to stop issuing new leases on federal land for oil and gas extraction and increase stringency for methane emissions standards – something that could benefit natural gas producers in Western Canada, because it might mean less natural gas production in the U.S. and higher prices. “That could stand to benefit Canadian producers,” said Karen Graham, a public policy consultant and principal at KMG Strategy specializing in energy, environment and cross-border issues. On the other side of the energy coin, Biden’s US$2 trillion “clean energy future” plan could be good for some Canadian industries, provided his policies don’t exclude Canadian products like lumber, hydrogen fuel cells, steel and aluminum. The plans call for heavy investment in infrastructure, including railways and highspeed trains, nuclear power, carbon capture, renewables, energy efficient buildings and
building retrofits – all of which would produce a surging demand for many of the things Canada produces. Biden has promised to immediately sign back onto the Paris Agreement. Notably absent from Biden’s plan, however, is carbon pricing, which many economists say is one of the most important climate action tools. Simon Fraser University sustainable energy economist Mark Jaccard said that if the Democrats take control both the White House and the Senate, Biden would proceed with some form of federal cap-and-trade. If the Democrats don’t control the Senate, Jaccard said Biden would use regulations to accomplish his emissions cuts. Even if the U.S. never adopts carbon pricing, that doesn’t mean Canada will be at a disadvantage, Jaccard said, because energy intensive trade exposed (EITE) mechanisms are used to shield Canadian industries that pay carbon taxes against competitors that don’t. “Canadian carbon pricing is always designed for a world in which other countries are doing different climate policies or even no climate policies.” Isabelle Turcotte, federal policy director for the Pembina Institute, thinks Biden will move on some form of federal carbon pricing, but only after the election. Talking
about carbon taxes during a campaign, after all, is a good way to lose an election, especially in the U.S. And she thinks bringing the U.S. back into the Paris Agreement fold and implementing strong climate policies is ultimately good for Canada. For one thing, Biden’s plan would align the two countries on things like fuel efficiency standards for light-duty vehicles, as well as lowcarbon fuel standards. “We’re about to go into some pretty substantial conversations as a country here with the consultation on how Canada should design its pathways to get to net neutrality by 2050,” Turcotte said. “There’s a whole question of our carbon budgets that could also be energized by how the U.S. also carries out a similar conversation under a Biden administration.” As for whether Canadian energy and resources companies will be better or worse off with Joe Biden in the White House, Graham points out that merchandise exports from B.C. to the U.S. (about 20% of which is energy) fell by about 25% since Trump took office – from about $2 billion in 2017 to $1.5 billion. “For the B.C. energy sectors, it’s already gotten worse under a Republican administration,” Graham said. “And it’s hard to see it getting a huge amount worse under a Biden administration.” — Business in Vancouver
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• PIPELINE NEWS NORTH
AUGUST 28, 2020
B.C. carbon tax ineffective, study says Nelson Bennett As a tool for lowering greenhouse gas emissions, B.C.’s carbon tax is a dud, according to a new study by the Canadian Energy Research Institute (CERI). The study compared B.C.’s carbon tax and Alberta’s tax on large emitters to the European emissions trading scheme and Quebec’s cap-and-trade agreement with California. The study concluded that the B.C. carbon tax was beneficial for the economy, but had little impact on emissions, compared to cap-andtrade in Quebec and Europe. “BC carbon tax policy boosted economic activity but had no effect on emissions,” the report concludes. “Since the objective of regulatory policy is to reduce emissions, our results suggest that the carbon tax policy in British Columbia failed to achieve its goal. “In fact, oil prices have been found to have a bigger effect on emissions in B.C. than carbon tax.” The study likewise found Alberta’s policy, which taxes large emitters, didn’t result in emissions reductions. The CERI study conflicts with others that found that, while B.C. emissions have gone up since the carbon tax was introduced, it’s because the economy grew so much. Without the tax, emissions in B.C. would have been much higher, some sustainable energy experts argue. “Empirical and simulation models suggest that the tax has reduced emissions in the province by between 5% and 15% since being implemented,” a study published by Brian Murray and Nicholas Rivers
B.C. GHG emissions went up in 2018. | Getty Images
in Energy Policy in 2015 concluded. Chris Bataille, a Simon Fraser University expert in energy and climate policy and associate researcher for the Institute for Sustainable Development and International Relations, said the B.C. carbon tax would be more effective in reducing emissions if they were higher and applied more broadly. Currently, the tax in B.C. is $40 per tonne. It was supposed to have gone to $45 in April, but the increase was deferred, due to the impact of the COVID-19 pandemic on the economy. “In British Columbia the carbon price does not touch process missions, just combustion missions,” Bataille said. Dinara Millington, CERI’s vice president of research, generally
agrees. The tax would be more effective if it were higher and didn’t include some exemptions for certain sectors. “We’re not suggesting that B.C. should scrap the carbon tax,” Millington said. It would be more effective in curbing emissions if it were higher, she said -- $40 to $80 per tonne by 2020 and $50 to $100 per tonne by 2030 – and did not provide some exemptions for the metallurgical coal, natural gas and LNG sectors in B.C. While those sectors do pay carbon taxes, Millington said their allowances for how much they can emit are higher than for other sectors. “Certain sectors have preferential treatment,” she said. One advantage that cap-and-
trade has over carbon taxes is that they are less transparent. Taxpayers don’t see the pricing as much as they do with a carbon tax, which is much more visible, and therefore harder to sell to the public. But to underscore just how tricky a balancing act carbon pricing can be, Minnington added that if either carbon taxes or cap-and-trade prices are too onerous, it could result in “leakage” to countries with no or lower carbon pricing. “The argument is that if you make your cap-and-trade or carbon tax so restrictive and so constraining… there’s a possibility that the energy intensive industries, like natural gas extraction industries, those firms could potentially leave the jurisdiction,” she said. — Business in Vancouver
$500,000 to develop Fort Nelson geothermal prospects Matt Preprost The provincial government is granting the Fort Nelson First Nation $500,000 to continue developing its geothermal prospects in northeast B.C. The Ministry of Energy, Mines and Petroleum announced the funding Aug. 17 for feasibility and engineering for a geothermal energy generation plant in the old Clarke Lake gas field. It granted exploration rights to the First Nation earlier this year.
“We are providing important funding to Indigenous communities throughout B.C. to develop projects that will help them achieve energy independence, support economic development and reduce reliance on diesel,” said Energy Minister Bruce Ralston in a statement. Electricity in Fort Nelson is mostly gas-generated, or imported from Alberta, and the Clarke Lake field has been previously identified as a potential site for a geothermal power plant.
A report by Geoscience BC assessed a potential 15 MW geothermal project at two potential sites in the field, and in January the First Nation was granted resource rights to 25 parcels of land covering 6,800 hectares. The field is 14 kilometres southeast of Fort Nelson, and has had more than 100 natural gas wells drilled into it. The Fort Nelson First Nation also received $1 million last year from Natural Resources Canada to assess the field’s potential.
The latest funding comes from the British Columbia Indigenous Clean Energy Initiative, a funding partnership between the province, federal government, and the New Relationship Trust, a First Nations non-profit group based in North Vancouver, and and which includes former Fort Nelson and Treaty 8 Tribal Chief Liz Logan. The Saulteau First Nation will also receive $500,000 for a wind generation project, the ministry said. — Pipeline News North