Kinder Morgan Trans Mountain pipeline ignites a trade war between Alberta and British Columbia

trudeau-notley-20161129Pipeline politics have ignited a trade war between the governments of Alberta and British Columbia – both led by NDP Premiers  – with the Prime Minister clearly siding with Alberta and the construction of the Kinder Morgan Trans Mountain pipeline, as recently as February 1 .  The latest episode in the longstanding interprovincial feud was triggered on January 30,  when the B.C. government announced the formation of an independent scientific advisory panel to determine whether diluted bitumen can be effectively cleaned up after being spilled in water, and  “Until that committee reports, the government will impose a regulation prohibiting any expansion, either by pipeline or rail, of heavy oil sands crude.”  Details are in “B.C. announces oil transportation restrictions that could affect Kinder Morgan”  in the National Observer (Jan. 30); “B.C.’s Action on Bitumen Spills ‘Finds Kinder Morgan’s Achilles’ Heel’ (Feb. 5).

Alberta’s reaction was strong. First, in what Toronto’s Globe and Mail described as a “spat” on February 1:  “Alberta suspends electricity talks with B.C. over pipeline fight“. In a few days, The Energy Mix wrote ” Sour Grapes: Alberta to stop importing B.C. wine over Kinder Morgan feud” (Feb. 6) and  “Alberta Declares Boycott of B.C. Wine in Escalating Kinder Morgan Dispute” (Feb. 7 ) . CBC News reports reveal the escalating emotions: “The Alberta vs. B.C. pipeline fight. Now it’s war.” (Feb. 3) and “Weaponizing wine: Notley’s engineering a federal crisis in her battle with B.C.” and  “Oil, water and wine: “Escalating Alberta-B.C. feud threatens future of Trans Mountain pipeline” (Feb. 7); DeSmog Canada wrote “This might get Nasty: Why the Kinder Morgan standoff between Alberta and B.C. is a Zero-Sum Game” (Feb. 2). On February 9, Alberta’s Premier announced “a task force of prominent Canadians to respond to B.C.’s unconstitutional attack on the Trans Mountain Pipeline and the jobs that go with it”. The Market Access Task Force is loaded with government representatives and oil industry executives.

If you only have time to read one article about this dispute, read the analysis of Alberta’s Parkland Institute, in Let’s share actual facts about the Trans Mountain Pipeline. The three claims being made by the Alberta government are: 1. the  pipeline would generate $18.5 billion for “roads, schools, and hospitals”;  2.  it would create 15,000 jobs during construction, and 3. it would create 37,000 jobs per year. With deep expertise in the oil and gas industry, Parkland explains how these numbers were derived and why they are mostly outdated and selective.

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Protests against Kinder Morgan will continue in B.C., with the Tsleil-Waututh First Nation  calling for a mass demonstration on Burnaby Mountain in March. – see the CBC summary here.

Stepping back,  see Andrea Harden-Donahue‘s January 24  blog for the Council of Canadians, “#StopKM: State of Resistance” , which details past resistance and demonstrations against KM,  and states that “the Pull Together campaign recently reached the fundraising target of $625,000 towards Indigenous legal challenges.” For a view of the legal issues and lawsuits (including First Nations’) in this longstanding fight, see a West Coast Environmental Law blog published on January 17, before this war erupted: “Whose (pipe)line is it anyway? Adventures in jurisdictional wonderland “.

 

Oil sands companies called on to “keep it in the ground” – but Suncor opens new mine near Fort McMurray, deploys driverless trucks

Parkland report big oil coverThe majority of Alberta oil sands production is owned by the five companies: Canadian Natural Resources Limited (CNRL), Suncor Energy, Cenovus Energy, Imperial Oil, and Husky Energy.  What the Paris Agreement Means for Alberta’s Oil Sands Majors, released on January 31 by the Parkland Institute, evaluates what the 2°C  warming limit in the  Paris Agreement means for those “Big Five” –  by assessing their  emissions-reduction disclosures and targets, climate change-related policies, and actions, in light of their “carbon liabilities.” The carbon liabilities are calculated using  three levels for the Social Cost of Carbon, ranging from $50, $100, and $200 per tonne. Even under the most conservative scenario, the carbon liabilities of each corporation are more than their total value, and the combined carbon liabilities of the Big Five ($320 billion) are higher than Alberta’s GDP of $309 billion. Conclusion: “the changes required to remain within the Paris Agreement’s 2°C limit signals a need for concrete, long-term “wind-down” plans to address the challenges and changes resulting from global warming, including the fact that a significant portion of known fossil fuel reserves must remain underground.” What the Paris Agreement Means for Alberta’s Oil Sands Majors was written by Ian Hussey and David Janzen, and published by the Parkland Institute as part of the SSHRC-funded Corporate Mapping Project.  A National Observer article reviewed the report and published responses from the Big Five companies on January 31.

autonomous electric mining truckRather than keeping it in the ground, Suncor Energy announced on January 29 that it is continuing to ramp up production at its Fort Hill oilsands mine, about 90 kilometres north of Fort McMurray.  The next day, Suncor also announced  the beginning of a 6-year phase-in of approximately 150 autonomous electric trucks at numerous locations. The company said it will “continue to work with the union on strategies to minimize workforce impacts,” and that “current plans show that the earliest the company would see a decrease in heavy equipment operator positions at Base Plant operations is 2019.”   Reaction from the local union is here in a notice on the website of Unifor 707A;  Unifor National Office response is here:  “Driverless trucks aren’t the solution for Suncor” .  The National Observer published an interview with a Suncor spokesperson on January 31.  According to”Suncor Energy says driverless trucks will eliminate a net 400 jobs in the oilsands” , Suncor is the first oil sands company to use driverless trucks, and “Suncor’s plan to test the autonomous truck systems was initially criticized by the Unifor union local because of job losses. But Little says Suncor is working with the union to minimize job impacts by retraining workers whose jobs will disappear. The company has been preparing for the switch by hiring its truck drivers, including those at its just−opened Fort Hills mine, on a temporary basis.”

The good news is that  “the era of oil sands mega-projects will likely end with Suncor Energy’s 190,000 barrel-per-day Fort Hills mining project, which started producing this month”, according to an article by Reuters.  The bad news is in the title of that article:  “Why Canada is the next frontier for shale oil” (Jan. 29) . The article extols the strengths of Alberta’s mining industry, and quotes a spokesman for Chevron Corporation who calls the Duvernay and Montney formations in Canada “one of the most promising shale opportunities in North America.”  For a quick summary, read   “Montney, Duvernay Oil and Gas Fields Seize the Momentum from Athabasca Tar Sands/Oil Sands” ( Jan. 31) in the Energy Mix.

Also,  consider the work of Ryan Schultz of the Alberta Geological Survey.  Most recently, he is the lead author of  “Hydraulic fracturing volume is associated with induced earthquake productivity in the Duvernay play”, which  appeared in the journal  Science on January 18 , and which is summarized in the  Calgary Herald  on January 18.  It discusses the complexities of how fracking has caused earthquakes in the area.

Federal government releases detailed proposals for Canada’s carbon pricing system, including output-based pricing for industrial emitters

On January 15, the Minister of Environment and Climate Change and the Minister of Finance issued a press release  announcing the full draft legislative proposals relating to the carbon pricing system. Public comment will be accepted until February 12, 2018.   The full text of  Legislative and Regulatory Proposals Relating to the Greenhouse Gas Pollution Pricing Act and Explanatory Notes are in English  and French versions . Comment on the legislative proposals will be accepted until April 9, 2018, with “structured engagement” and consultation with provinces and territories, Indigenous Peoples, environmental non-governmental organizations, industry, and business promised over the Winter/Spring of 2018.

Minister McKenna also released for comment the proposed regulatory framework for carbon pricing for large industrial facilities – an Output-based Pricing System (OBPS), with the aim “to minimize competitiveness risks for emissions-intensive, trade-exposed industrial facilities, while retaining the carbon price signal and incentive to reduce GHG emissions.   Emission sources covered by OBPS will include fuel combustion, industrial process, flaring, and some venting and fugitive sources – but notably, “Methane venting and methane fugitive emissions from oil and gas facilities will not be subject to pricing under the OBPS.”  The system will include emissions of all seven of the UNFCCC-designated greenhouse gases, “to the extent practicable” – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride and nitrogen trifluoride. Details are  in Carbon pricing: regulatory framework for the output-based pricing system  (French version here) , and  build on the Technical Paper : Federal Carbon Pricing Backstop (French version here) , released in May 2017.

Leading up to the January release, the federal government had released clarification about the timing of  the planned backstop carbon pricing mechanism on December 20, 2017 – it  will come into effect by January 2019, bringing the carbon price to $20 per tonne in any jurisdiction that doesn’t meet the federal benchmark.  Full details are set out in:  Supplemental Benchmark GuidanceTimelines , and the Letter to Ministers . Generally positive reaction followed, from the Pembina Institute  and  Clean Energy Canada.

Initial reaction/summary of the proposed legislation released on January 15:  “Ottawa’s new carbon pricing plan will reward clean companies” from CBC,  and from the Globe and Mail, “Ottawa prepares to relax carbon-pricing measures to aid industry competitiveness” .  More substantive comment comes from the National Observer, in  “Trudeau government explains how it will make polluters pay” (Jan. 15).  Reaction from Environmental Defence came from Keith Brooks , who calls the proposed plan “an effective and fair pan-Canadian carbon pricing system.”  Reaction from  Clean Energy Canada is similar.

Meanwhile, in Alberta: Note also that the province of Alberta released their new Carbon Competitiveness Incentive Regulation (CCIR) for large industrial emitters in December 2017, also based on an output-based allocation system.  Carbon Competitiveness Incentive regulations replaced the current Specified Gas Emitters Regulation (SGER) on Jan 1, 2018, and will be phased in over 3 years.  It’s expected to cut emissions by 20 million tonnes by 2020, and 50 million tonnes by 2030.  Favourable testimonials from the oil and gas, wind energy, and cement industry are quoted in the government press release on December 6.

To explain output-based carbon pricing, the Ecofiscal Commission published Output-Based Pricing: Theory and Practice in the Canadian context , by Dave Sawyer and Seton Stiebert of EnviroEconomics in early December.  The highlights of the paper are summarized here, with a discussion of the pros and cons and challenges of implementation, with special attention to Alberta’s provisions.

Alberta reports progress under Climate Leadership Plan, increases carbon levy

Climate Leadership Plan Progress Report 2016 – 2017 ,  released in December 2017, summarizes and measures the outcomes for the programs initiated under the Climate Leadership Plan .  The report  includes a section on Skills and Employment, providing very basic measures of  “Green Skills Demand” and “Jobs Supported”.   Green Skills Demand is measured as the percentage of job postings categorized as green, and the results show an increase from 2014 to 2016, though green job postings have not yet recovered to 2014 levels.  The  Jobs Supported section estimates include total direct, indirect and induced jobs created, calculated by Statistics Canada and using an input-output (IO) model.  It concludes that, in 2016-17, $311 million was invested back into the economy in programs and policies under the Climate Leadership Plan, which  supported approximately  2700 jobs.

Also, effective January 1, 2018, Alberta’s carbon levy increased from $20 per ton to $30 per ton.  The government press release states that 60 per cent of households are expected to receive a full or partial carbon levy rebate in 2018, ranging from approximately $300 (tax-free) for a  single adult earning up to $47,500 per year to $540 for  a couple with two children earning up to $95,000 per year .    The Pembina Institute has produced an Infographic and FAQ’s “What you need to know about Alberta’s Carbon Levy” .

The government also released a new Carbon Competitiveness Incentive Regulation (CCIR) in December 2017, designed to help trade-exposed industries.  From the  press release on December 6:  “The CCIRs are the product of extensive consultation with industry and will be phased in over three years. Companies will have further incentives to invest in innovation and technology to create jobs and reduce emissions through a $1.4-billion innovation package released earlier this week, which includes $440 million for oil sands innovation alone.”  Although the oil sands industry receives the lion’s share of the Energy Innovation Fund, described here   and here , the Fund also includes incentives for bioenergy producers, cross-sector green loan guarantees of $400 million, and funding for energy efficiency upgrades for large agricultural and manufacturing operations, institutions, commercial facilities and not-for-profit organizations.   The Pembina Institute explains the new regulations in a detailed technical report, Understanding the Pros and Cons of Alberta’s new industrial carbon pricing rules , released on December 20.

What happens to workers when wildfires and natural disasters hit?

Sadly, we are becoming  used to seeing headlines about the costs of fighting climate change-related wildfires, hurricanes, and floods – most recently, the record wildfire season of 2017.   These news reports usually discuss loss  in terms of the value of  insurance  claims – for example, “Northern Alberta Wildfire Costliest Insured Natural Disaster in Canadian History – Estimate of insured losses: $3.58 billion”   from the Insurance Bureau of Canada, or in terms of the budgets of emergency service agencies – for example, “Cost of fighting U.S. wildfires topped $2 billion in 2017” from Reuters (Sept. 14), or in terms of health and mental health effects – for example, “Economic analysis of health effects from forest fires”  in the Canadian Journal of Forest Research (2006).  “The Science behind B.C.’s Forest Fires” (December 5) post by West Coast Environmental Law discusses the links to climate change, and concludes that the record wildfires of 2017 foreshadow growing economic and  human costs in the future.

When employment effects of disasters are reported, it is usually by statistical agencies interested in working days lost or unemployment effects,  for example,  “Wildfires in northern Alberta: Impact on hours worked, May and June, 2016”  from Statistics Canada, or “Hurricane Katrina’s effects on industry employment and wages ” from the Bureau of Labor Statistics ( 2006) . While all these are important, Hurricane Katrina taught that there are also other aspects, including those of environmental and economic justice.

Hurricane Harvey survey coverOne recent example which illustrates recurring patterns: on December 5, the  Kaiser Family Foundation and the Episcopal Health Foundation in Texas released the results of a survey about the impacts of Hurricane Harvey . While most of the survey reports on  the loss of homes and cars,  it also measures employment impacts:  46%  of respondents reported that  they or someone else in their household lost job-related income as a result of the storm – through  fewer hours at work (32%), losing a job entirely (12%) or losing income from a small business or unpaid missed days (32%). And as so often is the case, income disruptions affected a greater share of Hispanic (65%) and Black (46%) residents compared to White residents (31%).

Two recent news reports highlight a more surprising story of the California wildfires:   “California Is Running Out of Inmates to Fight Its Fires” in The Atlantic (Dec. 7 2017)  and “Incarcerated women risk their lives fighting California fires. It’s part of a long history of prison labor”  (Oct. 22, 2017) . These articles describe the long-standing practice in California of using prison inmates as firefighters: in the current season,  almost 3,000 of the 9,000 firefighters battling wildfires are inmates, who get a few dollars plus two days off their sentences for each day spent fighting wildfires.

fort_mcmurray-fireThe Fort MacMurray wildfires in northern Alberta in 2016 rank as the costliest natural disaster in Canadian history, exceeding the previous record, which was the 2013 flooding in Calgary and southern Alberta.  That ranking is based on the  estimate by the Insurance Bureau of Canada   of $3.58 billion;  the Conference Board of Canada also reported on the economic impacts  (free; registration required).   Statistics Canada measured work days lost and employment insurance claims through their Labour Force Survey instrument, and so were able to differentiate effects by sector, sex and age, as location, in two reports:  Wildfires in northern Alberta: Impact on hours worked, May and June, 2016  (November 2016)  and “Wildfires in northern Alberta affected hours and Employment Insurance beneficiaries”, a section in the Annual Review of the Labour Market, 2016 .

Another assessment of the total financial impact of the  Fort McMurray wildfire estimated the financial impact of the Fort MacMurray fire was $9.9 billion, as reported by the  CBC (January 2017) and the  Toronto Star (January 17).  That research, by two economists from MacEwan University in Edmonton,  was commissioned by the  Institute for Catastrophic Loss Reduction  , but does not appear to have been published as of December 2017.  Their estimates included  indirect impacts such as the expense of replacing buildings and infrastructure, lost income, and lost profits and royalties in the oilsands and forestry industries.  And they estimate the mental health impacts and  cost of suffering of the firefighters as $3.78 million.

Excellent news reports also described the employment situation – including the government and union support for workers : “ Fort MacMurray wildfires leaves livelihoods in limbo”   in the Globe and Mail  (updated March 2017); “Fort MacMurray smoke halts major oilsands project”  in the National Observer (May 7 2016),  “ Fort McMurray firefighters who slew ‘The Beast’ now battling emotional demons” from CBC News (July 3 2016) ,  and “Resilient but tired: Mental effects of wildfire lingering in Fort McMurray” in The National Observer (Dec. 18 2017).

An Employment Fact Sheet  from  ProBono Law website  answers FAQ’s regarding workers’ rights in Alberta as of May 2016 – such questions as: .  “If business operations are badly affected and an employer has no work for some or all employees, does the employer have to pay them …?” (No); “An employee’s home was badly affected by the fire. Are they entitled to paid or unpaid leave to sort out the personal problems caused by the fire?” (No, employees are not entitled , but some employers do offer such leaves as part of their benefit plans or will offer them if asked.) Future recourse regarding leave provisions may be available as of January 2018, when the Alberta Employment Standards Code is amended to provide new Personal and Family Responsibility Leave of  up to 5 days of job protection per year for personal sickness or short-term care of an immediate family member, which includes attending to personal emergencies.   And failing that, there is always the hope, as described in the Toronto Star, that “Workplaces are adapting to climate change by offering paid extreme weather leave”  (November 14).