Question: How did the regulatory process for the Enbridge pipeline go so badly off the rails? I’m talking about the “no benefit/no pipe” rhetoric coming from the Alison Redford and Christy Clark camps which threatens to upend Enbridge’s Northern Gateway pipeline project, taking Ms Redford’s National Energy Strategy along with it.
Answer: Politics (isn’t it always). Using the time honoured principle of “who started it” the blame falls squarely on Alison Redford’s shoulders. Here’s why.
When Ms Clark requested a fair share of the benefits of the Enbridge pipeline proposal, Ms Redford responded by upping the ante. She reframed Ms Clark’s request as an attack on Alberta’s royalties and an attempt to rip up the Canadian Constitution. (Wow!) Ms Redford assured Albertans she would not “blink”; she’d protect our royalties at all costs.
But that’s not what Ms Clark and her ministers said when they announced the 5 conditions upon which BC was prepared to support the pipeline. Four of the conditions were legitimate requests for higher environmental and safety standards; the fifth condition was a request for a “fair share of the fiscal and economic benefits of the Enbridge project”. A request for a share of “benefits” is not the same as a demand for Alberta’s “royalties”.
The CBC, bless its little vacuum tube heart, appears the only member of the media that actually thought to check this critical point with Ms Clark. When the CBC asked the BC premier if she wanted a share of Alberta’s royalties Ms Clark said she didn’t know.
Ms Clark was a radio talk show host and a newspaper columnist before she became a politician. She’s not a lawyer. She appears to be scrambling to keep up with the inflammatory rhetoric and sabre-rattling coming at her from the Redford camp and one has to give her credit for her honesty in admitting she didn’t know the answer to that question.
Ms Redford on the other hand is a lawyer with extensive experience in international law. If anyone should know what the government of BC can or cannot demand from the government of Alberta, it’s Ms Redford. Instead of frothing with hyperbole, Ms Redford could have met with Ms Clark and transformed the discussion into a “…very positive, gung-ho, let’s make a lot of money...” conversation.*
However Ms Redford continues to demonize Ms Clark by characterizing the dispute as a constitutional battle. In doing do she places herself closer and closer to the edge of the ledge. Soon her only option will be to crush Clark (who’ll be replaced by the NDP leader, Adrian Dix—talk about jumping from the frying pan into the fire) or lose all credibility. She certainly can’t say “Oops I was wrong, it’s not a constitutional problem after all”.
So why doesn’t Ms Redford have a quiet word with Ms Clark and suggest that Ms Clark look at the “benefits” question from a slightly different angle? Instead of pressing Alberta for additional revenue, Ms Clark could focus on the oil companies planning to ship their bitumen on the Enbridge pipeline.
It’s the oil companies who pay royalties to the people of Alberta for the right to extract the bitumen. It’s the oil companies who’ll pay Enbridge for the right to transport their bitumen to Kitimat. It’s the oil companies who’ll pay the shipping companies for the right to load their bitumen onto tankers and transport it to markets on the other side of the Pacific. And it’s the oil companies who will generate profits for their shareholders if all of the links in this daisy chain come together without a hitch.
Given that it’s the oil companies who get the greatest benefit from this project, it should be the oil companies, not Albertans, who foot the bill for any additional revenues demanded by BC. This is not a constitutional law argument, it’s a practical one.
Warren Mabee, policy director for the Institute for Energy and Environmental Policy (Queens University) suggests that BC create a “targeted tax”—an export tax or port tax—that can be levied against the oil companies on each barrel of bitumen that moves through Kitimat. Mr Mabee says “That’s the type of tax that could be applied without any big issue.”**
So why the overheated rhetoric from Ms Redford? There’s nothing to stop her from pointing Ms Clark in the direction of the oil companies…unless her ultimate goal is to protect the oil sands producers from additional costs.
If this is the case, Ms Redford’s National Energy Strategy—the framework to allow the provinces to leverage their energy resources for everyone’s benefit—is a sham and the people of Alberta are being pitted against the people of BC in aid of Ms Redford’s political agenda.
This is a dangerous game. All of the participants, including the oil industry, will lose. The oil companies will move on (they always do) but Alberta will have lost a critical ally at a time when it needs all the support it can get to reach its goal of being an energy leader on the national and international stage.
* Don Getty, quoted in Calgary Herald, July 28, 2012
**Daily Oil Bulletin, July 24, 2012