There are alternatives to Teck-Frontier
I have not witnessed this level of political intemperance in Alberta since I was a graduate student at the University of Alberta in 1980. I am alarmed and deeply disturbed with the nasty rhetoric that has been displayed recently by the Alberta government – notably the statement by Jason Nixon, the Environment and Parks Minister.
At issue is the impending decision by the federal government on the Teck-Frontier project. Proponents of the project stress the project will create 7,000 jobs during construction and up to 2,500 workers during operation. The project, which has been under review for ten years, is estimated to deliver $70 billion in taxes over 40 years of production and billions of dollars in spin off activity. There is no doubt that it is the jobs, taxes and royalties which this government (and its predecessors) want.
The Alberta government is beginning to worry about jobs, as it should. On Friday, Statistics Canada reported that employment declined in Alberta, down 19,000 in January (although on a year-over-year basis, employment in Alberta was little changed). Of concern is the persistence of an unemployment rate higher than the national average. In the all-important construction sector, over 30,000 jobs have been lost since last September. This category of jobs is highly prized because it involves high paid employment and constitutes about 10 per cent of all employment.
But the rhetoric was not confined to politicians’ mouths. In my in-box on the day of Nixon’s pronouncement, I received, unsolicited, a missive from the Confederation Tomorrow Project containing an “Action Alert” which stated: “ However, those who are open to giving Ottawa another chance also made it clear that it would only be one more chance, and that one more wrong move might tip them over the edge. Some even explicitly mentioned the upcoming decision on Teck as being that potential last-straw moment.” Ominously, it concluded: “A failure to approve the Teck project will lead to an existential crisis for Alberta, and a constitutional crisis in Canada. Whatever your position on confederation – Alberta and Albertans need this project.”
In addition, there have been opinion pieces on both sides of Teck-Frontier concerning federal approval. The pressure on Ottawa is now enormous and the ultimate decision will be Justin Trudeau’s defining moment on energy and the environment.
Meanwhile, the prospects of Teck being financed from private capital are increasingly dim. Last week Teck CEO Don Lindsay told a CIBC investor conference, the company needed: “three Ps: The first is the pipeline has to be finished, not just started, finished. We need a partner. We need price.” Some cynics view federal approval as possible given the project would likely never be built.
If the $20 billion Frontier project is not built, what is plan B for the Kenney government? What alternatives are there to re-employ thousands of construction and oil-field workers?
I am a volunteer participant of the Alberta Liabilities Disclosure Project. The group supports improved disclosure of environmental liabilities caused by the extraction of fossil fuels. The group keeps a watching brief on the attitudes of international and domestic institutional investors, rating agencies and central banks towards fossil fuel investments. Long-term investors, unlike the Joint Federal-Provincial Panel which approved the project last summer, are increasingly evaluating investments from a full cost accounting point of view, including costs for emissions and remediation. These costs, conservatively estimated at $10-20 per barrel, reduce the already marginal economics of the Teck project.
To date, our group has accumulated significant amounts of data from the Alberta Energy Regulator on the cost of rehabilitating all wells in Alberta. The Project has been developing bold plans to give unemployed workers a chance to use their skills to assist industry to meet regulatory obligations. Rather than put public money into an elephant project, like Teck-Frontier, ALDP believes it is in the long-term public interest for industry to meet its lawful obligations.
While the AER puts the cost of rehabilitation at around $15 billion, detailed and realistic ALDP estimates place the costs between $50 and $70 billion. Rather than utilize public and private resources on Teck-Frontier, federal and provincial governments with industry, have a massive opportunity to deal with well reclamation, and eventually tailings ponds’, liabilities. Addressing these liabilities will remove sterilized land, reduce emissions and improve health outcomes.
Bold action involving the use of green bond financing (raising money to finance green projects) over a twenty- year horizon will mean $2 to $3 billion annually for the Alberta economy employing directly about 10,000 workers. This is not “charity” as Mr. Nixon might claim, but decent well-paying jobs aimed at meeting long-established regulatory requirements. Most of these well-paying jobs would be in rural Alberta where employment needs are greatest. This employment initiative would make more sense than fly-in-fly-in out construction jobs where workers are housed in vast dormitories without the support of their families and loved ones.
With climate heating the real crisis, not an imagined constitutional crises, Alberta and Canada should be looking towards the future, not backwards in the quest to meet the long-term economic and environmental interests of this wonderful province.