The federal government looks like it's back in the fossil-fuel business.
More than a decade after one Liberal regime sold its stake in Petro-Canada, another Liberal regime plans to spend $4.5 billion to buy Kinder Morgan's Trans Mountain pipeline system, including its expansion project.
At a news conference this morning, Finance Minister Bill Morneau and Natural Resources Minister Jim Carr revealed the details.
He said the cabinet has given the green light to buy the pipeline, but it still requires the approval of Kinder Morgan's shareholders.
The deal is scheduled to close in August.
If this occurs, the pipeline would be put under a Crown corporation.
"This transaction represents a sound investment opportunity," Morneau claimed.
If the federal government becomes the owner, it's also on the hook for the cost of completing the project.
The finance minister maintained that this agreement will enable Kinder Morgan to continue construction through the spring and summer months.
The Trans Mountain Pipeline Expansion project is estimated to cost $7.4 billion.
However, an article in last weekend's Globe and Mail indicated that the price tag will go even higher, according to unnamed federal government sources.
The federal government plans to sell the pipeline in the future, with Morneau claiming that this will provide a "real return on investment for the benefit of British Columbians, Albertans, and Canadians".
"Canadian investors have expressed interest, including Indigenous groups, pension funds, and others," the finance minister said.
Back in 2004, the federal government sold its 19 percent stake in Petro-Canada for $3.2 billion, but after the costs of the offering and other expenses were deducted, it ended up with about $2.6 billion in the treasury.
Canada could blow its carbon budget
In 2016, UBC geography professor and climate-change researcher Simon Donner wrote an article in Policy Options about the impact of the Kinder Morgan pipeline expansion on greenhouse gas emissions and Canada's commitment under the Paris Agreement.
The project will triple diluted bitumen shipments from Alberta to B.C. to 890,000 barrels per day.
"The level of emissions will depend largely on the effect of additional pipeline capacity on upstream oil operations," Donner wrote. "If the new pipeline capacity is filled only by the volume of bitumen currently transported by rail, oil-sands emissions will not increase but will become 'locked' at near today’s level of 62 Mt [one million metric tonnes] CO2e per year throughout the operational lifetime of the pipeline."
However, his Policy Options article reported that if the pipeline transported diluted bitumen created through new production, that would add 13 to 15 Mt per year, according to Environment and Climate Change Canada.
Under the Paris Agreement, signatories, including Canada, have agreed to keep the global average temperature increase to 2 °C above the average before the Industrial Revolution began.
Even if Canada were to be allocated two percent of the global carbon pie—and that would be generous, given our population—the Trans Mountain pipeline project could consume 11 to 13 percent of our allotment in the future, according to Donner.
"The fraction increases to 12-15% if upstream emissions from the recently approved LNG facility are added, and 13-17% with the just-approved replacement of the Enbridge line 3 pipeline," he added.
"Even this 'generous' scenario would place a heavy, possibly unrealistic, burden on the rest of the economy to reduce emissions," Donner continued in his Policy Options article. "With oil-sands and LNG emissions as high as or higher than they are today, emissions from all other sectors would need to decrease by 35-38% below today’s levels in order for Canada to stay below the 2030 target of 30% below 2005 levels.
"The change would need to be even more dramatic if the Keystone XL pipeline is also constructed, as may be the wish of President Elect Donald Trump."
If Canada were to receive 0.5 percent of the world's carbon pie, based on our population, Donner concluded that the Trans Mountain pipeline would gobble up 40 percent to 49 percent of our allotment.
"If we are serious about our commitment to fighting climate change, we need to talk not about new pipeline capacity, but about managing the long-term decline of oil-sands emissions over the next few decades," Donner concluded. "Otherwise, we’ll blow our budget."
Trudeau, Morneau, and Carr repeatedly say that the Kinder Morgan pipeline project is in the "national interest".
It's become a federal Liberal mantra.
The obvious question, however, is whether the Trudeau cabinet has decided that the Paris Agreement is not in the national interest—judging from its decision today to buy a pipeline.
That's a logical conclusion for anyone who takes the time to read Donner's paper in Policy Options