written by Rod Hill, Telegraph-Journal Wed Mar 27 2019
Premier Blaine Higgs’s government is four months old and already there is, in my opinion, good news: the idea of an Energy East pipeline is surely dead. Yet since plans for the pipeline were abandoned by TransCanada in 2017, Energy East has lived a zombie-like existence, failing to die in the minds of many people.
They refuse to recognize the reality that, given long-term projections of oil sands production, such a pipeline was redundant after the approval of the Keystone XL pipeline by President Trump and other pipeline expansions. Yet despite this, Premier Higgs remained steadfast, demanding that Quebec accept Energy East if it wanted to use New Brunswick as a corridor for its hydroelectricity exports to New England.
For its part, the Quebec government, responding to popular opposition, has been unwilling to accept a pipeline across its territory that involves the risks of spills with no reward.
Such was his irritation with Quebec, that last December – when the federal government announced an increase in Quebec’s (and New Brunswick’s) equalization payments – Premier Higgs said that such payments should be cut to force provinces to develop their natural resources.
“My point was if people felt the pain – if I felt the pain, if Quebec felt the pain…” then they would have no option, Higgs said at the time. He added: “We just don’t seem to want to move as a province. We’re happy to accept handouts, but we don’t seem to be as readily willing to make the changes necessary to allow us to contribute to our own well-being.”
This is a line that New Brunswickers have been fed over and over in recent years. It is no coincidence that the argument parallels the well-worn idea that welfare recipients are undeserving layabouts who need a boot in the rear end to motivate them.
Mr. Higgs seemed to be saying that provinces with below-average abilities to raise tax revenue, who therefore receive equalization payments from the federal government, have no moral right to say no to any polluting industry that comes along. By the same logic, those industries should be lightly regulated, so as to increase their profits. Those supposedly shameful equalization payments fall if the corporate income tax base goes up.
The premier’s idea seems to be that if a fiscal crisis can be manufactured by equalization cuts, creating “pain,” the suffering population will submit and agree to the policies that he favours. This is a curious conception of democracy.
Mr. Higgs has also been promoting the idea that a group of provinces should pool their resources to apply to the National Energy Board (NEB) for approval of Energy East, planning to hand the approved project over to a private company. He has claimed that it wouldn’t “really incur expenses as such for the government, not any significant amount.”
But the process would cost hundreds of millions of dollars with virtually no chance of success according to Dennis McConachy, a retired TransCanada executive who worked on Energy East planning.
As Mr. McConachy pointed out in an interview with the CBC in November, “it would be virtually impossible to be taken seriously by the NEB.” In part this is because many of the companies that would have used Energy East have committed themselves to using the Keystone XL pipeline. The NEB requires applicants to show that the project would be economically feasible. But it couldn’t be because producers have better options for their future production.
In any case, TransCanada made it clear it was uninterested when it announced last month plans to use its pipelines to transport western natural gas to New Brunswick. TransCanada has signed up 17 companies for long-term contracts ranging between 10 and 20 years.
As my colleague Professor Herb Emery recently wrote in this newspaper: “The increased imports of natural gas will also likely result in reduced urgency among voters for developing New Brunswick’s natural gas resources. Opponents of risking the health of the environment to address energy challenges of the province may see increased, cheaper gas imports as an acceptable direction” (“The challenge of greater gas imports,” Feb 27, A9).
Emery also pointed out that producing natural gas in New Brunswick would not result in lower prices. No one will willingly sell gas in New Brunswick for less than they can get in the New England market, so the price there determines the price here.
Anything that reduces the government’s rush to initiate high-volume slickwater hydraulic fracturing (or “fracking”) for natural gas is a good thing. It seems the government still has no mechanism for determining the consent of local populations and apparently no regulations or plans in place to deal with the activity or its waste products. Add to that the long-term costs of deteriorating casings in abandoned wells, providing a channel for methane to escape into the surrounding water table.
But the Premier is undeterred. Fracking, he says, can supply TransCanada’s customers, freeing up its pipeline for… Energy East! Some people just don’t know when to quit.
Here is a simple fact: If oil sands production expanded to fill all the pipelines being planned as well as Energy East, Canada’s ability to meet its already-inadequate commitments to reduce its greenhouse gas emissions would be rendered impossible. The politicians who back such developments, if they were honest, would admit that they have no intention of overseeing any significant reduction in the country’s greenhouse gas emissions.
It’s among many reasons why doomed energy projects should not continue to be pursued. And why threatening to cut equalization dollars to get them done is not acceptable.
Rod Hill is a professor of economics at UNB’s Saint John campus. © 2019 Telegraph-Journal (New Brunswick)